Whether you are an account representative, a regional manager, a vice president of sales, or the company owner, this is the nightmare that creeps into the back of your mind every so often.
Here’s how the story plays out:
They’ve been with you for years. Your sales representative is tight with the Key Decision Maker. They let you use their logo on your web site. The account is highly profitable and makes up a significant portion of your revenue. They score highly on your satisfaction surveys, so you have never considered them to be at risk…
And then BOO! – they are gone.
We see it happen all the time, and the simple reason is that companies often mistake customer satisfaction for customer loyalty. The reality is that not all satisfied customers are loyal. In fact, according to Bain and Company, 60% or more of customers who disappear, score themselves as satisfied or very satisfied just prior to switching suppliers!
The good news is that you have a choice. You can wake up, rub your eyes, and tell yourself “Whew, that was an awful nightmare!” – then do what it takes to avoid the horror of losing that account. Or you can stay the current course and wake up one day in the middle of a truly gruesome situation.
Here are three steps that will help you avoid a real-life nightmare:
1. Stop Running “Satisfaction Surveys” and Start Measuring Loyalty.
Net Promoter Score® is the number one predictor of future revenue and it’s also the standard process that thousands of global companies use to identify customers at risk. Customers who are satisfied are simply saying “you do what we ask you to do.” Customers who are loyal will tell you when you screw up and then work with you to improve the situation. And they will recommend you to other potential customers.
2. Change the “Bow Tie” Relationship Model.
The bow tie model occurs when the account representative is the sole conduit to the customer – and their key contact is the gatekeeper to all other relationships in the account. This creates significant risk. If either the account rep or their key contact leaves, then your company has no relationship left. When a key decision maker leaves, we call this “The Changing of the Guard®”. Having relationships at multiple levels between your company and the customer will reduce the risk that your customer will leave unexpectedly. Butler Street recommends having a 3x3 relationship model, meaning that three levels of executives within your company should be connected directly with three levels in the customer.
3. Conduct Quarterly Business Reviews.
The purpose of conducting a “QBR” is to ensure that your company is aligned with the strategic initiatives and metrics of the customer. The format of a QBR is critical, in that everything should be presented in the context and language of the customer. When presenting information such as SLA performance and innovative solutions you’ve provided, they should support the customer’s initiatives. And discovery questions should be designed to uncover new initiatives and metrics that will be important to the customer going forward. QBRs that are regularly presented, and are done so from the customer’s “Operating Reality” – i.e. from their perspective – reduce the risk of customer defection.
No one wants to experience the nightmare of losing a big customer, but we see it happen all the time. It’s scary, and can send shock waves through your organization that can disrupt the company for years to come. Executives who sleep well at night measure customer loyalty, not satisfaction. They have 3x3 relationships with their customers, and they conduct regular QBRs.
To learn more about how to avoid the nightmare of losing your biggest customer, Contact Us.