Tag: Analysis

Churn Rate vs Retention rate – What’s the difference?

Customer retention is directly proportional to customer loyalty, reflecting how satisfied your customers are with your products and services enough to return for more. This goodwill is a crucial metric, particularly during a business’s growth phase. Understanding your customer retention and churn rates is essential, as these metrics help pinpoint loyal customers and those at risk of departing, allowing you to devise effective strategies to retain them.  What’s the difference between churn rate and retention rate? Simply put, churn rate is the percentage of customers leaving your organization while retention rate is the ones that stay with you. You can influence retention positively by aligning on controllable factors like quality of product or services or by enhancing customer support. However there are some uncontrollable factors like customer’s budget, changes in processes or objectives or other factors that you won’t be able to influence directly. It’s always good for an organization to aim for a higher retention rate and lower churn rate.  What is the customer churn rate? Churn rate can refer to everything from boycotting a brand to opting out of their subscription services to frequent product returns or poor ratings. A higher churn rate can lead to you spending more money on acquiring new customers which is not sustainable in the long run. If your business is in its earlier stages, a churn rate of 3-7% is agreeable. But you however need to try to bring down this number as well as you go further years in your business. Calculating corn rate is necessary for a business to see how well it is performing. How to measure customer churn rate? Churn rate is measured by taking into account the number of customers you lost over a specific period to the customers you had at the start of the period. One thing to note is that it does not take into account the additional new customers you acquired during the same period. No. of customers at the start of the period – No. customers by the  end of the period ———————————————————————————————X 100 = Annual Churn Rate The number of customers at the start of the year    For instance in the FY 2022-2023 you started off with 1000 customers and by the end of the year you lost 300 customers, your churn rate is 30%. What is customer retention rate? Retention rate signifies the amount of customers who have signed up for your products or services and continue to use them after the first cycle as well. A higher retention rate has a better ability to predict your future. You will have a fair idea on how much money is going to come in so you can make your financial plans better for investments and expansions.  How to calculate retention rate? Retention rate = (Customers at the end of a period – Total new customers during that period) / Customers at the start of the period x 100 Retention rate helps you build better insights into specifications of your business. For instance, it will help you answer: What’s the most liked feature of your product that’s bringing your customers back? What sales or support actions contribute to higher retention or churn? What is the behavioral pattern of customers who stay vs the customers who leave? What is a good retention rate? One way to get an idea is by considering industry standards. For example, the monthly churn rate for SaaS companies is 3-8%, implying that the average retention rate should fall within the 92-97% range. Furthermore, we understand that the average annual churn is 32-50%, indicating that the average customer retention rate should be between 50-68%. However, it’s important not to solely compare your retention rate against the industry average. Why monitor customer retention rate and churn rate? Monitoring churn and retention rates is crucial for analyzing your business trajectory. A high churn rate usually indicates a need for product improvement. Understanding customer preferences and behaviors towards your product, and then examining churn or retention figures, can help identify specific areas for improvement. A high churn rate often signals potential business decline. Customer churn can be due to various factors like pricing, product or service quality, or a mismatch with customer needs. It’s important to remember that customers evolve over time and it’s crucial for you to adapt to their changing needs. Poor customer service can also contribute to churn. Key account managers must foster strong relations with their clients, especially high-value ones, to ensure retention. Some ways to bring down churn rate: Implement processes and workflows: Consistency in customer interactions and service delivery can significantly enhance satisfaction and reduce churn. Establishing clear processes helps ensure that all customers receive the same level of service and support. Enhance communication: Personalized communication is key to understanding and meeting customer needs. Large organizations might benefit from segmented surveys to gather detailed feedback and adjust services or products accordingly. Adapt to customer evolution: As customer preferences and needs change, so should your offerings. Staying relevant and responsive to market changes is crucial for maintaining customer interest and loyalty. Proactive engagement: Identifying potential issues before they escalate can greatly improve customer relationships and reduce the likelihood of churn. Keeping a close eye on customer feedback and behavior can help preempt problems and demonstrate your commitment to customer satisfaction. How can a KAM tool help? A KAM tool can help you manage and enhance client relationships especially with the top revenue contributors. Here’s why you need a KAM tool to bring down your churn rate: Provides centralized data management – When you use a KAM tool, you’re essentially having the records of all your client information at one place. From account history to contact details and transaction records, you have everything at one place for easy access across teams for all stakeholders. With easy access to data you can serve and understand your customers better. Improved communication – With a KAM tool, you can record customer information, feedback, and preferences all at one place

What is Whitespace Analysis in Sales?

