The importance of share of spend
Many years ago whilst working our senior sales people to develop our major accounts I developed a simple tool (document) I asked them to present at their account review meetings.
As always the tool itself is actually quite simple. The skill comes simply in deciding to use it (your job as the leader) and in getting the information to complete it (your account team’s job). It’s probably best illustrated with an example, so I'll explain further in this article.
Do you know the share of spend you have from your existing customers?
The sheet is quite simple.
List across the columns all of your main product ranges
List down the side yourself and all of your competitors.
Then attempt to fill in all the intersections. How much does your customer spend with you on each product group, and how much with each competitor.
Total across and down and see how much they spend altogether
Compare that to your revenues from them to understand your share.
Your opportunity for growth in that account is now clear and you can focus your efforts on the biggest opportunities!
Now, before you get too upset at being patronised, I do realise that the tool is the easy bit! Getting the information is the difficult bit. Have you tried? Even without full information and with a lot of guesswork, you can focus better on the accounts that have most growth potential.
I’d also argue that a really good account manager with an excellent client relationship and a good knowledge of their customer should be able to complete the form with a little discipline and some friendly chats with their friends in the account.
And I don’t just mean direct questions although that may be possible if the relationship is really good. I mean sensible, careful questions asked gently over a series of meetings. For example
Today: How much do you spend on X?
Next month: Who else do you use for X?
Month after: How do we compare to Y for you?
That will, if carefully noted, add up to a large part of the information you need.
Once again, I leave you with a challenge.
Do you know how much your customer spends on products and services you could supply and what proportion of that spend do you have?
