Your key accounts are called key for a reason. How do you differentiate the VERY IMPORTANT from the UNIMPORTANT?
The fashion world has always been interesting. Its trends often set the pace for other industries that end up emulating them right away, or in a few years.
Their pain is our gain, and the way they treat customers provides us with many clues on how to treat ours.
I’m not talking about fashion per se.
I’m talking about the business of fashion, of which The Business of Fashion is the recognized leader in authoritative, analytical points of view on the $2.5 trillion global fashion and beauty industries. Started in 2007 by Imran Amed, BoF today serves members in more than 125 countries.
The fashion business — if you follow it– is continually reinventing itself. One of the most recent articles was, “Selling Luxury to the 1%” written by Tamison O’Connor, the Luxury Correspondent at BoF.
The title intrigued me; after all, in my world of B2B, we already understand the 80/20 rule – that 20% of our customers control 80% of our sales and revenue. So what’s with the one percent? Are we in B2B missing something with our 80/20 rule?
Imran Amed positioned it this way: “There is a shopper out there that most of us will never see. They shop in private spaces, purchase products nobody else can buy, and spend millions of dollars each year with their favorite brands and retailers. In fashion industry-speak they are called VIC’s (‘very important customers’) or EICs (‘extremely important customers’) because though they only make up two percent of total customers, they drive around 40 percent of revenue.”[1]
Translated to B2B markets, this concept boils down to the fact that there are purchasers and influencers out there most salespeople will never see. They do their work privately, specifying millions of dollars’ worth of their preferred brands’ products each year.
Key Accounts
In B2B, VICs are often labeled as “key accounts” and garnish their own account executive to handle the business. Sometimes in B2C, a company like Amazon will emerge and treat everyone like a VIC, but even Amazon develops layers in that VIC model (Prime members are treated differently). So it behooves us to see how fashion treats their VICs and compare that to how we treat ours, wouldn’t you agree?
The point is that people who spend more money are more important to a company, and they should be treated differently. Unfortunately, that’s a fact of business. And as much as you want to treat everyone the same, that’s just not the way business works.
Or at least that’s the theory.
Money has always mattered most in sales. It has nothing to do with “feelings.” A business needs money to survive. It is the blood of any business. And yet, feelings often drive business. Just ask any VIC why he or she does business with a company. More than not, you’ll hear, “I like my sales representative” as often as you’ll hear, “I like the brand.” Service is what shapes the VIC’s behavior, and VICs simply get more service.
Take Furniture
Go to High Point Market and you’ll learn everything you ever wanted to know about furniture. But you’ll have to go for several years to gain that knowledge.
Like fashion, furniture is an industry driven by design and trends. Private labeling, deals made and cancelled, offshore, USA made, the complexity is overwhelming.
And then there are the VICs. Like fashion, furniture has its VICs. These are the people who love beautiful furniture, and who have the money to support what they love.
One of our clients sold exquisite English antique furniture for many years. In one of the downturns, another client recommended he talk to me. On the phone call prior to my visit, I asked him how business was, and after telling me it was terrible, I asked what the average price of a piece of furniture was in his showroom.
“$7,500,” he said.
“What do you get for that price,” I asked?
“A very, very small end table,” he replied.
“What are you doing now to promote yourself?”
“I’m thinking of buying commercials on Comcast.”
“Don’t,” I said. “I’ll be right over.”
In our meeting, I was stunned by his knowledge of furniture; he knew everything. He would go to England a couple of times a year…explained how they make furniture “antique” by soaking them in ponds…it was in his blood. He showed me an armoire for $250,000. I told him what he is selling is artwork.
But business was bad. When business is bad and you are in this type (or any type) of business, the first thing to examine is the customer file. We do RFM analysis (recency, frequency, monetary value) on such files to find the VICs. A top frequent customer (who buys often) may not be a top monetary value customer (who spends the most). Recency (the customers who just bought) is also an excellent way to evaluate customer files for VICs.
My furniture client had one customer that made 341 transactions over the years, totaling $18.5 million. That same customer was the highest monetary value (VIC) in his file. He lived in Southwestern Wisconsin, among other millionaires.
My client had 52 customers with over $3M each in transactions. But in the average per transaction, those customers were nowhere to be seen.
