10 reasons to proactively manage accounts

March 12, 2015 -  By

Phil HarwoodIn many companies account management takes a back seat to sales and operations. These organizations may sell and produce volumes of work, but they miss out on the best part—the ongoing relationship. In doing so, they fail to reap the many benefits that come with great, proactive account management. These include the following.

1. Higher renewal rate. This may be obvious, but it truly is the most important benefit and one that’s not given as much credit as it deserves. Even a small increase in your client renewal rate will yield exponentially greater profit due to the associated benefits that come with customer retention. In one example, a 5 percent increase in renewal rate produced a 50 percent increase in profit.

2. Reduced sales staff. One reason profits soar with an increased renewal rate is the reduced need for sales staff or reduced hours devoted to sales activity. Savings are realized when these hours are freed up and redirected toward other activities. What could you do with a couple hundred extra hours a year?

3. Reduced marketing budget. Proactively managing accounts also leads to a smaller marketing budget since there’s less of a need to drive new business when renewal rates are high. When existing customers are taken care of, they spend more money. There’s not a lot of marketing required in this situation.

Please don’t misunderstand. Marketing is an essential element to business success. My point is that marketing expenses may be reduced as proactive account management practices are implemented.

4. Increased service scope. We’ve all heard it said that people buy from people they like. These same people buy more from people they trust. Of course, trust isn’t present in the relationship at the onset; the opposite is true. Therefore, when you earn clients’ trust over time, they naturally will buy more from you, increasing the scope of your services and profits.

5. Increased gross margins. How would your P&L look if you were to increase your gross margin a few points? Do the math. You might be amazed at the impact. Proactive account management, relationship building and trust have a nice effect on pricing pressure—they remove it. Prices may still matter but not as much. The value of the relationship—the trust that’s been built up over years—is way more important to the customer than the size of your invoice.

6. Increased portfolio growth. Opportunities often exist to grow within a customer’s portfolio. This is certainly true when working with property managers but is also true when working with manufacturers, retailers, government agencies and more. Portfolio growth occurs naturally and almost effortlessly for the proactive account manager. For everyone else, these opportunities appear as bids.

7. Increased referrals. Only the most satisfied customers make qualified referrals. The marginally satisfied aren’t going to go out of their way. And forget about dissatisfied customers. When was the last time you gave a referral? Most likely, it was for someone you know and care about—someone you want to help. Your customers are no different. They are more likely to refer you when there’s been an investment in the relationship and they feel taken care of.

8. Increased no-bid work. One benefit of proactively managing accounts is the abundance of work that never goes out to bid. Instead, it’s just handed to you on a silver platter. Plenty of examples exist of even large-scale projects handed to the incumbent without a competitive bidding process. Your customers are busy people and there’s an expense involved with managing a bid process. If you’ve established a deep relationship based on trust, these opportunities will rarely go out to bid.

9. Improved terms/conditions. Another benefit is terms and conditions, which may be relaxed over the years to be more in your favor. This change may occur formally with revised contract language, informally within the context of personal relationships or both. Either way, the proactive account manager benefits from these improved terms and conditions.

10. Personal rewards. Finally, there are personal rewards related to serving customers at a high level, seeing how they benefit and, in turn, seeing benefits flow back into your organization. Proactive account managers who develop deep relationships with customers gain more than profit; they gain personal satisfaction of a job well done.

About the Author:

Harwood is a Managing Partner with Pro-Motion Consulting. Reach him at phil@mypmcteam.com. He is a Landscape Industry Certified Manager, NALP Trailblazer, NALP Consultant, and Certified Snow Professional. Harwood holds a BA in Marketing and Executive MBA with Honors from Michigan State University, where he was recently nominated Alumnus of the Decade.

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