When picking fruit from a tree, the low-hanging fruit is the easiest to pick. The same is true of business development: some work is easier to win than others. And the easiest work to win is from your existing key clients. And why is this so?
Well, with your key clients, you know them and they know you; strong relationships are already developed. Secondly, the client trusts you and without trust you won’t sell advisory services. And thirdly, your knowledge of their business and plans puts you in pole position to proactively identify their advisory needs.
So, when trust is built and relationships are strong, growing existing clients is the easiest work to win. But you still need a structured programme for managing and growing these key client relationships, and this is where you need KAM. So, what is the evidence that developing key clients is crucial?
1. Revenue and profits are concentrated in key clients
The 80/20 rule applies. According to Bain & Company1. the top 20% of a firm’s clients account for a disproportionate share of their revenue and profits. Yet, structured programs to manage and grow these relationships remain inconsistent across industries including professional services.
2. It’s more cost-effective
According to Harvard Business Review2., acquiring new clients can cost up to 25 times more than retaining existing ones. Key account growth is a lower-cost pathway to increased revenue.
3. Loyalty grows with relationship breadth
Data from my colleagues at Beaton indicates that client loyalty increases as clients use a broader range of your services. Where respondents are asked, “how likely do you think [firm] will still be the [industry sector] firm you use most in three years’ time?” positive responses increase the greater the number of service lines used. And according to Harvard Business Review3., “loyalty leaders” grow revenues roughly 2.5 times as fast as their industry peers.
4. Clients want strategic collaboration
Beaton research also indicates that buyers want a more strategic collaboration with suppliers. Beaton data consistently ranks “expertise in your area of need” and “understanding your business” as first and second drivers of consideration and final decision to purchase regardless of professional sector. This perspective is supported by academic research4. which indicates that a collaborative partnership aligns strongly with success.
In short, there is evidence that a KAM programme can drive up client loyalty and growth, focus the firm’s BD efforts where they matter most, reduce the cost of acquiring business, and increase strategic collaboration.
A better way to grow your firm
But still, many clients tell us they spend too much time writing bids with uncertain outcomes or chasing new clients in an ad-hoc way. This leads to lots of activity but not much progress.
Although implementing a structured approach to KAM takes effort, the clients are already at the table, the trust is earned, and the opportunity is real. The low hanging fruit is ripe for the picking.
Ready to get started?
Wheeler Associates and Beaton help professional services firms design and implement KAM programmes that build loyalty and drive growth. If your firm already has a KAM programme in place, let us use our diagnostic to assess how this programme performs against best practice. Our research indicates that just 24% of the larger PSFs have robust KAM programmes in place.
Sources
1. Linking loyalty and growth, Bain & Company, March 2010
2. The value of keeping the right customers, HBR, October 2014
3. Are you undervaluing your customers?, HBR, January/February 2020
4. Collaborative B2B sales partnerships in supply chains, European Research on Management and Business Economics, September – December, 2023