“When was the last time you contacted your customers,” I asked him after our analysis.
“When we had the sale last year,” he replied.
“Sale?”
“Yes, we have a spring sale.”
“This is artwork,” I said. “You don’t need a sale on artwork. Is that why you’re thinking about advertising on Comcast? Do you think people have discretionary income to buy $7,500 small tables are watching cable?”
“You don’t understand, I’m desperate.“
Desperation does that to people – makes them make the wrong decisions every time.
We executed a newsletter for the client and sold one painting for $2,600 off that newsletter, which, by the way, contained NO pricing on any of the items. We convinced our client to put in a business reply card with the newsletter, despite his objections of being construed as a “junk mailer.”
“Believe me,” I said, “No one will think that with what you sell.”
When the cards started coming in, they had “love” notes on them (i.e., “We missed you!! Or “Where have you been?” or “We love your furniture.”). And they all had checked various boxes of category interests!
We had the cards returned to our office, not his, and we would “fax” them over each day once the mailing dropped. I called after a week (and 100 cards later) and asked how business was.
“Still bad,” he said.
“Have you called these leads we’ve been sending over? Did you see some of the love notes on them?”
He laughed. “I saw, but no, I didn’t call them.” he said.
“Why not?”
“I didn’t want to be construed as a telemarketer.”
“Let us call them,” I said without hesitation.
“What are you going to tell them?”
“Nothing,” I said. “I’m going to sell them something.”
He said he would handle it. Five years later, he went out of business.
It’s a sad story. But it speaks volumes about VICs. In his case, every single one of his customers was a VIC. When you are selling things with an average price tag of $7,500, the customers better be VICs because only VICs can afford to buy from you.
Formula for Success
O’Connor’s article points this out: Engaging any consumer segment is only becoming more challenging, “as competition for their attention intensifies. The dynamic is pushing retailers and megabrands to implement more sophisticated, differentiated strategies to foster relationships.”[2]
In 2022, the top 2 percent of luxury customers drove 40 percent of overall sales, according to Bain & Company, a leading global consultant company that studies such things. O’Connor pointed out that most people in that group have concluded that it is a better idea to enjoy life, rather than die rich. “Discretionary spend — not just on luxury goods — has gone up significantly relative to pre-pandemic levels.”[3]
But we’re talking about translating B2C to B2B. How does that work?
In any market category, there are VICs. For example, Data Center Construction: An Insatiable Market was an article I wrote for Accountability Information Management, Inc., a leading B2B research company. Like our furniture client, we were able to analyze the players in that market and identify those who were the VICs. Here are some of the insights we gleaned (remember: you can do this with ANY market).
- Over half of the 297 data center projects we analyzed were happening in only nine (9) states, while 43 other states and Canadian districts control the other 49 percent. VICs often aggregate in certain states, depending on the B2B focus. How often do companies waste resources “prospecting everywhere” trying to hit anything that moves? Knowing there are nine areas to plan your attack makes a heck of lot of difference in your strategy!
- Most of the 297 projects in the dataset were classified as “offices” in this sector including Facebook, Amazon, etc. Universities and Colleges building data centers were next (a distant next with only 6%). How do B2B businesses classify their markets? How often have you heard you should be focused on one area and then are flanked by your competitor in the other area where the action is?[4] Finding and targeting the VICs by market area can mean the difference between mediocre results, and bona fide windfalls!
- The dataset of the 297 projects identified 67 architects who handled these data centers (and remember, many architects were not named for planning-stage projects). Following RFM analysis, we identified the top four architects who handled the highest value projects, and the top four who handled the top single projects in terms of highest value. Both groups were different! Smart marketers know you have to approach these segments differently, especially when you ask the question, ”Who is the real VIC?” – the one who is building the most, or the one who is building the largest project?
It’s Always About the Experience
It doesn’t matter WHAT you are selling in the end. What matters is HOW you are selling it.
In the world of the luxury VIC, the war for attention comes down to events (like personal shopping to dedicated fashion shows or dinners, etc.). In B2B, many translate events into the “trade show.” But you don’t find VICs at trade shows; you find them in meetings off site at a trade show!