White space in sales is referred to a gap that a business can identify and use to scale its revenue with its products or services. White space analysis is the process of digging through the sales data to hunt for new white space opportunities for cross-selling and up-selling. This cheatsheet helps you to leverage your sales data to find out potential gaps in your key accounts. Find out what whitespace means, and 6 quick steps to execute whitespace analysis in your strategic accounts.  

Risk Assessment of Key Accounts during COVID-19 pandemic

Risk Assessment of Key Accounts during COVID-19 pandemic We’re in a global crisis that’s unlike anything we’ve seen or could have ever expected. All organizations are facing an unprecedented level of risk that requires timely action. “Predicting the unpredictable: dealing with risk and uncertainty” has always been a key mantra, and this holds today with the emergence of COVID-19. As an Account Manager, you are best placed to provide new insights to top management regarding the impact on your organization’s existing business and opportunity landscape. The impact on annual plans and account plan goals should be on your organization’s radar now to allow them to take consider these when making decisions. This is a time of rapid change. Drastic ad hoc actions are taken to address challenges to the business environment. Ad hoc strategic actions pose major risks and the evaluation of risk with each action is critical. The four keywords to keep in mind to manage risk during this crisis are mitigate, transfer, avoid, and accept. The first step to managing business risks is to identify what situations pose a risk to your finances. Consider the damage a risk could have on your business. Once you have a list of potential business risks, develop a process to weigh the severity it possesses for the key account. Set up a scoring system for risks, from acceptable to undesirable. Look at the likelihood of the identified risks occurring at your business. Gauge the financial impact the risk could potentially cause. Risk Assessment Framework 1. Risk Matrix A risk matrix helps you prioritize business risks by ranking the potential impact and likelihood for each account. Color coding helps visualize accounts based on their risk rankings, and you can also designate zones in your matrix as generally acceptable (GA), as low as reasonably possible (ALARP), and generally unacceptable (GU) to create an at-a-glance view of which key accounts to prioritize. 2. Risk Rating Key A rating key enables you to visualize risk rankings and designate the GA, ALARP, and GU zones. The rating key also suggests the preferred action for each of the 3 zones. 3. Risk Zones Generally Acceptable (GA): In the area of the chart ranked “low,” risks have little impact and/or are unlikely to occur. Risks in this region don’t pose an immediate threat to the project or organization, and some can even be ignored. As Low As Reasonably Possible (ALARP): This is a zone of acceptable risk, encompassing the “medium” ranking areas. Risks falling within this region of the matrix are tolerable or not significantly damaging; work can proceed without addressing these risks being immediate. Generally Unacceptable (GU): This is the area of the chart where risk is “high”. Risks in this region are quite damaging, highly likely to occur, and would threaten the project or organization. They are the highest priority, and you must address them immediately. 5. Financial Impact The total financial impact of the risks across your organization categorized by the zones and by the severity to re-evaluate the guidance numbers for the entire organization. 6. Risk Response Plan The account manager can plan for managing the risk(s) (Avoid / Transfer / Mitigate / Accept) for the key account management. Action items for the same can be planned. Support required from peers, partners, or third parties can be highlighted timely, acted upon, and followed up. Your business risk assessment is not a one-time commitment. Review risk management processes periodically to see how you handle risks. Also, lookout for new risks that might not have been relevant in the previous assessment of the key accounts. DemandFarm’s Account Planner enables you to do this risk assessment inside your CRM making the Account Manager’s job easy. This simple risk analysis will help you avoid hazards that could damage your finances. The risk assessment of key accounts informs you about the steps you need to take to protect your business. You can see what situations you need to address and avoid.

