1. Key Account Retention
in a service business
Tenacity Europe

2. Tenacity - Protecting Revenue
All our clients are B2B companies offering managed services to very large clients
Strategic Account Management
Leading to Client Retention and Profitable Growth
Clients for Life® client retention process
Best practice in the Service Management industry
Protecting over $ 23 billion
Clients for Life protects over $ 23 billion in contracts worldwide

3. Key Account Retention in a services business
The essence of Client retention and Contract profitability
Why your Client retention strategy should be different for services
How to overcome margin erosion with every contract renewal
KAM tasks and processes in Key Account Retention
Why
What
How

4. The 3 keys to achieving and sustaining Profitable Growth
% Retention Increase
Time %
Increase
% Profit Increase
Awesome Leverage!
Retain Existing Clients
Increase Revenue from Existing Clients
Sell New Business
Explain: This really applies to larger accounts in the area of $500,000 or greater.
An established company will achieve profitable growth in these three ways.
This is in the order of the greatest magnitude:
1. The greatest is to Retain Clients
2. The second greatest increase will come from providing extra services to existing clients.
3. Sell new business to new clients.
As an example, by improving the client retention rate 1–2 % per year, it is very possible to improve the profitability growth 10-15% per year.
Account Accounts
Sold
Lost 5 1
Which is Better? Flip Chart Example

5. What is the difference between a product and a service?
In services value is to be created continuesly after the sales is done.

6. Client Decision The essence of retention and profitability
Value Creation by the Organization
Value Perception Client
HOW IT WORKS
Retention, margin and revenue are results. They all come from decisions clients make.
Client Decision

7. MONEY FLOWS TO VALUE
All organizations spend their money on things they consider to be of value for their future.
To summon this up in one law of economics: money flows to value

8. (Bain & Co. from Harvard Management Update)
80% OF COMPANIES BELIEVE THAT THEY DELIVER A SUPERIOR CLIENT EXPERIENCE, BUT ONLY 8% OF THEIR CLIENTS AGREE WITH THEM. 
(Bain & Co. from Harvard Management Update)
80 %
8 %
We all consider money flows to value as a no brainer, but this research shows common sense is not always common practice.
Actually more often it is not all that well incorporated as we believe it to be.

9. PERCEPTION OF VALUE Business Value Contract Value Service Value
Perception of the Client
That what is agreed upon in the contract.
SLA/KPI
Help achieving goals (outside the contract)
Goals
That what is mentioned on the invoice
Invoice
Business Value
Contract Value
Let’s dive into where we mess up and where also the opportunities are to get more money flowing our way, both in retention and in margins.
Service Value
Perception of the supplier

10. The Services Life Cycle
High
Problems
the client experiences
Value Gap
Often there is a business reason for changing suppliers, - Ask for examples of why are we contracted
but don’t we keep valued on that level because services have a life cycle
The problem is at the end of the life cycle, co
Fee
the client is paying
Low
Time

11. The Services Life Cycle
Value
The client perceives value relative to what they are paying
High
Support
The client is supportive, but questions the added value
Too expensive
The clients perceives the price as too high
Low
Year 1
Year 2
Year 3

12. The Services Life Cycle
New decision maker
High
Problems
This will happen at all accounts!
The client experiences
Value Gap
Fee
The client is paying
Low
Time

13. The Services Life Cycle
Innovation
High
Additional services
Innovation
Low
Time

14. How

15. Execution cycle report evaluate Sales process Contract
Standard execution. Execute on contract and report on performance against kpi’s
But when you (just) deliver what you promissed, that will get you fired as we saw in the services life cycle.
This is also positioning yourself as a supplier on the service and contract level where you are interchangeable for any competent competitor. And when that happens, clients start to buy on price.
Ask: How to solve this problem?

16. Manage value in services
report
Expectations session
Sales process
Contract
Best practice in services:
Don’t look back, look forward and do so on the decision making level.
Ask for expectations in the next year,
Report on impact on your cients business = report on expectations
Expectations show you threats and opprotunities.

17. Expectations are:
everything the client thinks is possible and necessary in the cooperation
i.e. the clients definition of value

18. Account Management Processes
Managing
client
expectations
Managing
Professional
relationships
Delivering
technical
expertise
Here is a wrap up. Every key account management process should have a well structured way for managing expectations. Especially in services.
Relationship management, sales and execution just aren’t enough to deliver a premium service leading to high retention and profitability.
Value Perception Client

19. Questions for Discussion
What is the average lifetime of a key client in your company?
What would it take to lengthen the lifetime for key clients significantly?