Companies are often so focused on driving new brand wins that they sometimes lose sight of revenue retention and the growth of existing business. The curse that many sales reps, managers, and leaders have is that “shiny” new things draw ALL their attention away from what they currently have and their foundation for growth.
We have seen companies add 50% in new business only to end up achieving single digit growth in their overall revenue. For mid-sized companies, this can equate to tens of millions of dollars in revenue loss in a single year. Many companies budget a flat or modest growth for the existing business line item but lack the foresight and planning to make this a reality. Companies regularly focus most of their efforts on new brand wins and new revenue and forget that it is the top-line revenue figure that really counts. The impact for this lack of planning is that the company is unknowingly starting the year behind and will have to make up for the existing client revenue losses. The emotional toll of adding new brands and revenue only to have to make up for unexpected lost clients is tough on the team and hinders momentum, velocity, and exponential growth.
At times, it does make sense to churn some of your clients. Churn can be good when a) it is planned; b) it is unprofitable business; or c) your solution has evolved in a way that the legacy solution no longer fits your business model. A company with a strong client services (or account management) function is never surprised when a client leaves. A highly engaged and effective team, combined with the right tools and processes, will be able to anticipate and forecast churn; it will bring this risk to the larger team along with solutions on what needs to be done to retain the business (if the company chooses to do so).
Companies need to look holistically at their revenue (new and existing) and consider structures and processes that will help them maximize their growth efforts:
Establish a team that is responsible only for existing business (remove this from the new business/brand salesperson’s job remit). This creates a focus on each function of your sales effort and creates greater accountability for each role. Not all great new business salespeople are great at account management or vice versa, and splitting the role reduces the probability of the “magpie” effect impacting revenue. If a team isn’t big enough to segment these roles, help define time allocation and effort between new and existing business. Prioritization is an essential part of effective time management and a key element to success.
Apply resources appropriately to your clients, whether new, existing, or legacy. Implement an internal feedback loop for your existing business. This should include monthly account highlights, initiatives, KPIs, and opportunities to engage further.
Make sure your clients understand what you do and the value that you bring to their business. Don’t position your solution as an isolated expense; your solution is part of a larger ecosystem, and it should add value by solving problems. This could include increased revenue, reduced costs, enabling a quicker time to market, assisting with staff retention, or delivering efficiency gains. An effective way to deliver this information is through regular business reviews.
Do regular voice of the customer assessments. This will allow you to better understand the relationship and how you can add more value to their business. It also opens conversations where you can identify what your clients don’t know about you or a shift in their priorities. These assessments are a good way to ensure that you understand the probability of retention or growth within your existing base.
Create ownership within your client services and delivery teams. Failure to deliver or failure to comply with SLAs increases risk to the business and will likely result in revenue churn.
Create measurables that increase transparency within your regular reporting or scorecard. This should include identifying new revenue, revenue growth, shrinking accounts, and lost accounts (both count and revenue).
Build relationships that extend beyond one or two people within each of your clients. This requires a solid understanding of the commercial environment of your clients and having conversations that go beyond only what your solution can provide.
Ask for referrals. Promote the value that you are delivering and ask for help. This simple action builds champions within existing accounts and can also drive new business.
Train your customer service and delivery teams on empathy, building connections, active listening, solving problems, and suggesting a better path for the client.
Build out mutually owned account plans with your clients and have regular check-ins regarding the progress being made against each.
Winning new business is essential to growth; it’s exciting and demonstrates that your solution has reach. The balance between winning new business and retaining and growing your base shouldn’t conflict, and a company’s structure and focus shouldn’t be choosing one or the other. The team, and company, should understand the value of both and allocate time and resources appropriately. Even if you are winning a ton of new business, if the larger revenue bucket has a hole that is leaking as fast as you fill it, your business will be standing still, or worse, losing ground with both revenue and in reputation.
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