B2B VICs face the same time constraints as VICs in the fashion industry – and have to be approached by NOT demonstrating the product. O’Connor’s article notes: “While product plays a key role in a Salon strategy, the spaces themselves are intended to be experience-led rather than transaction-led.”
In other words, the booth at a trade show is for the customer. The meeting offsite is for the VIC. Sales has ALWAYS been about the experience.
And in those off-site B2B meetings, you don’t have to have private butlers on hand to offer guests canapés and cocktails like the Gucci salon concept. But you do have to have sales/account executives who know the VIC perhaps as well or more than they know themselves.
Elmer Leterman recognized this long ago in his book, The Sale begins when the Customer Says No. He wrote, “The question is not: how can he use my product? But rather, what are his needs and how can I help solve them?”[5] The conversation, according to Leterman, begins with the advantageous things the salesperson can do for the customer, not the product. That’s hard to do most of the time because it requires knowledge beyond the product. And, often, it has nothing to do with the product being sold.
In other words, a sale begins even before the conversation begins: with the setting, the room, the way a person dresses and conducts himself or herself. The experience! The main reason for any sale is something that the buyer urgently needs. And while we can argue that who needs a $20,000 purse urgently, the fact is, a VIC does or may AFTER the experience.
And besides, it’s not the purse, but the EXPERIENCE around the purse.
Treat everyone like a VIC and you are assured success, regardless of what you are selling.[6]
B2B VIC Strategies
The fact is, no matter how much we discuss that it’s about the experience, it’s really about sales. Experience is just what precedes or surrounds the sale these days.
Here are some strategies to consider in shaping your experiences with your VICs that will lead eventually to sales.
Understand the VIC’s Needs.
Unless you have psychic powers, there is no way you will know for sure what a VIC really wants – except for the one thing everyone wants: to be treated with respect as royalty. Consequently, your strategies should always – always – begin with research to understand their needs as much as possible beyond that given.
In one instance, we recommended our client conduct a mean-time-between failure analysis of his product within an end user’s facilities. The client’s product was an ordinary component for a glass door, and after securing permission from the facility director for the medical campus, the client did just that. We helped shape an “experience” – the MTBF study.
When the facility director asked why our client omitted some of the doors in that study (there were almost 500 doors on the campus), our client said they weren’t his product and he would not know the MTBFs. The facility director reviewed the report with our client and said, “Why not give me a quote to replace the component on the doors you missed with your part and let’s just see what we can do about standardizing these components across the campus.”
Do you think that would happen without that experience? Anything can be an experience!
VICs are everywhere, but it is the seller who creates the VIC with the EXPERIENCE. Researching your target ahead of time (in person or on the phone) opens enormous opportunities to create unique experiences.
Build Really Strong Relationships.
One visit (digital or in person) each quarter isn’t going to cut it. Nor is an email every now and then. Trust is an ongoing effort that can be disrupted by the slightest factors and things you can never anticipate. Relationships are also like that, personal and business.
When you are in regular communications in any relationship, you get the “heads up” on anything that might disrupt your relationship. A casual word, something in an email, a subtle change in behavior. All these subtle signals can help you foster loyalty and repeat business with a customer, especially the VIC.
For years, we took relationships to a higher level by working hard and showing up each day at one client I have in mind for this example. One day, the President asked if I wanted a desk at their offices. “Certainly, if it’s not too much trouble” I said. That desk became the central focal point of all future visits, and I wish I could tell you how successful that strategy was. It resulted in a 20-year run on the relationship, and we did some of our best work, helping our client grow market share and sales year over year. It ended when the President retired and “new blood” came onboard – not an unusual situation.
But all relationships have this in common: the exchange of ideas both ways. When one side stops listening, or leaves, the relationship doesn’t last long. New relationships must be formed. But remember: VICs are everywhere.
Provide Value-Added Services.
In What Are the Problems Marketers Face These Days?, there’s a section discussing value added or added value. It’s important to know the difference between these concepts.
Sometimes, it’s the subtle differentiation that will make or break a strategy. John Caslione, a noted consultant and friend, tells us that both types of propositions are important; however, Value-Added is far more important than the adding value when it comes to really making differentiation work and communicating successfully.
The secret is value – which is way more than simply a rebate or a price cut/discount. It’s what Gucci does in their VIC strategy: they sell AROUND the product. They sell the EXPERIENCE. Selling the experience in a B2B brand is more difficult – but not impossible.
