In this solo episode I talk through the four steps of the client value ladder and the skills you need to deliver value at every level.
It’s particularly relevant for you if you are managing the day to day client relationships but are also responsible for account growth and delivering on your agency’s forecast.
Many of us in agency account management know that acquiring a new client is 5 to 25 times more expensive than retaining an existing one (1) & increasing client retention rate by 5% increases profit by 25% to 95% (2), but another study by Gartner reported that a whopping 80% of a company’s future sales will be derived from 20% of their existing client base! (3).
This makes the skill of growing existing business very important.
What’s less well known, and also shown in another study by Gartner called ‘Why your accounts aren’t growing and what to do about it’, is that the account management skills required to retain accounts are DIFFERENT to those required to grow (4).
The report showed that providing exceptional service leads to retention, not growth.
This means that as agency account managers we need to be thinking about how we need to behave differently if we’re responsible for growing our existing accounts.
The report concluded that mastering “client improvement conversations” increases your ability to grow an account by 48% and increases likelihood of renewal or retention of spend by 94% (4).
If handled poorly or indelicately however these conversations could damage relationships and trust (4).
‘Value improvement conversations’ are defined by the three following actions:
1. Provide customers with a unique, critical perspective
2. Paint a vision of the customer’s future business
3. Provide customers with an ROI on the entirety of the relationship
I hope you enjoy this episode and come away with ideas for the skills you need to develop or that you are indeed on the right track with your client development strategy.
References:
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- 5-25 cheaper: Harvard Business Review: https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
- Increase profitability: Bain & Co: http://www2.bain.com/Images/BB_Prescription_cutting_costs.pdf
- 80% of future business will come from 20% of your existing clients (Gartner): https://www.forbes.com/sites/alexlawrence/2012/11/01/five-customer-retention-tips-for-entrepreneurs/?sh=4e6b38175e8d
- Have customer improvement conversations: ”Why accounts aren’t growing and what to do about it” Gartner for Sales Leaders, 2019 https://www.gartner.com/en/sales/trends/account-growth
Transcript:
Jenny:
Welcome to Episode 12. Now, this episode is a solo episode, and it’s all about growing existing business and existing accounts. So this episode really is for you if you are an agency account director or an account manager in the role for a few years, and it’s your responsibility to grow that business to grow your client business, and to expand the account and to grow those relationships. Now, this has come up because many of my students, the people that work with me, often have questions like, how can I grow my account without coming across as salesy or pushy and compromising my client relationships? Or what do I need to do? So the client sees me as someone that brings value, because at the moment, they just see us as very transactional. Some people ask me about asking for referrals, we all know it’s a lucrative thing to do. And it’s a very smart thing to do. But how do you actually ask without coming across as salesy? And what questions should I be asking my client to really understand their business to uncover business problems? And how do I sell without being inauthentic and really having a client centric approach? And do I need to be more assertive without putting my clients off?
So these are some of the questions that I’m asked all the time about selling to existing clients. And that’s the reason why I’ve decided to put together a series of podcasts around growing existing business. And the key really here is having a client centric approach, and ensuring that you continue to add value to your clients. So in this episode, we’re going to be looking at the different value levels that you can give to your clients, and what skills you need to deliver those that add value.
Why is it important to retain and grow our existing clients?
So let’s step back for a moment and just ask ourselves, why is it important to retain and grow our existing clients? Well, there’s a number of statistics on online, some of them you may already be familiar with. But some of the really standout ones is, quite frankly, it’s cheaper to grow your existing clients. So according to the Harvard Business Review, it’s anything from five to 25 times more expensive to go out and get new business. And when you think about it, the cost of pitching is huge. And that’s often where we stand a one in four chance of winning the actual business. So it’s a huge investment. So it’s cheaper to grow the existing account, because they’re already familiar with us, and we already understand their business. It’s also more profitable. Now, according to Bain and Company, if you increase your retention rate of a client by 5%, it can increase the profit margins by between 25 and 95%. So again, retaining your existing business is much more profitable. There’s also a study by Gartner that says, 80% of your future sales come from 20% of your existing clients. Now, that is quite an eye opening statistic. So if we are thinking about that, then we really do need to be nurturing, and adding value to these existing clients.
