“We’re not looking for you to open new customer accounts.”
One of my contracts received the message above; he works as a major account manager for a multi-national company; the message came from his line manager and was a directive passed down from the CEO and FD.
It’s strange when you consider that the company (let’s call it – XYZ) is a global brand, has an active sales process, and the business activities are split between proactive and reactive.
XYZ has been locked in a three-way sales battle with its main competitors for some time. All the players in the marketplace sell the same commodities at pretty much the same price, and any gap in customer service level differences is hard to define.
Therefore, the directive was a surprise; stopping the hunter activities to concentrate on the farmer role has rattled several cages.
It’s always hard to understand when this type of directive is used; I had a similar occurrence many years ago when being onboarded into a role that required me to maximise the established accounts in one profile whilst closing down accounts in a different profile. In my case, the mission statement resulted from a European monopolies court case decision.
Not taking on any new major accounts reasoning for this type of directive could be because of several trading conditions; however, none of those listed below is believed to be the case for XYZ.
- Supply chain disruption.
- A legal decision or impending court action.
- Cash flow – over-trading.
- A merger or acquisition is imminent.
Sales and Marketing core approach
Sale and marketing operations share the same imagery for business success. Prospects are sorted or encouraged into the sales funnel, and prospects are processed to weed out the chaff, leaving those prospects to be converted to customers.
Years back, salespeople were often categorised as one of or being a mix of Sales styles: Gatherers, Farmers and Hunters. ECommerce has removed or obsoleted most of the gatherer type of sales roles; today, most sales roles are a mix of farmer & hunter; some are hunter only, but this is in the minority.
In my first sales role lasting for over six years, I was 100% hunter, a tuff gig; however, it gave larger than average commissions. Today depending on the market place the mixture of time spent as a farmer and a hunter varies; most internal-based sales roles, typically SDR or BDR sales roles, are more hunter than a farmer. Currently, most external-based sales role is more farmer than a hunter.
The Sales Funnel.
Some add or split the sales funnel stages further, but I’ll keep with the basic version for this post. In the early days of my sales training, my tutor described the sales funnel as seen here; however, he added a series of holes in the side of the funnel, and from these holes leaked suspects, prospects and returning customers.
The second image I was present with was my customer base, represented as a tin can like the sales funnel; the customer base tin can had several holes punched into its sides, explained as simply the losses of being in business.
Whilst these holes were impacting the integrity of the tin can, at the same time this leakage of the customer base was going on, the can was also having further holes drilled into its side by my competitors.
Any customer base suffers from natural leakage; the most common reasons are:
- Business commitment/relationship changes due to key influencers leaving, retiring or joining others ventures.
- Change of direction decided at board or director level.
- Merger, acquisition or customer going out of business.
- Competition activity
Political, Economic, Social, Technological, Legal, and Environmental. PESTLE shows the six influencing factors.
As most of the PESTLE is external driven and therefore not controllable by even global businesses or brands, PESTLE changes and the resulting fallout cause most businesses to act reactively and often retrospectively.
All things equal
XYZ has been locked in a three-way sales battle with its main competitors for some time. At the beginning of this post, I wrote All the players in the marketplace sell the same commodities at pretty much the same price, and any gap in customer service level differences is hard to define.
Therefore, the directive was a surprise; stopping the hunter activities to concentrate on the farmer role has rattled several cages in national accounts.
Farming and Hunting
Now depending on the businesses marketplace and activity, at the time of being first tutored about the sales funnel and customer base tin can, my then sales role saw a split of 60% in favour of the customer base tin can and 30% prospecting and 10% following up transient business past on from other sales territories.
My contact sees his sales role time split approximately as 90% repeat customer accounts and 10% prospecting. However, during his tenure of just over five years with XYZ, even from day one, XYZ, he’s needed to spend time ‘repairing fences and putting out fires,’ with a significant rise in the portion of that time increased in the last three years.
