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It's all about focus

Success requires aiming at the right accounts

by Jim Ambrose

If you are a salesperson or sales manager, do you have a process to be sure you are investing time and effort on the right market and on the right customers to maximize return on effort? That is, to AIM your business?

AIM is the first important part of my latest publication, Cracking Accounts.

The AIM process provides the analysis for the best return on effort (ROE) that points to the best accounts to crack and the best customers to keep. I call the practice of focusing on the best customers to crack Right Customer Acquisition (RCA), and on the best customers to keep Good Customer Retention (GCR). The purpose of AIM is to direct the resources applied to the selling activity toward the RCA and GCR accounts. This is the compass for the salespeople and for the business.

The practice of AIM is centered on maximizing return on effort by identifying the best and easiest accounts for the salesperson and the business. It points where to invest time and resources based on the probability of cracking those accounts.

In the typical assigned account package, there are low-sales accounts with the expectation the salesperson will grow business with these customers. Too often, a salesperson will spend an equal amount of time and effort on all of the low-sales accounts or too much time on the wrong accounts. The AIM process of Cracking Accounts is to identify the best accounts for the business and the easiest low-sales accounts to crack.

I call it the “AIM 4x4” analysis.

There are four criteria that determine if an account is the best and easiest to crack (Right Customer Acquisition).
1) Customer size . . . potential
2) Core competencies
3) Knowledge of the account
4) Do we know what they value?

AIM 1: CUSTOMER SIZE . . . POTENTIAL
The total potential of the account must be identified. Total potential is the total purchases of products the customer makes in your trade or market space. The important point is to focus the salesperson and business resources on cracking the high potential accounts. The argument for identifying potential is an easy one. If you are going to invest expensive resources to gain a 30% share of an account, the larger the account, the larger the sales and margin dollars.

An easy way to apply the AIM process is to create a simple analysis tool (below). It is a great tool to use in discussing the accounts in the package. For the relative potential of the account, score the account a one through four, where four is the large potential account relative to the others.

AIM 2: CORE COMPETENCY
Does the account fit the core competencies of your business? Take the easiest approach to cracking accounts by choosing the ones that seem to match your core strengths in the market. Your core competencies include the customer’s brand preferences, geographical locations and service requirements.

Choose the customers that prefer the brands you carry, are involved in your primary service market, require your strong suit in service requirements, and pay their bills in your range of tolerance.

A low relative score will be on the accounts that currently choose not to use your primary brands, are on the fringe of your service area or require more than your current service package. However, do not eliminate these accounts from the account package just because of this particular score. They will need a lot of work to convert to a different brand or service offering. But, you want to uncover the easiest accounts to crack and the accounts that score a four in this category are most important. The purpose of AIM is to be sure lower scoring accounts do not consume resources critical to the better scoring 4x4 accounts.

AIM 3: KNOWLEDGE OF THE ACCOUNT
AIM 3 focuses on simple but important questions about the account.

• Do we know the right people?
• Do we know what they buy?
• Do we know their current choices of suppliers?
• Do we know why they buy from them?

Knowing the right people at the account and their favorite suppliers and why they buy from them will help you determine how you will approach cracking the account. Competitors are not uniformly good at all of your RCA (Right Customer Acquisition) accounts. They may have the business because no other supplier is very good either and they happen to be the strongest of the group. Large accounts where you have low share will always have a better relationship with your competitors than they will with you; that is why it is a high-potential but low-share RCA account. However, there is a variation to the competitor’s strengths across the RCA accounts. You want to identify the easiest ones to crack.

This step In the AIM process should always be a work in process. Getting information about the customer is an evergreen event.

AIM 4: KNOW WHAT THE CUSTOMER VALUES
Understanding what a customer values is an often-neglected evaluation. Salespeople tend to get in their own way as they drone on selling the customer on the distributor’s “value add.” If the customer is even listening, s/he is comparing what the salesperson is selling as far as value to what s/he really needs.

It is a far better use of resources and an easier path to cracking accounts if you first understand what the customer values, then commit to providing it. A customer value audit will uncover information your competitors do not have. A customer value audit is a series of questions by the salesperson and the manager during face-to-face sales calls. Here is a sample audit question: When dealing with all suppliers, what causes you to have a bad day?

This is one of my favorites, because the customer will immediately start to talk about poor service and issues caused by his supplier. This question also provides the perfect opportunity for the manager on the joint sales call to ask the if-then question: “If I guarantee you we will not do those things, will we substantially grow our business?”

When the RCA customer answers “yes” to that question, it means three things.

• First, this customer values service and quality. Price is important but so is quality service.
• Two, you have a clear understanding of what you need to provide to win the business.
• Three, you know where to invest time and resources in the operation side of the business. It is your perfect compass for cost productivity improvement. As you concentrate your team on providing the perfect service to this new RCA account, you are guaranteed to be spending time and resources with the best return on effort.

Another huge benefit of conducting the customer value audit is to uncover the value stream you would not want to provide, and therefore you identify that account or accounts to wean out of your selling efforts. For example, when conducting the customer value audit, you are told they value 120-day dating, low price and a 100% restocking policy regardless of condition or manufacturer return policy. Conducting that audit at the early stage of the AIM process just saved you a lot of time, energy and resources trying to crack an account that will eventually suck the money out of the business. You uncovered the loser account before it became a loser account.

The AIM 4x4 scoring for customer value audit involves this question: Do we know what the customer values and are we prepared and committed to provide time and resources to crack this account?

Finishing the hierarchy analysis for the accounts in the account package, each potential RCA account will have four numbers associated with it. The accounts that make it through the analysis with fours all the way across are the low-hanging fruit and the first and best accounts to be sure that everyone and everything is focused on cracking. These are the AIM 4X4 accounts, and everyone in the business must know who they are and what they need to do as part of the team to crack the accounts. The scoring discussion on each of the four criteria provides the structure for a thorough sales review and planning session.

In the exhibit on page 36, it becomes clear where the salesperson, sales manager and the business should focus their time and effort and where the salesperson should spend more time developing information about the account using the AIM criteria as a guide.

Processing the accounts through the 4X4 analysis is a continuous part of account package management. I believe in keeping things simple. The AIM 4x4 tool shows the discussion notes on the progress with each account. I encourage my clients to use their current report structure and add additional columns or provide more space between accounts to make notes on the AIM categories and score.

The key is applying the thought process, not filling out more sales reports. Use this tool, apply this thought process and your easiest accounts to crack will emerge.

Jim Ambrose, author of Cracking Accounts, has been engaged in distribution sales and management for more than 35 years. Visit www.jimambroseworkshops.com.

This article originally appeared in the May/June 2013 issue of Industrial Supply magazine. Copyright 2013, Direct Business Media.

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