Richard Hilton: Why customer experience is the backbone to sales transformation
by Richard Hilton, Managing Director EMEA at Miller Heiman Group
Sales organisations often take the permanency of their customers for granted — a big mistake in the age of ceaseless change, when sales leaders must continuously grow the size of existing accounts in addition to capturing new customers.
Closing the first piece of business with a new customer and nurturing a relationship with an existing customer involve very different challenges. But the huge gap that exists between customer service and sales in most organisations exacerbates the challenge of growing existing accounts.
In this article, I’ll discuss how sales organisations actually fare at winning new business and growing existing accounts, referencing key data from the annual 2018-2019 Sales Performance Report: ‘Selling in The Age of Ceaseless Change’ from CSO Insights, the research division of Miller Heiman Group. From these key insights, I’ll argue the case for a greater focus on customer experience rather than the sales process as the backbone for sales transformation.
Capturing new accounts
Sales leaders most commonly cite capturing new accounts as their priority goal for the year (57.3%). However, in reality, revenue from new customers accounts for only 29.9% of total revenue.
Very few sales organisations cite their ability to close deals with new customers as a core competency. Almost 70% of companies rate this aspect of selling as one that needs improvement, if not a major process redesign — it represents the lowest-rated operational metric in CSO Insights’ study.
New account selling also takes up increasingly more time. Back in 2013, 30% of sellers reported a sell cycle of three months or less, while this year the figures have fallen to 25.4%. At the other end of the scale, sell cycles longer than one year have increased from 10% in 2013 to 18.1% this year.
So, how can sellers capture new accounts more effectively? These three insights make a statistically significant impact on new account capture:
- Sales organisations that prioritise new accounts improve their ability to close business with new customers. Almost two-thirds of the respondents (65.4%) that exceed expectations at prioritising prospects express confidence in their ability to close new business.
- The highest performing sales organisations, and those that excel at closing new business, demonstrate a high degree of alignment between the sales process and the customer’s path. Unfortunately, such alignment is rare, and only prevalent for 21% of respondents.
- Proficiency in opportunity planning and execution produced the largest increase in win rates of forecasted deals. But only a minority of companies actually leverage opportunity planning to close deals with new customers.
Increasing penetration into existing accounts
Sales leaders cite growing existing accounts as their second-most important objective. When organisations struggle with lead generation and new account capture, they rely more heavily on existing relationships. As a result, sales income derived from existing customers accounts for 70.1% of total revenue.
From a cost of sale perspective, it costs approximately half as much to secure repeat business than it does to secure new business. The average sales cycle to close existing customer opportunities is 3.8 months versus 7.2 months for new customers. Yet despite these advantages, only one-third (34.6%) of sales leaders feel that account expansion is an organisational strength.
Organisations struggle with account expansion because they approach the problem in a vacuum, with too strong a focus on themselves and not enough on the customer’s perspective. Clearly the ROI from cross-selling and broader account penetration involves more sales, but the real purpose boils down to creating customer loyalty, which in turn reduces customer churn.
Business leaders should avoid narrowing responsibility for customer loyalty down to just its sales elements. Improved penetration of existing accounts requires consideration of customer relationships before and after the sales process. Consequently, account management must partner with sales, marketing, service, customer success, relationship management and all other customer-facing roles and functions.
Best practices for increasing penetration into existing customer accounts include:
- Fail to plan, plan to fail: Investing more time in capturing new accounts does not equate to better account management. CSO Insights’ data shows no correlation between time spent on post-sales tasks and success at renewing business, reducing customer churn or strengthening relationships. However, just as planning matters when capturing new accounts, companies with an aptitude for account planning report statistically higher win rates and quota attainment in existing accounts.
- Bridge the gap between customer service and sales: Meeting new demand for greater customer service for existing customers requires a blurring of the lines between sales and service. Some businesses tackle the challenge head on by creating dedicated customer service teams responsible for nurturing relationships with existing account holders and renewing business with those clients. Others take a more informal route by aligning customer service resources with sales resources, creating teams that can handle customer satisfaction and retention.Both approaches show merit and reflect changing attitudes in the industry. By adopting a customer service approach to sales, organisations can re-classify how they manage existing accounts and customers, opening up opportunities to tap into previously unrealised revenue streams.
- Thinking beyond cross-sales: Account planning should focus not just on how to identify and close additional opportunities, but also (and more importantly) on how to help the client solve business problems in a way that increases their loyalty.
- Explore new technologies: Organisations increasingly rely on sales technologies to improve effectiveness and efficiency. The recent CSO Insights 2018 Sales Operations Optimization Study found on average, that the average organisation used 10 different sales technology tools, with plans to implement four more in the next 12 months. Artificial intelligence tools come into play here, not only streamlining research and analysis, but in some cases completely automating the renewals process. With time a valuable resource for most sellers, it makes sense to use technology assets to improve the results of account management activities, without increasing the time invested in them.
Winning in a world of ceaseless change
Change can propel a company forward or leave it trailing behind the competition. In the current landscape of ceaseless change, sales leaders must seriously evaluate their self-proclaimed weaknesses in capturing new accounts and increasing penetration into existing accounts. The data in the 2018-2019 Sales Performance Report tells us that organisations opting to put a greater focus on customer experience rather than the sales process as the backbone of sales transformation will successfully ride the waves of change and reap the rewards.
Richard Hilton is Managing Director EMEA at Miller Heiman Group, the largest dedicated sales-performance company in the world. He has a track record of driving meaningful growth in the sales performance industry and a wealth of rich, complex sales and sales leadership experience running people-oriented businesses within the professional services area. Hilton’s passion for generating results through innovative products and delivery methods, coupled with his consultancy-led approach, will enable customers to drive revenue and create efficiencies in their sales and service functions. Hilton has worked for some of the biggest brands in the industry, including ADP, Mercer and Barclays. Most recently, he served as sales director for Capita Employee Benefits, where he led a team who introduced powerful, technology-based solutions to the market.