We Believe We Are Managing Our Key Customer Relationships Effectively
Although it seems like common knowledge in most industries that customer relationships are fundamental to growth and profit, you would be surprised by how many companies I’ve seen where customer relationships were not managed effectively.
One of the reasons companies call us is because they’re struggling to drive sales or growth. This particular company was no different. At first glance, it looked like they had all the right relationships in the organisation. They had a sales team, and they thought their executives were reasonably engaged in the business. But they couldn’t drive sales or growth and they didn’t know why.
Over time, customers were slipping away faster than new customers were coming on board, which, of course, is not sustainable. This was a service organisation where longer- term relationships and contracts were core business. Attracting new customers had a long lead time, and a reasonable level of contract retention was vital.
In this case, new sales never met expectations. Sales targets were consistently missed, and there was no ability to increase overall market share.
When we did our analysis of the company, we found that all the customer relationships were too low down in the organisations. Although the sales team had relationships with department heads in their customer companies, these weren’t the people who had the authority to make decisions.
The reason this had happened is quite normal—it is much easier to reach those department heads as they are more accessible. It’s much harder to get an hour with a managing director or general manager. They weren’t getting sales simply because they didn’t have strong relationships with the right people on the right level of their customer’s business.
This is quite a common problem. Relationships that the account managers or salespeople have with the customer are often not senior enough. Day-to-day business connects you with department heads, supervisors and department managers regularly, so it’s easier to have relationships with those people—and they’ll often try and convince you they have the authority to make sales decisions when they really don’t.
This is compounded by the fact that companies tend to tighten authority to make procurement decisions at various levels in the organisation. As a result, more senior executives are now involved in signing off on buying decisions.
It is a by-product of any business: the more senior the role, the harder the person is to access. They’ve got more gatekeepers around them, which means you’ve got to put a lot more effort to personally enagage.. It’s easier to get to the people lower down in the company.
If you’re not careful, however, that’s where most of your sales activity can end up being focused. While it’s easier, and your sales team can create quality relationships, they’re creating relationships with people who can’t sign the cheques—which means you eventually don’t get the sales.
As harsh as it sounds to say, it is really wasting their time, if these great realtionships are not bolstered by more senior relationships, because unless you’ve got relationships with the decision makers—and they trust you—it doesn’t matter how much time you put into it, you’re never going to win the work.
Even worse, the salesperson may truly feel the sale is likely due to a strong relationship with someone who is not the final decision maker. Therefore, that expectation is passed through the organisation, only for everyone to be unpleasantly surprised when the sale doesn’t eventuate.