White Space Analysis of Key Accounts

What is White Space Analysis? White space analysis is the process of digging through the sales data to hunt for new white space opportunities for cross-selling and up-selling. White space is essentially a gap that a business can use to scale its revenue with its products / solutions / services. A simple yet powerful tool for locating White Space in key business accounts I have learned over the years that a business process and strategy can have powerful outcomes if it can be explained in a simple way. But ‘simple’ does not mean ‘easy’. It is often construed that way. Simplicity only makes understanding the problem easily. But arriving at the solution to the problem could still be hard. White space Analysis helps you to discover areas where you can grow your account, align and map your resources. This can help you identify your farming and mining white space opportunities. The analysis report provided can reveal some insight into what can be improved in the near future to increase sales and ROI. One of the ways to simplicity is to identify the two variables/parameters and put them on a two-dimensional X & Y-axis. Then think of various possibilities at a different position of this grid. I set out to build software for Key Account Management. One of the basic, but fundamental problem was to understand ‘Account Landscape’ and ‘Account Mapping’ to identify areas of growth in a Key Account. As usual, I started thinking of two variables – people on both sides. This means the products & services of both parties again, opportunities, strategic initiatives of the customer and of my company, global footprint of the account. Finally, I arrived at ‘Buying Centres’ of the buyer Account & ‘Offerings’ of the seller as two variables to build the Account Landscape. The resulting matrix is a simple and yet powerful tool to understand the Key Account. Where is the whitespace in your business? Deciding what offerings (products/services/solutions) to take to market is not easy.  That is the most fundamental aspect of any business. That’s for the management to decide. But an Account Manager has to identify the ‘buying centers’. These are the units in that account where one can take my offerings independently. These are usually divisions/functions and for a global account combined with regions. For example: ‘Retail Banking Europe’ & ‘Merchant Banking’ could be buying centers for a Bank. This will set the Account Manager thinking, which offering is applicable to which buying center(s). Which of those boxes are easier to penetrate? Maybe because my offering there has a compelling value proposition for that buying center and there seems to be no incumbent competitor either. That is my ‘White space’ of growth. The following Account Landscape shows the progress in that account over the years. How White-Space Analysis can help you? Let me share how white space mapping actually helped a DemandFarm customer to unlock $40 million from the existing 23 accounts. A $600 million IT services company with 50+ key accounts used the account landscape to map and grow their accounts. When DemandFarm has implemented a couple of years ago the account managers of these accounts were asked to identify various buying centers of the accounts. Here we have taken an example of Airbus. So, the account manager of Airbus identified Helicopters, CIO Org, Commercial Aircraft, etc. as the Buying Centers. Before this, we had already configured various service lines or Offerings which the customer was taking to the market. For e.g. Engineering Consulting, Enterprise Security, IoT, then had Platforms and so on so forth. How can you identify White Space business accounts? Having created these Offerings and Buying Centers in the account, DemandFarm generated an account of Landscape. This is how the account looked in the beginning, we had all the Offerings as the Columns and the Buying Centers as rows. One can see Opportunities & Engagements at multiple places. The account was well placed then, but the revenue growth of the account had stagnated. Because of the standard offerings like Engineering Consulting, Enterprise Security, etc. which were less relevant now. So, the company introduced new Offerings. One such example is when DemandFarm acquired a big Salesforce competency shop enabling them to offer services around Salesforce practice. The challenge was to make the account managers embrace this change and grow the existing platinum accounts which seemed stagnant. Then, Salesforce was configured as a new offering and started appearing on the account Landscape as the new column. Since this was a new Offering the account managers were made to think where this new Offering could be sold. Obviously, it cannot be sold to the existing Buying Centers and therefore two new Buying Centers were identified & created namely Sales and Marketing. The combination of these new Buying Centers & the new Offering became the focus area or the ‘white-spaces-analysis’ for growth. White space mapping helps you to map areas to grow your service or product. After this, the Account Manager created a plan to grow business with the new offering in the new Buying Centers. While the old buying centers were not generating new business, the account manager was still able to plan for an additional $1 million in Marketing and another $1million in Sales Buying Centers. A similar exercise in all strategic account management for all new offerings leads to an additional plan of $40million in 2017. They are well on their way to achieving $28 million of that plan. There is a lot of power in simplicity and visualization. However, it should not be concluded as ‘easy’. Explore the complete guide to Cross-selling and Up-selling to identify unexplored opportunities for your business as well as your clients’ business and grow better in 2022.

