Friday, June 05, 2015

The New Account Sales Challenge: The 5 Ugly Questions Helping You to Protect the Health of Your Business



In the CSO Insights 2015 Sales Performance Optimization study, “capturing new accounts” made it to the top of sales objectives for 2015.  Kim Cameron recently published a post “Overcoming the New Account Sales Challenge” here.

Before addressing the valid challenges, mentioned in Kim’s blog, you should though make sure that your initiative of “capturing new accounts” eventually does not hurt your business by causing these undesired effects:
·         Expected growth targets are not met
·         Profitability drops
·         Customer satisfaction drops

The 5 Ugly Questions
This list of questions can help you to diagnose whether your “capturing new accounts” initiative might negatively affect the health of your business.
1.       Have you clearly defined the ideal accounts you want to capture?
The lack of this definition exposes you to all three undesired effects. In absence of such a definition, salespeople will decide on their own, where to go hunting and the chances are high that they miss the attractive accounts.
More information on this phenomenon can be found in Frank V. Cespedes excellent book   Aligning-Strategy and Sales

2.       Is an adequate value proposition available for these ideal accounts?
In absence of such a definition especially profitability and customer satisfaction are endangered.

3.       Do you know how many of the ideal accounts have never before bought the category you want to sell to them?
Not knowing the answer to this question can particularly hamper profitability.  Furthermore it might take longer for your initiative to meet the expected growth targets.  
Accounts, never having bought the category you want to sell to them, have a different customer journey than accounts that are new only to you but have previously bought the category from competitors. Therefore, you need different strategies matching the respective customer journey.
In the first case you can gain market share if you can penetrate the account by facilitating the “buy learning” journey.
In the second case, you have to displace the incumbent competitor (“buy wallet share”).  Displacement of incumbent competitors most often results in price wars.
If your company does not have an operational excellence strategy in place, which provides for a systemic and sustainable lower cost structure, profitability is highly endangered.
Product superiority with according value propositions is another alternative to displace incumbent competitors without risking your profitability level.

4.       If you have to attack accounts held by incumbent competitors, do you now their purchasing strategy?
Ignoring this question can lead to overoptimistic growth expectations. Many purchasers follow dual vendor strategies. They know that for remaining a valuable account to the second vendor, they have to leave them a part of the wallet share attractive enough so the vendor does not “fire” the account.

5.       The follow on question then is: Does your expectation of the wallet share you must aim for, so the account is attractive to you, match with what you can realistically expect given the competitive situation in the account?
Knowing the answer to this question makes you more selective of the new accounts to pursue and is the basis for setting realistic growth targets.

Conclusion
In absence of a company strategy, where ideal customers, appropriate value propositions, market saturation level, competitive strategies and purchasing strategies of the ideal customers are known and aligned, “capturing new accounts” risks to be detrimental to the health of your business.

Call to Action
Answer the 5 ugly questions. They are ugly because you might come to the conclusion that “capturing new accounts” is actually a less attractive objective than you had hoped for.  You might then be motivated to find more suitable alternatives to grow the top line without jeopardizing the health of your business.
Should you need help, you can give me a call.

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