Should You Cull Your Account Base?

PaintingWe’ve written in the past about how the key to success and sustainability is ensuring that your account base is profitable, and having robust client profitability metrics are critical to achieving that goal. It’s easy to say this, but much harder to implement because the implication of this analysis is something that most managers and salespeople find completely unintuitive: cutting clients off from doing business with you.

Years have been spent developing these relationships and these clients are paying hard dollars for your service, so why is it rational to turn that spigot off because some financial model is telling you that the account isn’t a good one. Instinctively sales managers start challenging the results of the profitability analysis, putting into question the assumptions that were used in cost allocations or other methodologies. Salespeople are usually closer to their clients than they are to the finance guys or consultants that put the analysis together, so they will be reluctant to bring up these issues with clients. Inaction often results.

So comes the question: should your organization force a culling of the account base? The answer is ‘yes’, but it has to be done in a disciplined fashion that ensures three things:

1) Accounts that are growing, but have not reached a level of acceptable profitability, are ring-fenced and provided a chance to prove their potential

2) Accounts that are going through temporary difficulties are given fair consideration and an opportunity to reestablish themselves

3) Open communication: The shut-off process should not be a simple discrete event, rather it’s a communication process over several periods where the salesperson and sales management learn about the client’s position, condition, and intent. They also communicate the firm’s new client strategy and economic realities.

The discovery process to either categorize the account or initiate frank discussion with a trouble account often leads to better understanding of clients over all and increase in business over time. In other cases, it leads to civil, less painful cease of business that may resume at some point in the future. These outcomes are much better than the alternative of bitter former clients who can negatively impact your reputation.

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