Question: Because of the slow down in my market, my competitors are trying to gain business anywhere they can. They are more active in my good accounts than ever before. How can I protect my good accounts from the competition?
Great question. This is a major threat to your business. The Pareto Principle, also known as the 80/20 rule, dictates that for most salespeople, 20% of their customers produce 80% of their revenue. If that is true for you, it means that losing one of your good accounts to the competition can be devastating to your business. That should be enough reason for you to give special time and thought to protect your good accounts from the competition.
But losing a good account impacts your business in additional negative ways. The individuals within your good accounts are typically those people who provide you special insights into what your competition is doing and what is happening in the market. Lose one of those good accounts, and you lose some of that special insight.
Your good accounts are the first places you take your new products and services. They provide you ready acceptance and honest feedback for your new offerings. You hone your presentations and sharpen your approaches because of the feedback provided by your good accounts. Lose one of them, and that special function they provide is also gone.
And then, of course, we all know that your good accounts are the places where you make the greatest financial return for your time invested.
So, it pays to think more deeply about how to vaccinate your good accounts from the competition’s enticements.
Here are four proven strategies to help you withstand competitive onslaughts.
1. Deepen and broaden your relationships.
It is difficult for your good friends to take their business away from you and give it to someone they don’t know or trust as well. Not that it can’t ever happen, but if you have great relationships with the key people in your good accounts, if you have turned them into friends and not just business acquaintances, you’ll put a layer of protection between you and your competition. So, you need to focus on turning the contacts in your good accounts into friends by deepening and broadening your relationships.
To deepen the relationships means that you work at enabling the key people within your good accounts to know you and your company better. Take them to lunch, go to a ball game together, create an opportunity for them to meet your spouse and visa-versa. Turn them into friends.
Extend the relationship to include the rest of your company. If possible, bring a number of the key people in your good accounts into your facility to meet some of your company’s other employees. Take your boss, operations manager, and customer service people into the account to meet them. The more comfortable they are with your company, the more of your people they know, the less likely they are to seriously consider the enticements of a motivated competitor.
To broaden the relationships means that you make sure that you know more of the key people within your key accounts, and that they know you. Be methodical. Make a list of all the important contact people within a good account. Then carefully evaluate the state of the relationship you have with each of them.
If there are important people who don’t know you, fix that quickly. Make sure that you have positive relationships with your key contact’s boss and the boss’s boss. Work as high up the hierarchy as possible.
While the depth and breadth of your relationship isn’t a foolproof vaccination against your competitors, it goes a long way to assure that your good account will keep you informed of what is happening, and will probably give you an opportunity to respond to any especially appealing enticements. It’s step one in protecting your good accounts from the competition.
2. Close any open doors.
Your competitors will be looking for ways to gain a foothold in your accounts. They’ll search for cracks in the door they can wedge into greater opportunities. Beat them to the punch by eliminating any opportunities. Carefully examine these issues:
It is not at all unusual to find that some prices in your good accounts have crept up to the point where they are not nearly as competitive as they may be in other places. Review your prices, and make sure that your margin increases haven’t put you in an awkward position. You may have to reduce some prices to prevent a competitor from making you look bad.
There may be some unresolved, lingering problems in your account. While they may not seem important to you, they provide an opportunity for your competitors to turn into an opportunity for them. Are there products that need to be returned? Invoices with discrepancies that need to be resolved? Items that need to be picked up? Training that was to have been done and never got scheduled? Information you were supposed to obtain for someone that you never did?
You’ve got the idea. If there are any unresolved problems in the account, a good competitor will find them and exploit them to his advantage and your disadvantage.
You may have some product weaknesses that your competitor can exploit. For example, you may have available this year’s version of some standard product. But your good customer is happy using an earlier version. You’ve never seen any reason to try to convert them to this year’s model when they are perfectly happy with last year’s. However, last year’s model may not stand up favorably to this year’s version for your competition. In that case, you may look bad when your competitor brings in this year’s hot new product and compares it to an older model that you are supplying. Shame on you. You should have detailed your version before your competitor got the chance.
3. Bundle your products and services.
You may be selling ten different items to one of your good accounts. Rather than continue to sell those ten as separate issues, package them together and write a contract that addresses all of them as a package deal. Get your good customer to acknowledge the package. That way, if your competitor tries to pick out one of the items you’re selling, they can’t because the price and service on one item impact the others. The more you can bundle items together into packages the more difficult it is for your competition to dislodge you on one of those items.
4. Formally communicate your value.
Arrange for quarterly meetings between your good customer’s key people and you and your boss. At these meetings, bring reports detailing aspects of your service, how much money you’ve saved that customer, the training you’ve done, the information you’ve provided, etc. Don’t be afraid to identify other areas that you could impact in the same way. This formal reporting raises your position in the customer’s eyes from that of being just a vendor, to that of a valuable partner. This separates you from the competition and makes it less likely that your customer will be attracted to a competitor that is just waiting to steal a good account from you.
While none of these strategies are guaranteed to put an impenetrable wall around your good accounts, the wise combination of them will make penetrating one of your good accounts an extremely difficult and frustrating project for your competitors. Sometimes the best strategy is a good defense.