How Key Account Management can change the world

Impact of Kay Account Management I am a Key Account Manager and I am very cognizant of the fact that I can change the fortunes of a company with a single strategic insight at the right time. Why do I think that? History is replete with companies that reached iconic heights and then spiraled into catastrophe. A few tragedies that have struck the business community in the past few decades are: Kodak‍ Kodak was once a photography giant and now is long gone! What if Kodak had an Account Manager who was strategically strong and understood that print photography was going to go out of business soon. What if he suggested that Kodak use some of its vast resources to build its digital photography empire? Maybe Kodak would have been the Canon of our age! Hummer Another great example is that of the Hummer. The largest SUV known to man was a coveted car in the 80s and 90s. Owning a Hummer was a brawny status symbol and signaled that you had arrived in life. But in the new millennium, it became impossible for General Motors to market an SUV that gave the questionable mileage of 10 miles per gallon. Imagine if they had a Key Account Manager who could tell them that the turn of the century was going to bring an increased awareness about climate change. With those environmental warriors in mind, the Hummer could have created a new offering that may have kept them in business. But alas! They did not have a key account manager like me who could show them the right strategy. Nokia But one of the biggest failures of the 21st century is undoubtedly Nokia. The Finnish tech giant, which was once the biggest mobile company in the world is now nowhere! They were unable to keep up with the technological advancements in their field and were stomped upon in the stampede that is Apple and Samsung. Once again, what if they had a key account manager who could anticipate this and provide additional R&D capabilities to ensure that Nokia continued to push out iconic products? Alas! These companies did not have the strategic insights that my brethren could offer. A Key Account Manager is indispensable for most companies because they can offer strategic insights to a client that could generate additional revenue streams and successfully future proof of the client. So from sad stories let’s move onto success stories! Boeing-Nordam Boeing 787 Dreamliners are quite literally the dream of airline manufacturers across the world. They are fuel-efficient and long-range jets that bring down the cost of air travel. But to make it fuel-efficient, it was integral to bring down the weight of the aircraft. Nordam, a maker of aerospace parts and systems worked together with Boeing for 18 months to create a composite window frame that was 50% lighter than traditional aluminum frames. By this collaboration Nordam was able to increase its revenue share from Boeing and Boeing was provided phenomenal external R&D capabilities that it may not have had internally. Sintex Industries- French Manufacturer Sintex Industries, a leading Indian plastics molding company was able to team up with a French manufacturer to develop plastic components for high-speed trains. This strategic partnership allows both parties to innovate together to build world-class products for end-users. What could be better? Timberland-Omni United Some collaborations that are so unique that they have to be saved for last! Timberland a leading clothing manufacturer teamed up with Omni United a tires manufacturer for a line of tire that can be turned into footwear at the end of their life. The two companies killed two birds with one stone! They brought down their production costs and took up a CSR initiative in one fell swoop! It’s this kind of cross-industry collaboration that fuels the life of a key account manager like me. The ability to impact the environment positively while bringing down costs is what we all strive for. The Key Account Manager who dreamed of this idea is sure to be extremely proud of his achievement! There is no debate about the fact that businesses have changed the way we humans are interacting with one another and the planet. With strategic collaborations, they can do much more with much fewer resources. In this context, key account management needs to be strategically strong, dynamic, and future-focused to ensure that no opportunities are missed. An opportunity missed could be the difference between bankruptcy and resounding success! Please comment below if you know some influential examples and if you have any insights to share.