Now, there was a study by Gartner in 2019, that really looked at why accounts don’t grow. And the really interesting statistic that came out of that was that, although there’s a belief among the account management fraternity that exceptional service leads to account growth, it’s proven not to be true. Exceptional service delivery leads to retention, for sure, but it doesn’t necessarily lead to growth. And the findings from that study concluded that what you need to grow an account is to have what they call customer improvement conversations. And if you are having those customer improvement conversations, then it can increase your account by 48%, and increase the likelihood of renewal or retention by 94%. So increasing your ability to grow an account by 48% is really huge. And so we really should be paying attention to what does a customer improvement conversation really mean?
Customer Improvement Conversations
So the study defined a customer improvement conversation as three core things. The first thing is to provide customers or clients with a unique critical perspective. Now, when you think about that you think about, you know, that could create some tension in your client relationship. If you are providing something unique, and something critical to maybe what they’re doing already. But this really is going to move the needle for them, because they’re going to suddenly see you differently and see you as someone that can add a huge amount of value, because then you are showing them something that perhaps they hadn’t seen before. Point two was for you to paint a vision of your customers future business, which means you need to be ahead of the curve looking at trends, looking at the future of their business, so that you can spot opportunities for them to capitalise on, or also avoid challenges that may be coming down the line. And then three to provide customers with a return on the investment. Return on investment on the entirety of your relationship. So what I’m going to do now is to talk you through the four levels of client value, and the skills you need to deliver value at each of those levels.
Level one – Deliver a quality service
So the first level of value that we can give to our clients is to deliver a quality service. And this skill you need to deliver a quality service at this level is to really have an understanding of what your agency does, and a technical understanding of all the services that you deliver. So you will be, for example, you’ll be able to link a client problem to an existing client case study in the past where you can cite examples of where you’ve helped other clients in the past. You’ll also have a really good understanding of your client’s internal processes, and particularly their sign off and approval processes, so that you can make sure that you’re aligning your processes to them. You’ll also understand the difference between your high value products and services, and your low value services. So, for example, if you are a full service agency that does brand strategy, then perhaps a brand strategy workshop is very high value, to do an execution of an ad is low value. So the idea, the concept, the strategy, is very high value, you can usually charge more for it. And understanding the difference between strategy and execution is key. Another example would be perhaps you’re an app developer. So it’s low value, the actual execution of an app or delivering an app. But actually, if you are consulting with your clients at a very top level, then maybe you’re talking to them about their general digital transformation, and their digital strategy. And the app is an execution of what their desired outcome is. So understanding what your own services are in terms of high value and low value is a great starting point.
Similarly, you can, at this level, understand how the agency works in terms of processes. So when you’re in front of clients, you really have a good idea if a project comes up of how to execute that project and how to deliver that project seamlessly, to ensure that it gets delivered on time and on budget. And you also have a thorough understanding of how to scope a project, how our cost estimate works, how our purchase order works, how our timing schedule works. So it’s all the nuts and bolts, the technical understanding of how you deliver a quality service on time on budget. And that is level one, in terms of what our clients expect from us in terms of value.
Level two – Deliver an exceptional client experience
Level two value is not only do you deliver a high quality service, but you also deliver an exceptional client experience. And in order to operate at this level to value, you not only understand your services and processes and how they fit in with the client, but you also understand how to manage the relationship with the client and deliver greater service to go over and above. So, in order to do this, you probably would have done some kind of relationship mapping exercise. So you understand all of the clients, the client side, who is involved in the decision making process at the client side, and who’s it important for you to establish relationship with. You also understand your own client context pain points, and how they’re measured. How are they measured? What are their KPIs, and also you understand their challenges, both internally and externally. So you’re always looking to identify areas that you can add value and help them solve their problems. You may have a little, what I call a fuzzy file, a fuzzy file is taking a note of any particular details about the client that will be worth you understanding, a new remembering, so that you can create that rapport with your clients. So for example, if they support a football team, then make a note of that. So you can ask them, the next time you see them, you know, is your team playing this weekend, for example, or maybe they mentioned the name of their son or daughter, and you can repeat it back the next time you speak and say, ‘I remember that you had to disappear to take your son to school, how is Simon?’ You know, using people’s names is always really a good way of making sure that they know that you’re paying attention, and that you really are interested in them, not only their role, their pain, their role in the business, but also on a personal level.
