Farmers eat hunters for breakfast: why key account management trumps new business development

Farmers eat hunters for breakfast: why key account management trumps new business development

By Alex Shacklock, Director.

When lawyers and accountants think about business development, there is almost always a negative connotation around the word ‘sales’ which most professionals turn their nose up at.  And of course, the focus of BD in those firms that do embrace it, is often on hunting – winning new clients and securing new projects. The hunters who reel in shiny new deals and clients get all the glory. While hunting has that exciting wow factor on the surface, farming existing accounts is often more profitable and sustainable over the long term.

It’s time to flip the script and recognise that farmers, who cultivate deeper relationships with existing clients, and who cross-sell and upsell to existing clients, create more value over the long haul than hunters who continually chase the next deal. Here’s a closer look at why key account management trumps hunting for new business:

More profitable work

Working with established clients allows you to progressively build trust and credibility. As the client gets more comfortable with your services, you can progress from smaller pilot projects to larger, more complex and profitable long-term engagements.

With new clients, you and your team often feel pressure to underbid to initially win the business. This crushes margins and undervalues your firm, service, and your brand reputation. However, as you build stronger and longer-lasting relationships, these relationships mature, and you can charge rates more reflective of the value you reliably provide.

Shorter sales cycles

It takes significant time and effort to identify new prospects, thoroughly educate them on your services, run pilots or limited-scope projects to build credibility, and ultimately land a sizable deal. Even for the most skilled hunters, the lengthy sales process delays meaningful revenue generation.

Farming existing accounts sidesteps prolonged sales interactions. You already understand the client’s needs and context, their structure, business challenges, and political landscapes. By proactively identifying expansion opportunities, you can move swiftly from ideas to funded projects and revenue generation.

Bigger deals

New clients are often wary of entrusting large, business-critical initiatives to unknown advisers. They’ll start small by handing you limited-scope engagements rather than large-scale transformations.

However, trusted advisers who have delivered results over the years earn the right over time to take on more mission-critical programmes with larger price tags. Through key account management you can build credibility and rapport and the process ultimately lets your clients expand both the size and strategic importance of the initiatives they bring to you.

More referrals

The better the service you provide, the more likely satisfied clients are to refer you to others in their network. A rigorous key account management programme emphasising account development, customer success and retention builds significant goodwill and referral pipelines.

Happy clients rave about your work with other firms, on social media, or on the golf course, and this fuels valuable word-of-mouth momentum. Make one client ecstatic, and network effects take hold.

Increased loyalty

Retaining accounts also builds loyalty, making clients less likely to entertain competitors’ proposals. As relationships strengthen, buyers seek less variety in their supplier base.

Clients stick with advisers who offer stability, reliability and trust – key characteristics of loyal business partnerships. They demonstrate commitment over the long haul rather than chasing quick wins.

The data supports the farmers

Study after study shows that retaining and expanding existing client accounts generates substantially more profit over time than signing new clients. It costs 5 times more to attract new clients as it does to retain them. Increasing client retention rates by just 5% boosts profits by 25% to 95%.

The 80/20 rule applies – 80% of revenue comes from just 20% of clients. Given these statistics, it’s smarter resource allocation for services firms to focus more energy on farming versus hunting.

The cost efficiency of farming

Farming also consumes less budget over the long term. After investing heavily to acquire new clients, you must spend equally to onboard and retain them. Quickly jumping from one pursuit to the next inflates client acquisition costs. But nurturing accounts already familiar with your services requires less investment.

When farming trumps hunting

Hunting is still vital, as adding new clients expands market share and reduces revenue concentration risk. However, a hunting obsession often takes hold in services firms because it’s flashier. Sales professionals understandably focus more on new clients and big game because it boosts their bonus.

But managing partners must take a portfolio view across accounts. While hunting provides a needed pipeline, farming ensures your firm feasts for years by securing repeat business from existing relationships.

So, what’s the answer?

Most successful rainmakers use a blended approach.

They align or tailor their business development approach to the client or stage, rather than fixating solely on the hunt:

  • Acquire: Strategically add a handful of new client accounts annually to expand reach.
  • Retain: Foster loyalty among the existing client base to generate recurring fees.
  • Maximise: Identify expansion opportunities within active accounts.

Through this lens, hunting assumes its rightful place as one component of an integrated client development strategy rather than the end-all-be-all. Farming fuels lasting success. The tillers of soil reap the richest rewards when they nurture, cultivate, and harvest at the right times. This bears fruit for years across the entire client portfolio.

How can we help you?

If you want to find out more about how we can help you and your firm create a clear framework of activities that will help both your hunters and farmers gain effective BD opportunities and build confidence, then email Kate here or give us a call at 0333 7722 061.