Impact of Org chart on Key account management

Are you a key account manager who brings a lion’s share of the revenue for your organization? or Are you a sales ops manager who backs the sales team to come up with flying colors? You guys are the real heroes of your organizations. Maybe that’s why the challenges faced by you are critical. Do you believe that a 19th-century management tool is solving almost all the challenges faced by you in this 21st century? It’s true and not a joke. “If no Org Chart, then no Key Account Management” Org Chart is the smart tool that does all the wonders. It is a visual representation of the structure of an organization with some extensive information about the contacts. It is dynamically evolving every day with new features added up to strengthen its potential. DemandFarm’s Org chart is one such powerful tool with lots of updates made to benefit modern key account managers ‍About Demand Farm: DemandFarm is a Key Account Management Software system solely focused on addressing the unique challenges that Key Account professionals face. With focused functionality, the software allows all stakeholders of strategic, Key, and global account programs to intensively cultivate, build, harvest, and profitably grow the organization’s most valuable relationships. Power of DemandFarm’s Org Chart Software : Hierarchy Mapping: Know who reports to whom among the contacts. Relationship Mapping: Know who are the supporters, detractors, and neutral contacts. Influence Mapping: Know who influences whom inside the organizations. Power Mapping: Know the power of each contact i.e, who calls the shot. ‍ ‘From Contacts to relationships to key accounts’ 250+ leading companies in various industries are leveraging DemandFarm’s Org chart builder to re-imagine key account management and growing their strategic relationships with key accounts. One such company is Veracode. Veracode uses Salesforce Org chart ‍About Veracode ‍Veracode is an application security company that provides an automated cloud-based service for securing web, mobile, and third-party enterprise applications. Veracode offers multiple security analysis technologies on a single platform, including static analysis, dynamic analysis, mobile application behavioral analysis, and software composition analysis.

What Kind of Icebergs are your Key Accounts?

B2B Key Accounts are typically large global enterprises, with interest across verticals, several lines of business, complex organizational structures, plenty of staff movement across geographies and entities and significant regulatory dynamics. So it’s obvious that the solutions offered to such Clients are equally complex, high value and typically medium to long run. While that kaleidoscopic level of complexity is mind-boggling in terms of management, it is also an indicator of the endless possibilities to build deeper and wider engagement with the Client…across verticals, across geographies, across buying units. If a Client has made the cut to be listed as a Key Account and be managed by the elite Key Account Management Squad, then it’s assumed that they are either high performance- high potential Accounts or High- Potential- Low (current) value Accounts (that need developing).In this post, I’m focusing on the ‘High Potential’ piece of the equation. How do we unlock all that potential in our favor? The visible potential and the invisible potential – i.e., both parts of the iceberg. If we lose a Key Account like that, it can unbalance the entire ship, even possibly sinking us. However, if we find a sustainable way to harness the potential it offers, of what lies above and beneath, then we are well on our way to winning with KAM. Unlocking the true business potential of a Key Account involves being a good hunter (spotting available opportunities for revenue – the visible part of the iceberg) and a good farmer (nurturing white space opportunities for growth and value creation, till they are ripe for harvest- what lies beneath). At DemandFarm, we call the latter Account Farming. Ok- with that said, the question is- how? What areas of Key Account Management play the biggest role in unlocking the business potential of Key Accounts? Here are some that come to my mind..I’d love to hear from you on others: Relationship Management Now, this is my number 1 pick for factors impacting Account Farming. I’m referring specifically to people: who are the people that matter in this Account and how can our relationship mapping with them be leveraged for growth? Large B2B companies have matrix structures with complex, often complicated relationship networks. People move around hierarchically, geographically, across verticals and buying units, and sometimes even functionally. So what are the key focus areas? First, is knowing the right people in key roles, their formal and informal affiliations, a predisposition towards significant issues, hierarchy, etc. Second, it’s about connections – connecting the right stakeholders at the Client end and internally, leveraging the right relationships at the right time, for the right opportunity Third, it’s about investing in building and nurturing the right relationships at all levels- gatekeepers, influencers, and decision-makers included – for the mid to long term Finally, it’s about capturing all of that into a format available to all internal stakeholders. Leaving it in the Account Manager’s head makes you vulnerable, but it’s virtually impossible to keep tabs on all of this in real-time, without a technology enabler Data Management This is a close second to Relationships. Winning with Key Accounts is all about client-centric intelligence and insights. So it’s important to address where the data comes from, what needs to be mined and how it needs to be managed. But the secret sauce is qualifying the quantitative and quantifying the qualitative. Remember that old saying – not everything that can be measured counts, and not everything that counts can be measured. In my eyes, knowing what to quantify and what to qualify is the secret to spotting business potential. It’s about having your eyes on the right metrics and building the right models to act on critical qualitative indicators. The right technology can make this process smoother. Even more important is enabling KAMs to leverage insights without spending inordinate time steeped in data. This involves: Leveraging data already available in other systems such as CRM to generate real insights – at DemandFarm we call it the Data consumption vs. data Creation approach. The former minimizes pressure on the KAM to be filling in forms and capturing data. Real-time data available in one format at one place with one click: shockingly, even today, much time that should be spent building relationships and doing strategic work is spent in housekeeping tasks like collating and formatting data from various sources, generating reports manually, etc. Account Planning How customer-centric we are is revealed in our Key Account Planning. And how customer-centric we determine how well we can unlock business potential. There is no way to widen and deepen engagements with Key Accounts if we don’t plan with an eye on the entire landscape and white space – including everything about Client plans, pains, and opportunities, competitors, regulatory constraints, etc. Opportunities for growth and value creation are uncovered if we know what the Client aspires to, and how they plan to get there. The process of Account Planning needs to go beyond the process of annual planning. Internal Collaboration Strategic Account Management is a team sport – everyone needs to be on the same page to harness potential effectively. Lots of wheels need to be set in motion to capitalize on medium to long-term value creation opportunities. How well we are able to manage data to spot opportunities; building an internal business case to go after the right growth areas; setting clear expectations and buy-in from internal stakeholders; spending time on collaboration rather than clarifications and explanations, institutionalizing core key account management processes to avoid surprises and improve accountability – are all crucial indicators of a collaborative team. The right platform can make the process of collaboration seamless. Got some more you’d like to share? Write into us at [email protected]

