There is an opinion (in several types of businesses) that the person who brought a client to the company should continue to serve them. In general, it’s hard to argue with this. In B2B (and other large) sales, the decision to purchase is made with an eye on the prospect of future collaboration (service, support), and personal rapport with the company representative plays a significant role. Moreover, one very large company that makes computers and is now earning a substantial part of its revenue from consulting reportedly advocates this approach to the fullest extent, and regardless of the individual’s career growth within the company, their clients remain their clients for life.
Additionally, a fair approach suggests that efforts to retain existing customers should outweigh efforts to acquire new customers by the 80/20 principle. Practically, this means that you can focus on new customers only if all the existing ones are satisfied.
Here we have two important problems.
- In theory, it might seem that the person who “sells” and the person who “leads” are different individuals in terms of their roles. This is not the case. The functionality is the same in both cases — understanding the need, translate its internal language and provide a solution. The functionality can vary when the sale itself is done unprofessionally and in a shady manner, as we say, “pushing.”
- Sooner or later, a saturation point is reached when there are so many existing clients that it becomes impossible to serve new ones. The process of attracting new clients occurs when old ones gradually drop off for various reasons (the half-life law). This issue is more serious, and I will write about it further.
The seller’s position at the saturation point is a deadlock situation. It is further exacerbated by:
- The issue is that the sellers themselves occasionally drop off, and old clients end up adding to the workload of the remaining sellers, who reach a saturation point and can no longer pay attention to new “old” clients. After a while, the number of clients for each seller stabilizes anyway—dissatisfied clients will drop off. This continues until the seller reaches a state of equilibrium again.
- The issue is that salespeople not only sell but also typically “serve” the accounting department. The more reporting, paperwork, meetings, planning sessions, and breaks there are, the sooner the saturation point is reached. That’s why it’s important to structure processes in the company so that the accounting department supports the salespeople, rather than the other way around.
The only way to grow a business in such a situation is to hire new salespeople who will build their portfolio from scratch. However, this is not a solution either, and here’s why.
Let’s imagine that there are five “old” managers at a company, and then a new one arrives. Following the logic described above, the leader will pay less attention to the newcomer, who, noticing the difference in income figures, will feel very insecure and will be pressured, subjected to hazing. He will be a victim of reprimands and the boss’s bad mood (the old-timers are already “one of us”). His mistakes will be forgiven to a lesser extent than those of the veterans. For the veteran, it will be “unfortunate misunderstandings,” while for the newcomer, it will be “signs by which people are judged.” To top it all off, the standard xenophobic reaction to a newcomer in an established team will kick in. If the newcomer manages to stay in such conditions, it will take at least six months before he brings in the first serious, outstanding deal. But, most likely, in 80%-90% of cases, the newcomer will leave. As a result, we end up with a rather stagnant team that, according to the law of half-life, gradually falls apart on its own. The company declines and shrinks down to a team of 4-5 people, consisting of 1. an accountant, 2. a “playing” director, 3-4: the director’s old friends, and 5 — a constantly arriving newcomer. (Sounds familiar, doesn’t it?)
And even if we imagine an ideal manager who sets up the recruitment pipeline perfectly, there still comes a saturation point for them, as they cannot effectively manage more than, say, 7-10 salespeople.
A curious reader might ask me, “Why doesn’t the manager hire other managers instead of salespeople, so they can hire the salespeople?” But where would he find the time if he himself is “busy” with salespeople? Would he really delegate the task of building teams to the salespeople? How would that work? Where would these “busy” salespeople find the time for recruiting and training newcomers? And do they even need to do that if they can’t afford to lose money from existing clients right here and now? It’s a dead end. A stalemate.
We have now reached the most important point: the answer to the question of why very few companies can grow, in principle, and why growth is not infinite. As long as growth continues up to the saturation point, it doesn’t raise any concerns. But once the saturation point is reached, there are simply no resources left for development, and in order to grow, one must… lose clients. Who would be willing to do that?
So what to do? It’s simple. Call guys like me or… Mark&Sales …so that they, as an external resource, can build sales and take them to a new level, or to think about such a dead-end development of events in advance by reading this post first. So, if you haven’t reached saturation yet, you should keep reading.
The recipe is that the seller should not reach saturation. Instead, upon reaching 30%-50% of their maximum potential client base, they should gain an understanding of the market, the product, the customers, and sales techniques, then advance in their career. The remaining time should be dedicated not to attracting new clients, but to recruiting and training newcomers.
With this approach, the sales division of the company will also reach a saturation point, but much later and of a different kind. This saturation point will relate to the fundamental ability of the top manager to pay attention to the lower levels at all, carving out time between all the “nonsense” like meetings, conferences, business plans, reporting, strategic issues, public relations, and so on.