It's not hard to find a professional services expert who will say, "Repeat business is your most profitable business. To generate more repeat business, focus more people, energy, and effort on satisfying the specific needs of your best clients."
Still, few companies actively pursue instituting major changes at their firms to focus said efforts on said important clients. So it's worth making the case once again. This time, the case is made by recent McKinsey research on building a top consumer goods sales force.
Consumer goods sales forces? Not just the right fit, you say? I assure you, it is. Read on.
In a recent McKinsey research brief authors Jeremy K. Allen, Sherian S. Ebrahim, and Gregory C. Kelly report 3 key practices that top top consumer goods companies employed (as measured by top market share growth, by revenue, relative to their peers in the same category) when reorganizing their sales forces.
Best Practice 1:
First, the top sales organizations concentrated more resources on a smaller – and more thoughtfully selected – pool of retailers than the typical manufacturer did. They served half as many customers through key account teams, on average, than other manufacturers – yet appointed a third more people to each team. Indeed, in our experience, the largest US consumer goods makers commonly rely on just 10 to 15 customers for 50% to 80% of their sales, depending on their mix of categories.
While it may seem a bit obvious (kudos to McKinsey for discovering the Pareto Principle)
, it doesn't mean it's any less true. Top companies, especially consulting and professional service businesses, focus more of their resources on the most important subset of their client bases.
Best Practice 2:
The second way top consumer good manufacturers excelled was in organizing their key-account teams along cross-functional lines so that they could better serve the retailers, whose demands on manufacturers, we find, increasingly extend into areas such has customized packaging, shopper marketing...and even product development.
The sales force winners' teams were more likely than those of other manufacturers to include not only sales personnel but also experts in category management, customer marketing, finance, and supply chain operations.
If this were a study of service businesses, it might read something like this. "The second way top consulting and professional service business excelled was in organizing their client times along cross functional lines. For example, an accounting firm – instead of just having a partner or business developer and tax experts on the team – assigned an M&A
expert, a growth and profitability expert, and an industry expert to the team from the outset.
"This helped the accounting firm meet the increasing demand from clients not only to help them file their taxes, but to compete in their industries and realize the most profit and overall value from their companies."
In other words, the top consumer goods companies assigned more people who could actually add value to the customers' businesses, and that made a difference for the customers...which made a difference for the manufacturers as well.
Best Practice 3:
Third, the sales force winners actively customized their services to meet the needs of the individual retailers – in part by collaborating more intensively with key accounts than the other manufacturers did. The winners not only called on key retailers more often but also said they had taken greater pains to send their most talented sales and customer service employees to work with these clients. (Emphasis added.)
Need I say more? (I will, of course.) The consumer goods companies that delivered the most frequent contact and the highest quality teams were more successful than those that didn't.
Still think we in consulting and professional services have nothing to learn from the top consumer goods companies?
Let's assume you waved your magic wand and:
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Identified your top accounts and assigned more people and resources to them
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Organized your key account teams across cross functional lines so that you could deliver higher value to your clients (even before they request it)
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Collaborated more intensively with top accounts while also assigning your top resources to each high-value account
If you did all three, what would happen to your service business?