“If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” — Jim Barksdale, former Netscape CEO
A B2B client of mine was debating if they should invest time, money and effort in ramping up their account planning effort. Account planning is hard, and they had a great sales year in 2017, with the expectation that 2018 was going to be even better.
Their data said that 70% of their sales came from existing customers, and 30% from new customers. That’s a healthy ratio typical for established companies in their industry.
Before they cemented their decision to not invest time in ramping up account planning, I asked them to let us look at the data.
Decisions based on average numbers are wrong on average.
We analyzed the current and prior two years of sales data, and we discovered that in face yes, 70% of sales were coming from existing customers. However, we dug deeper and found the following:
- 70% of sales from existing customers each year came from ten customers, out of about 110 total customers. That 9% of the customer base.
- The top 10 customers generated an average of $7 million each year, while the remaining 100 customers generated an average of $500,000 each year.
They then realized that investing in strengthening account planning could deliver significant ROI. They decided to move forward based on the following assumption; they would develop at least one (1) existing customer in the bottom 100, to generate an average annual sales volume of $9 million.
By the way, their business is contractual with three-year minimum length. So, $9 million is $27 million over three years.
After 18 months they had developed three accounts from the bottom 100 that were generating an average of $6 million per year each. Total return on effort was 3 clients x $6 million = $18 million x 3 years = $54 million.
Again, account planning is hard and requires senior leadership and front-line sales leader commitment. However, there are few initiatives that a company can invest in that generate the returns you can achieve through account planning.
Is account planning important to your firm?