Have you got the right target clients?
Isn't it obvious who the key targets should be? Those who bring in the most profit to the firm. Yeah but no but...
Many firms we come across have selected their target clients based on criteria lost in the mists of time but which probably have more to do with historic revenues and internal politics than anything else. More to the point, there's often limited commitment to the key target list so that it's impossible to galvanise the firm's resources into actions that will actually make a difference.
In our experience, there are some golden rules to selecting key targets:
- Apply some hard, quantifiable selection criteria of which having a good chance of a significant and sustainable increase in share of wallet is at least as important as absolute revenue or profit levels. It's amazing the number of so called key clients where there is no idea what addressable business is available and therefore the firm's current and potential share.
- Often more subjective factors can have more impact than hard criteria e.g. whether the designated client relationship manager is a natural team leader and prepared to embrace a key client process is probably of more import than anything else particularly if you're trying to breathe new life into your key client management programme.
- Be completely open with everyone in the firm about what the selection criteria are.
- Use portfolio techniques to weigh such factors against one another. Our tried and tested approach is based on work done at Cranfield and uses the following matrix (come on, we are consultants after all!):
Client attractiveness covers the hard and soft factors mentioned above. Each client is taken and scored against each of these attractiveness criteria. For a more sophisticated approach, you might want to apply a weighting to balance those criteria which matter most.
Then you need to work out what business strengths matter most to the firm's clients. Cranfield suggest that these should be based around the 4Ps - product, price, service and image (in their parlance). However, it is essential that this is based on more than just gut instinct and any client research the firm has conducted will shed light on appropriate criteria. You need to score yourselves and immediate competitors in order to work out your relative strength. Plotting your clients on the matrix will show which 'top right' ones are candidate for your key targets. And which 'bottom left' ones you should be divesting. - Involve the main people in your firm who have to manage key clients, in deciding on the selection criteria and plotting the matrix. This is the recipe for gaining commitment to action.
- ...er that's enough golden rules. Oh and have a great Christmas.
For more information on this, please contact Steve Blundell on 0207 220 4480 (email sblundell@grch.net )
