Incumbent contractors in the B2B service world know winning the work is just the beginning: It’s the initial, necessary milestone in the lifetime of the contract and customer relationship.
Because contractors live by the revenue and profit realized over time, one monthly invoice by invoice, account retention is king – if contractors don’t hold onto that work, the money train ends.
And unfortunately for contractors, most customers have 30-90 day termination clauses in their agreements so they can end it without cause – regardless of 100% contractor compliance, stellar performance, or years of loyalty. Poof, contract gone, and sometimes on what seems like a customer’s whim.
So, when should contractors up their game to hold onto contracts and customers?
When should they implement retention best-practices to consistently do everything they know they should be doing?Lose 2 of your Top 20 Contracts and it Hurts Enough to Improve Account Retention Click To Tweet
When a contractor loses two of their top 20 contracts in a year, that means a huge chunk of revenue and profit disappears (Why two? One loss can be excused as normal attrition, but two, there’s fire under that smoke — unless of course that 1 loss was your biggest contract, then there are problems).
That two-contract loss can motivate contractors to seriously address their shortcomings in account retention.
While large contractors typically have a specialized group that focuses on serving large accounts, such as a Strategic, or National, or Global, or Key Account Group – their account retention efforts are often done piecemeal.
Account retention groups are often hybrid crossovers with dotted line responsibilities to multiple masters, straddling sales and operations silos.
Organizational Commitment to Account Retention
It would be kind to say account retention groups use many best-practices consistently, that contractors invest in doing everything they know they should be doing, but that stretches the truth a bit too far.
The operating costs of account retention groups are buried into the contractor’s G&A of account pricing, which has little room in the first place.
As a result, account reps are left to do more freelancing than a business would consider intelligent, they do what they can on more of an individual, heroic basis, such as:
- Trying to save accounts after service failures – whipping operations & soothing irate customers
- Seeking to establish personal connections higher up the customer food chain
- Collecting customer-confidential, inside info helpful to the contractor
Contractors’ gaps between the importance of account retention and their retention investments can be fatal to business survival. Besides the lost revenue and profit, reacquisition costs can skyrocket, and replacement contracts often bring much lower profits.
But until the pain of losing two of their top 20 contracts, many contractors believe they’re immune. And by then it’s too late to avoid the pain.
AVOID THAT PAIN, we can help implement your Account Retention Best-Practices – and how they are implemented matters. Contact Chris Arlen, +1 206.909.5860, firstname.lastname@example.org
First published as “When Does It Hurt Enough?” on LinkedIn.