Existing customers are a critical revenue source for almost every organization. Meeting organizational growth targets requires sales leaders to establish well-defined account management processes and tools that not only retain customers, but also enable account teams to identify, develop and execute on growth opportunities within their account base.
However, Gartner research reveals that the traditional account management model may actually stunt growth.
As part of the broader move to solution sales, many organizations have expanded their product and solution sets; on average, sales leaders report a 2.3x increase in the size of their sales teams’ product portfolio over the past several years.
Despite this increase in portfolio size, account management channels continue to perform below growth expectations, with cross-sell and upsell revenue falling short of targets.
Account managers are now expected to provide service, resolve issues and maximize consumption and ROI — all while selling additional new products and services. Account managers are also expected to achieve growth by connecting multiple products together into complex solutions.
Selling these solutions is time-consuming and difficult, requiring a distinct skill set and attitude. Yet in many instances, these additional growth responsibilities have simply been added alongside traditional retention responsibilities. The result is a role so expansive sellers must inevitably choose among competing demands on their time.
The account management paradigm at many sales organizations is oriented not toward encouraging growth, but rather toward discouraging the loss of business already won, which inadvertently allows account managers to prioritize the retention of existing customers over the expansion of account spend. We call this an anti-shrinkage system.
This challenge is exacerbated by the prevailing mindset within account management organizations that exceptional service that exceeds customer expectations drives growth. So, given a choice between service-oriented activities and those aimed explicitly at growth, account managers often choose the former, believing they will eventually lead to growth.
Gartner surveyed nearly 750 B2B customer stakeholders to better understand the impact of various account manager activities on customers’ likelihood to both retain and grow that supplier relationship over time.
We found that, while high levels of customer service do, in fact, increase the likelihood of customer retention, they have no statistical or meaningful impact on growth.
Gartner analysis shows that the leading driver of growth within existing accounts is a specific set of activities called “customer improvement.” These activities help customers understand how they might improve their business in ways they have yet to fully appreciate on their own, and emphasize the future benefits of the commercial relationship. This creates an urgency for change, which is critical for new sales.
What’s more, our analysis of retention drivers shows that customer improvement is nearly as effective at driving account retention. as product success and service are.
Customer improvement efforts help retention because the customer is likely being pursued by at least one competitor as well, that is almost certainly delivering a message about a brighter future. If the incumbent account manager is merely emphasizing the status quo, there is no comparable counterpoint to the competitors’ arguments for change.
World-class organizations focus on customer improvement. However, most sales organizations have account management functions that inadvertently reinforce or even encourage the natural inclination of account managers to focus on retention through product success and service before pursuing growth.
Account managers who practice customer improvement deliver future-focused, supplier-agnostic messages on how customers can improve their business, securing both retention and growth.
Shifting from product success and service to customer improvement requires an organizational commitment to the new approach. Sales leaders can start by focusing on four critical tactics:
Enable sellers to confidently drive growth conversations — provide them tools and support that make it easier to identify and pursue improvement opportunities.
The extent to which customers believe their relationship with the supplier improved their business — a metric we call the customer improvement score (CIS) — is a strong predictor of retention and account growth. By tracking account health and viability, account teams can better determine where to direct customer improvement efforts.
Selling is a team sport. Structure and staff account teams to drive growth-oriented behaviors: critically evaluate customers’ businesses, deliver unique perspectives and creatively brainstorm customer improvement opportunities.
Provide clear delineations between customer service, customer success and customer improvement roles and responsibilities to reduce role complexity, improve efficiency and lower churn.
Gartner helped 3pillar Global, a custom software development company, identify that their account management teams were allocating all of their time to service and retention and not enough to growth. With the support of Gartner experts and tools, 3pillar restructured the department to build out a separate sales team, which led to a 20% increase in sales growth year over year.