Most of his accounts are spending large amounts, and his targets are set against volume and margin due to constant fluctuations in raw materials prices. The increased amount of time now needing to be spent on ‘repairing fences and putting out fires;’ seems to be an indicator of increasing issues within the organisation; however, despite the acknowledgement by the senior management of issues, little seems to be changing.
XYZ also operates from several regional locations; most locations are the result of past acquisitions; for these regional locations, the sales activity is split more reacting to customer enquires, any survey of activities at the regional level would reveal significant amounts of time being spent on the gathering and processing of orders.
The regional business is subjected to variations in turnover due to transient customers and seasonal factors. None of the regional locations has received the same directive to stop opening new accounts. Some of the national account people questioned why the regions had not received the same instruction to stop opening new accounts, no clear answer has been given by senior management.
Most regional locations are dependent on repeat businesses; each has hundreds of past accounts, and many accounts only transact business a few times a year; the regions are staffed based on a model based on customer services, and the regional structure makes them more gatherer-farmers and seldom hunters. this seldom hunter may explain the reason for the desist notice on new accounts.
A lack of hunter business is mostly down to resources and skills; in those regional locations with an external salesperson, the salesperson has most often had internal promotions from the customer services team. Thus, they take the easy route to business. Sales training is not an activity high on the agenda.
National ‘V’ Local
When HO issues a directive to its national accounts team, it caps the business at a predictable level. A decline in turnover is accepted as inevitable, but given the lower margin gained from National accounts, XYZ is continuing to concentrate on margin and not turnover.
Whether they have taken into account the realities of naturally occurring seepage due to factors of business life expectancy, economic stability, political fallout and the simple actions of their competitors eroding the customer base are for future analysis.
For my contact, the directive has made him feel like he’s working blocked off; the challenge of working as a farmer 100% is the only option left to him.
Uplifting the spending and margin from his established customers is not easy; if it was easy it would have already happened. Taking business away from the competitors is the obvious action; interestingly, many accounts holders trade with XYZ and its competitors, and no calculation has been made but it is thought to be as high as 40% -50%.
Uplifting the spending from the account holder that trades with your competitor is not simple, one fallout could be a price war, which is very easy to start and hard to stop; often described as a race to the bottom, avoiding such means focusing on need lead resolutions and not price lead.
My contact welcomes the release of potentially 10% of his time on one hand; however, as a quantifiable resource, it is not the largest time his company could release, reducing the amount of time taken up by him and his colleges in national accounts spent ‘repairing fences and putting out fires;’ could in his estimate give back 20% plus of his time, unfortunately, is not in his control for that to happen change to needs to happen elsewhere, and driven from the top down.
The drivers for change
The cost of ‘repairing fences and putting out fires’ is high for my contact and his company. Most concerningly, it opens up constantly the possibility of customer dissatisfaction. And probably explains why so many of his XYZ customer accounts also hold accounts with their competitors.
At the being of this article, I wrote, ‘XYZ has been locked in a three-way sales battle with its main competitors for some time. All the players in the marketplace sell the same commodities at pretty much the same price, and any gap in customer service level differences is hard to define.’ XYZ is not the only business that finds itself in this trading situation.
The routes to change are blocked
An interesting perspective. I learned from my contact that most of the management started or previously spent time working for one of XYZ’s competitors.
XYZ appears from the outside to have an integrated culture of accepting that the ‘repairing of fences and putting out fires’ is part of its doing business in its market sector.
The odds are that all its main competitors also share this vision, as It is not likely that a new player will join the game any time soon. The commitment, vision or need for change in XYZ, or its competitors is negligible.
Having started to look at: We’re not looking for you to open new customer accounts.” the reasoning is still unclear; it has become clear that XYZ and its competitors and my contact has bigger fish to fry.
Thus the status quo will continue for now; likewise, for those that need to purchase the goods and services in XYZ or its competitors, the game of musical chairs continues.
If you always do what you always did, you will always get what you always got. [Albert Einstein]