Key account management – the penalties of getting it wrong!

A local business near to us has been highly successful over a number of years.  It is a salon that has expanded to provide a range of services.  It started off as a “nail” bar, added tanning, and in more recent times has ventured into the world of hair removal, massage, make-up, pedicures and are now an Elemis franchisee.  Newer premises were leased 3 years ago and it’s always been a lesson in cross selling watching the staff casually drop into conversations about the next appointment, Mother’s day offer, holiday package on tanning etc.

Sadly though, they are losing customers.

It’s not always about the price.

And more importantly, those people who readily refer others to their services are now actively encouraging people to go elsewhere.  So what’s caused this downturn?

They increased their prices in early December….the first time in over 4 years, so that’s quite reasonable. What was a bit more of a shocker was the percentage increase of 30% overnight.

Now this may well be considered very justified, given that it was the first increase in 48 months….and let’s not forget, business is business, not charity!

What they forgot though was the power of communication.  In the preceding weeks, when sitting with clients, they’d had the opportunity to discuss the reasons for the increase, and indeed why they’d held their prices for so long.  Instead a small notice was placed by the cash desk and unsuspecting regular clients were hit with an extra hike…all just before the Christmas holidays.

There were grumblings – and lots of them, not only in the shop itself, but interestingly it radiated out to those regular clients and became a topic of conversation at social events, with many saying “I’ll be going somewhere else”.  It wasn’t so much about the price increase, because let’s face it, it’s a luxury that can easily be dropped from someone’s monthly outgoings.

What irked customers was:

  •       the lack of communication about the fact it was coming
  •       the timing –  many had budgeted for that little luxury in the run up to Christmas       and office parties, and to find they were forking out more, just made them mad
  •       the customer experience has also noticeably suffered.  Due to the increased           popularity in recent years, they haven’t invested in more staff, hence the same number of people are now doing a variety of jobs whilst still trying to provide a customer focused service. With fewer people doing more work, conversations with clients are disjointed and the opportunity to up-sell and cross-sell other services is lost.

Key account management whatever your business is a skill.  It is not just about looking after your big accounts.

As our trainer, Mandy says in her Key Account Management course – “Key account management is a strategic business approach with the objective of ensuring long-term and sustainable business partnerships with strategically important customers.  It has to be an integral part of your overall business strategy”

Whatever business decision you are making, if it affects your customers and they are going to notice changes, be that price increases, new premises or change of personnel, remember to engage with them.

They’re your most precious asset in positively marketing your business for free, or conversely, if they find you lacking, they’ll not hesitate to share their stories with others and persuade them to go elsewhere.

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