Bill Connor simply could not believe what just happened. Sitting in his car in the visitor’s lot with his head in his hands, he thought to himself, “What am I going to tell my boss?”
Earlier, Bill had just lost his largest account, Lassiter Logistics — $1.5 million in revenue to the company and $60k in commissions. “How did this happen?” he asked himself over and over again — “they loved me!”
Or did they?
After Bill works himself through the stages of grief, he’ll realize the signs of client defection was as apparent as the nose on this face. He simply chose not to pay attention to the signs. Bill was a self-professed “relationship guy.” As long as his relationship with the warehouse manager, Jim, was strong, he had nothing to worry about. He had a nine-year relationship with Jim that included golf, late-night dinners and ballgames. They talked every day and Bill was confident both he and his company were “rock solid.”
Unfortunately, this situation plays out across all industries every single day and yet, 99 percent of executives have not implemented a client risk analysis. In this world of big data, machine learning and predictive analytics, there is simply no excuse for not having an early warning system associated with client defection that provides actionable insights to “right” the relationship.
So, what were the early warning signs and where did Bill go wrong?
A key measurement in any client risk situation is relationships. Notice the word relationship is plural? You need to look at quantity, quality and tenure of those relationships. Unfortunately, Bill had a single-threaded relationship — with Jim. When questioned regularly by his boss about expanding the relationship, Bill always responded that “Jim insists everything go through him and that we should never go around him.” Sound familiar? Last month, Lassiter hired a new COO from outside the industry and, as fate would have it, the COO terminated Jim Cummings one hour before Bill’s meeting. A single-threaded relationship is a sure fire risk factor. “Changing of the guard” is another.
Another early warning sign was his performance versus SLAs and competition. If Bill had paid attention, he would have realized his company had more no shows, more tardy arrivals and more terminations than in previous years. Jim Cummings accepted Bill’s “growing pains” excuse and that his company would be back on track in no time. The new COO did not.
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Next, there was a reduction in the number of skills ordered over the past six months. Bill dismissed the reduction in orders because the revenue drop was masqueraded by a new customer win by Lassiter. Because there was no material drop in revenue, the revenue “red flag” was not apparent.
Finally, Bill did not cross-sell administrative, IT and finance. His single-threaded relationship was made worse by providing only warehouse personnel to Lassiter. He rationalized that Jim liked it that way. He liked specialization in vendors and often referred to the fact by not putting all his eggs in one basket, he would keep all his vendors “on their toes.” That seemed to make sense to Bill because no one could touch his $1.5 million.
When the new COO explained why he was making the change, he highlighted the increase in operational issues that Bill’s company caused Lassiter, but focused on the fact he felt they could consolidate the amount of vendors by 80 percent if the right key performance indicators were put in place. Not being familiar with other services/skills Bill’s company provided, the COO assumed his company was limited to warehouse personnel and was eliminated from the newly implemented managed service provider contract.
Bill thought the customer “loved” him. That was the prevailing view that Bill’s boss was sharing with upper management. Unfortunately, Bill’s company did not have a system in place for detecting early warning signs and lost a large and profitable customer.
Are your clients at risk?
MORE: Don’t be a sales schmuck
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[…] Bill Connor simply could not believe what just happened. Sitting in his car in the visitor’s lot with his head in his hands, he thought to himself, “What am I going to tell my boss?” Earlier, Bill had just lost his largest account, Lassiter Logistics — $1.5 million in revenue to the company and $60k in commissions. […]