In order to understand and operate at a level two value level, then you also you have a very thorough internal client experience, process from the moment that your client joins you. And you have an onboarding process, but all the way through the relationship, so you know what the touch points are. You know, the level of value each point in that relationship, you are consistent, because what this helps to do is to manage your client expectations, and to make sure that their experience of working with you is consistent. Because if you think about it, if they want to maybe refer you to someone else, then they need to make sure that you are going to deliver the same high level of value and experience that they’ve come to know you for. So making sure that internally you have a very, very clearly defined client experience process.
Level three – Understand the business outcomes
Now moving on to level three value. So for a client, if you are offering level three value, not only do you offer a high quality service, you not only deliver an exceptional client experience, but you also understand the business outcomes that the client is trying to achieve. And you align your services to help them achieve them. And the client has a return on investment for the relationship. So if you are operating at level three value, you are not only doing everything that we’ve already discussed, but you’re also regularly diagnosing the client, that and their business, to uncover opportunities for you to really make a difference to their bottom line for you to make them money, save them money, save them time, reduce costs, and all of these business outcomes that clients work with us for. So you will understand how to ask the right questions at the right time in the right way to uncover the business outcomes and the business objectives that the client is trying to achieve. You’re also researching. So there shouldn’t be a client question that you asked that you couldn’t be looking up on Google before you actually get to the client office. So make sure that you really fully understand the client business. And that is typically, you know, looking at the client’s website, following the company Chairman online, following all of your client contacts on social and having a Google Alert set up for your company, the company name, maybe the product, maybe the competitor products. And if you’re working with a listed company that’s on a stock exchange, then you can also look at resources like Seeking Alpha, where you can actually download the C suite transcripts of some of their meetings, and their investor meetings where they’re talking about where they’re headed, where the company is going, what their long term visions or what their yearly plan is, what their strategic imperatives are. And you can really get a great understanding. So you can actually download those transcripts for free and read them really to understand the company at a very, very senior level. You might also talk to their clients and customers. So you might join focus groups, you might generate some unique first party data to understand their client customer. And customers, you may be doing some kind of listening study to understand more about what their needs are and how their needs are changing. Or you might be talking to other departments within your client company to get their perspective on where the growth areas are in the business and where the challenges are. So for example, if you are dealing with the marketing department, then you may ask to talk to their head of sales, or even go out on the road with one of their sales reps if they’re still doing face to face selling. So, really having the skill you need to operate a level three is a level of business acumen and a real thirst to understand the client business from a business perspective, and understanding what they want to achieve. What are the value drivers? How are they, what next year are they focusing their energy and their budget on, and who owns that problem and who owns that challenge to address. So you will be asking for their marketing plans or operational plans. And you understand where their focus is, and what the important issues are for them as a business. Because where you become more valuable is where you really understand, not just thinking about yourself, it’s not thinking about your services, it’s thinking about their business and how you can add value. And you can share insights.
Level four – Future value creation
So I hope this is useful so far. And finally, we’re moving on to level four value. So level four value is where you do all of the things we’ve discussed, this isn’t one or the other, this is actually building on the skills that you already have. But level four value is about future value creation. So the skill you need is to be a strategic thinker. Future value creation simply means that you are looking ahead of where the client is currently, and you are spotting opportunities for them to capitalise on, or you’re identifying challenges where you can help them avoid. So in order to, the skills you need at this level really are to be looking at the environment, to be situationally aware, to be reading about trends, to look at competitive landscape, to be a lot more consultative, to be very proactive in generating ideas of where you think that the client needs to be aware, and what’s your point of view, in terms of how you are going to help them solve these problems or capitalise on opportunities. And there was a study done several years ago, and it was led by Tim Williams from Ignition Consulting Group, and he’s a pricing strategist for agencies. And there was a big study, it was global, and it was between agencies and clients. And one of the questions that was asked was, Why do you, why do you let go of an agency? And the client said, because they never gave us anything that we didn’t ask for. And I think sometimes in agency life, we believe that because we are delivering good value quality service, that that’s good enough. But unfortunately, our competitors are waiting in the wings to help our clients solve their biggest problems and challenges. And if we are continuing to be reactive to briefs and just deliver good service, it’s no longer enough. So yeah, if you’re operating a level four you are, you’ve got an analytical mind, you’re looking at trends. And a little tip here is I think trends. You know, you can google what trends there are, both in your business, but also how they relate to the client’s business. So for example, if you look at management consultancy websites, they tend to have a lot of people that are part of these generations of reports. So PriceWaterhouseCooper,s Accenture, McKinsey, Ernst and Young, Bain and Company are just a handful of those websites that you can refer to, because often they publish reports about different market segments. So there may be segments in the market, and there certainly have been recently ,that you can look at to identify maybe what the customer trends are, what the market trends are, what’s changing, what you know, a lot of people have been talking about digital transformation this year, particularly in 2020. So we you know what, what is changing for your client and what can you bring to their attention. Think about the customer insight that you can find out that your client didn’t know. Think about the market trends that you can find out more about and help educate your client. And I think education is huge. If you are looking to grow your existing accounts, because anything that you can educate your client on, is going to stand you in good stead for being positioned more as a trusted adviser, rather than an order taker.
