To help you prepare for the next recession, it is crucial to know where you stand and how to act. In this article, we present a way for you to understand how ready you are for a recession as well as highlight a strategy that has allowed Dell computers to survive during the last recession. Key Account Management allowed them to focus on customers who are more profitable and less risky to default on payments.

Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” In a survey of 226 economists published by the National Association for Business Economics in August 2019, 72% of the respondents said they believe the U.S. will enter its next recession in 2020 or 2021. The first step you could take to prepare for potential economic hurdles is by doing an analysis of how well-positioned you are to succeed during the next recession.

 

Start the RGMM Diagnostic Here

 

Once you know how ready you are to tackle the next downturn, the next step is to create an action plan to bridge any gaps you may have. Our expertise at SBI is Revenue Growth, and during a recession, the difference between failing, surviving and thriving comes down to your ability to maintain or grow your revenue. We’ve recently published how companies like Amazon and Oracle were able to thrive by sharing some of their key strategies for growth. In this article, we will share an additional strategy for growth called Key Account Management and how a company like Dell Computers was able to leverage it for survival during the last recession.

 

Key Account Management in a Recession

 

Account Management is the process of segmenting and prioritizing key accounts based on their contribution to the company’s total revenue. This more focused approach allows you to build stronger relationships with your most valuable customers. Salespeople are empowered to spend high-value time strategically delivering solutions rather than on low-value, tactical activities.

 

During a recession, maintaining existing accounts is imperative. Acquiring a new customer can cost five times more than retaining an existing customer. Here is a detailed overview of how to build a Key Account Program.

 

The Rise of Dell Computers

 

In 1984, Dell Computers was founded on the premise that selling personal computer systems directly to customers would enable them to better understand customers’ needs. This understanding would allow Dell to provide the most effective computing solutions to meet those needs. While dozens of computer companies faded during the 90s and early 00s, Dell had become the number one supplier of personal computer systems in the United States, and the number two supplier worldwide.

 

Although Dell offers a broad range of product categories, the brand is best known for its desktop computer systems category. As consumer trends shifted to mobile and social media, Dell was quick to respond. The Company was an early adopter of e-commerce and social media and was rewarded with increased reach and brand loyalty.

 

However, the decrease in personal consumer expenditure was inescapable. Spending in the space decreased by 3.7% during the 2007-2010 recession. Dell’s survival strategy was to continue diversifying its revenue streams and expand the customer solutions business. They focused on delivering best-value solutions in the enterprise space, including servers, storage, services, and software.

 

 

Dell’s Customer-Focused Innovation

 

During the first quarter of FY10, Dell reorganized its approach to segmenting the business. They evolved from commercial geographic segments to global commercial business units (Large Enterprise, Public, and Small and Medium Business). The move empowered business units to be more targeted in their interactions with and offerings to their respective customers. Dell gained an advantage through delivering globally consistent and cost-effective solutions and services.

 

Dell’s dedication to understanding and addressing customers’ challenges paid off. The company’s unrelenting customer-focused approach to innovation provided a time-tested competitive advantage. During its early stages, the company was able to do so by selling directly to clients. As they scaled, the approach to segmenting the business allowed Dell to preserve its customer-first advantage.

 

Using a Key Account Sales Strategy for Recession Planning

 

In the Dell segmentation example, we see how concentrating efforts on key accounts enables a better understanding of the customer. If you understand what is most important to your high-impact accounts, you increase retention and create an opportunity to upsell/cross-sell products or services more effectively.

 

Adopting Key Account Management is a great strategy to thrive during a recession as it is both a defensive and offensive move. On the defensive front, achieve cost-reduction benefits using the Pareto approach of focusing your sales efforts on top accounts. Offensively, you gain the knowledge necessary to position your company as indispensable to your both existing client base and prospects. You can read more about how to get started on selecting the right key accounts here.

 

Recession-Proofing Your Business

 

They say those that do not learn from history are doomed to repeat it, and when it comes to survival during difficult times, revenue growth is at a premium. Make sure you understand how well prepared you are for the next recession with the Revenue Growth Maturity Model Diagnostic and subscribe to our blog to get the latest strategies on revenue growth.

 

Start the RGMM Diagnostic Here

 

If you’re interested in learning more about structuring a Key Account Management program that will drive your business forward, contact us to schedule a quick call to share a few best practices and resources.

 

 

New call-to-action

ABOUT THE AUTHOR

Luis Salazar

Develops data-driven strategies to help clients achieve superior business results.

Luis is an experienced consultant and senior leader with 10+ years of experience designing and implementing business strategies, managing technology projects, and optimizing operations via analytics for his clients.

 

Prior to joining SBI, Luis worked with executive stakeholders at clients ranging from venture capital-funded startups to Fortune 500 companies, where he developed practical strategies through an agile and structured approach.

 

Luis has a strong quantitative background and has built sophisticated financial models for Valuations and Mergers/Acquisitions. His industry experience includes Oil & Gas, Hospitals, Medical Devices, Manufacturing, Software, and E-Commerce.

 

Read full bio >