Account Potential

Estimating account potential is the foundation of strategic account planning. This can be sales potential, or profit potential, or both. But it is not just account potential that we need. We must compare account potential to current sales to provide an estimate of the account's potential that is available for account growth.

Unrealized account potential is what we are really after. You may have a high potential account but with sales very close to this figure. There is little or no room to grow the account. Time and resources spent here in excess of the amount needed to maintain the account are wasted.

Estimating account potential is a straightforward analytical chore in most cases. Data vendors like D&B can provide industry and establishment estimates for an amazing range of products and services. We address this in more detail in our Estimating Account Potential and Data Hell, As Usual pages.

Unrealized Account Potential

After you have estimated the potential for each account in a territory, you simply subtract current sales to get unrealized, or available, growth potential. Then, rank your accounts in order of decreasing unrealized potential.

When you do this, you are likely to find nearly all of your best customers at the bottom of this list. Why? Virtually all of their account potential has been tapped. Unrealized potential is very low.

What does this mean strategically for your best accounts? In most cases, your best accounts should remain in your top strategic tier but the strategy should be to shift as much tier one time and resources as you can to your highest potential accounts in tiers two and three.

This is likely to be the easiest part of strategic account planning. Tiers two and three are where the big payoff lies.

Now The Hard Work Begins

Removing your best customers — your tier one accounts — from the unrealized potential list provides the starting point for identifying tiers two and three targets.

Starting at the top of the trimmed unrealized potential stack, you first have to figure out where you already have some active contacts or standing. You may also have some small sales volume in many of these. In any case, these accounts are probably good candidates for a tier two strategy.

When you remove your tier two candidates from the unrealized potential list, the remaining accounts are tier three targets: High unrealized potential but you are starting from scratch with most or all of these.

For each of the tiers two and three candidates, you need to list your current access points and strengths. Next, you should list any negatives or weak points. For example, a major account may have replaced you with a competitor some years back, perhaps on a pricing or personality issue. But you still know some people there and may be able to plot a return.

This is typically a fairly long process if you have as many as 50-75 such accounts. It may take considerable research and legwork to get enough information to be able to assess their true potential. This is the hard work.

When done, you should have the basis for reordering your tiers two and three list. Likely responsiveness is the key.

Potential Adjusted for Responsiveness

The last step is to estimate the likely responsiveness of each account to the various strategic approaches that you may consider. This involves developing an approach that seems practical for each account and making a rough guess as to the account's likelihood of responding favorably.

Some accounts will simply be hard cases that are unlikely to respond no matter what you try. Responsiveness in most cases might be zero.

Others may be open to new sales approaches that are simply different from those of your competitors. Some may just need a long-term effort to develop relationships with key people in the buying process.

In the end, many accounts may simply be unknowns in this respect. Once you have done this responsiveness-adjusting exercise wherever you are able to, you have the basis for a solidly grounded account strategy. The next step is action.

Experiment, Learn, Improve

Action — implementing your initial strategic account plans — always entails some degree of risk. Some of your plans will not work at all, or at least not as well as expected. Here is a risk-minimizing, results-maximizing, best practices approach:

On a small scale, try out as many ideas as you and your associates can devise. Track the results to see if there is a significant positive impact. Figure out why the approach worked and learn so you can teach others. ...More ...

 

Potential vs. Effort

Despite inevitable data problems, developing a decent account potential estimate is usually not difficult. What is a lot harder is adjusting that estimate to reflect the account's likely responsiveness to a particular selling strategy.

How might the account respond if I called on them weekly? Monthly? If I brought along our experts? If I invited them to a special workshop on an issue important to them?

The short answer is that most of the time you will not know. The best you can do is guess and then try your guess out.

Our punch line page deals with this experiment-and-learn approach in more detail. It is nearly always critical to success.

The good news is that, after you and your associates have tried a number of account-specific approaches, you will have a data set that begins to tell you what works and what doesn't, and why.

Subsequent approach tuning and refinement can greatly enhance their impact over time.

Experiment to learn. Then share what you have learned to leverage your combined knowledge.