So I hope these four level of levels of value, and the four sets of skills that I think are really important in order to deliver that value, has been useful. And this is step one, all about a value ladder in my Account Accelerator Programme. My Account Accelerator Programme has been running since 2016. It is for you if you’re an agency account manager with at least two to three years experience, if you’re an account director and you have to be responsible for existing client growth. It’s a three month programme, it’s weekly calls. And I literally give you the tools, techniques, strategies, and you end up with a plan after that 90 days in how you can grow your existing accounts.
Account Accelerator Programme
So there are nine steps. And the first step is the value ladder, which we’ve just briefly discussed, where we actually sit down and develop relevant ideas for you to proactively take to your clients. So you’re definitely increase the client’s perception of value for your role and your services. The next step is relationship mapping, where you will ultimately save time by focusing your account growth actions, on the right opportunities, the right clients, because otherwise, it’s a scattergun approach, where, and I know this is one of the push backs that a lot of agency account managers say, I don’t have time, I don’t have time. So we need to make sure that you are spending your time in the right areas. The next step of the Account Accelerator Programme is client diagnosis. And this is where you’ll increase your confidence in client interactions, and ask the right questions to uncover the right growth opportunities. And I give you a framework for asking those questions. The next step is referrals blueprint, and this is where you’ll ultimately feel really comfortable about asking for referrals. Referrals are really, really important in terms of growing your existing accounts. And statistically, according to an Agencynomics report, 30% of growth comes from your clients referring you to others, or leaving the client company and taking you with them. So in order to master referrals, it’s really important that we are able to say them in the right way, and ask for them in the right way. The next step in the Account Accelerator Programme is all about client stories. So you’ll increase your client’s receptiveness to your suggestions and ideas, because part of interacting with clients is making sure that you are proposing ideas in the right way, without any resistance from your client. The next step is all about client experience. And you will ultimately reduce your uncertainty of which growth strategy is right for which client. So we literally give you a toolbox of strategies and tactics to use for growth. And the next few steps are your authority builder. So we’ll make sure that you raise your personal profile. And so that you’re interacting with your clients in the right way, not just in person, but also online. Your risk management is the next step. So risk management is all about how to reduce the client relationship risk, because the last thing we want to do is make all this effort to develop our client relationships when ultimately, we also need to be mitigating the risk against losing them. And then finally, we pull everything together into a practical, short, usable client growth plan.
One of the things that I hear time and time again, from account managers account directors is that they have a plan for growth, a client development plan, but it’s so unwieldy and so huge, that frankly, they don’t use it and it gets left on their desk. So if you would like some more information about the Account Accelerator Programme, there’s limited numbers. We’re kicking off in January, on January the 12th 2021. And there are going to be different account managers and account directors from different agencies who are very enthusiastic. They want to accelerate their career. They want to be able to add more value to their existing clients, and they don’t want to be coming across as salesy, but ultimately, they are responsible for account growth. So if this sounds like you then please get in touch. It’s jenny @accountmanagementskills.com or send me a message on LinkedIn. It’s Jenny Plant. So I hope you found this valuable. I’d love to hear from you. And I will see you on the next episode.