How to Effectively Drive Prospect Engagement

You may have a strategy to make a sale, but what about the period after the sale? Keeping clients engaged after a sale is made is equally important as it is the window to future opportunities. Engaging with prospective customers assumes another level of significance as they are half convinced and might need a slight push to bring them on to your side. Driving this engagement demands the creation of a winning strategy that requires careful planning and execution. Here are a few tips that can help you drive engagement and help nurture your leads: Form a bond It always helps to form a bond with prospective customers to get an insight into their thinking. Be transparent about the information prospects seek, as they will then find it easy to establish faith and confidence in your business. Try and thoroughly understand their needs and expectations. Then highlight the features of your product or service and tell them how it will be beneficial in solving their problem. Once you have made them comfortable and familiar with your business, making the sale will be relatively easy. Think long term Making a sale is not considered a short-term goal anymore. It extends beyond forming a long-term relationship where clients look to you for effective and quick after-sales services. By showing that you care even about a sale is made, clients will likely return to you for their next requirement or recommend you to their contacts. Nurturing leads should thus be a top priority in your strategy that should not be compromised at any cost. Get the questions right Asking the right questions will not only help you devise a successful strategy but also go to show your prospects that you have done your homework and are serious about your offerings. Garnering details about their budget, objectives, challenges, and goals will help you recommend a well-suited solution for them. That way, you stand a chance to not just meet but exceed expectations. However, avoid questions that make prospects uncomfortable, or make them question your credibility and capabilities. Avoid language that sounds manipulative or high-handed. Devise a successful strategy You need to keep your prospects engaged at all costs. This can be achieved by devising a sales effectiveness strategy that focuses on establishing credibility, showcasing thought leadership traits, and displaying where you score over competitors. However, it is important to avoid sounding pompous. Highlight how a client stands to gain from your products and services and back it up with some case studies or testimonials of satisfied clients. Also, always show your prospects that you are open to feedback at any stage. Ensure that communication lines are always open and that emails and queries through other channels are addressed at the earliest. In account-based selling such as this, making the sale is does not complete the job. Keeping engagement alive with clients and even with prospective clients, as they demonstrate the intent of positive action in the future becomes essential. Always remember to nurture the lead as this helps form a lasting bond that could translate to bigger rewards in the future.