In one case the international sales manager at a client showed me an Excel file with a simple chart documenting the sales of one of his distributors over the past year. “I’d love to do this for every one of my customers,” he said.
“Let me work on this,” I replied.
In less than a week we developed a distributor report that had not only the year’s sales for the customer, but a 5 Year History Chart, a sales Time Line Chart – for the year, a list of Top 5 Best Selling Products including sales volumes, Top 5 Best Selling Models, Top 5 Best Selling Parts and 8 overall category totals – all on one page! These presentations became the standard for their distributor meetings for the next seven years, enabling my client to go over with each customer their ”position” with the company. In other words, they treated each of their distributor customers as a VIC.
Of course, I couldn’t have done this without direct access to their SAP system, which was granted due to the enormous trust the client had in our relationship. It solidified the relationship and is one of the examples of value-added strategies: giving the customers more than they asked for (creating the EXPERIENCE) on a simple one-page document for the client to, in turn, have experiences with his customers.
Finding out what customers need and helping them get it as Leterman said is the key to success.
Provide Exceptional Customer Support.
Responsive, reliable support to customers to address any issues or concerns promptly enhances the relationship. It’s often called riding to the sound of the guns. With VICs, it is the essential ingredient for the experience.
In Powerlessness: Why Organizations Fail at Customer Service, I documented a personal story of the frustration when a customer – any customer — doesn’t get support (this was from two major companies in the U.S.). When people call customer service, they are powerless. There is only one thing that gets rid of powerlessness: power. In other words, the person you are calling must have the power to help. Help nullifies the feeling of powerlessness and substitutes relief.
Just ask any VIC in the fashion industry. Whatever they need, whenever they need it, they go to their “account executive” and it happens. The question is: do you create the VIC, or does the VIC create you? The concept of a relationship itself answers that question: it works both ways.
At a meeting with a major association we were pitching we talked about customer service, and how our clients experience such support from our company.
“We answer phones in two rings,” I boasted in the days when companies were moving toward automation in answering phones. “We believe personalization is important in our relationships.”
One of the board members interrupted and asked, “What’s your phone number?”
I said, “847-358-4848” with a smile on my face as he took out his cell phone and dialed it, putting it on speaker so all in the room could hear. After the first ring, someone said, “Interline, may I help you?”
“Just testing,” he said, hanging up and smiling. The rest of the presentation was a piece of cake.
Even though we didn’t get the business because the fix was in (long story), service like this has been our rule since opening the doors over 30 years ago.
So has “cell manufacturing.” Everyone at Interline knows enough about what we do to be dangerous, and when confronted with an issue that can’t be resolved then and there, tell the caller this: “Give me a little time and I’ll have someone who knows more about this get back to you.”
Know Your Vic
As much as we want to treat every customer as a VIC, the fact is, there’s only so much time, and so many resources. In B2B this is especially true.
So the real question becomes: how do you filter your customers into those who are VICs and those who are not. Some people interpret this as a “have” and “have not” question.
That’s not the case at all. In business, sales drive every action you take, and as Newton taught us, for every action there is a reaction. Without sales, even Gucci wouldn’t be able to execute its VIC strategy.
Business need customers – some a lot of them, some not so many. I remember walking a trade show once and I saw a faucet in solid gold on display in the booth. The salesperson saw me and started smiling as I approached him.
“That’s some faucet, isn’t it?” he said. “24-karat gold.”
“What’s the price tag on that puppy?” I asked.
“$17,000,” he said.
“You sell a lot of those?” I asked, thinking about my client’s faucets that retailed at $850.
“I don’t have to,” he said, still smiling.
Then and there the realization that this was someone who knew his VICs was clear. He didn’t need to sell that gold faucet to everyone. But the fact was – and is – someone will buy it. Probably, more “someones” than we’ll ever know.
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Stay in touch and let me know here what you think! Thanks for reading.
[1] VICs: How the Super Rich Want To Shop, by IMRAN AMED, in BoF, 02 February 2024
[2] , “Selling Luxury to the 1%” by Tamison O’Connor, 29 January 2024 in BoF.
[3] Ibid.
[4] This is going on in the offices market as well, where markets are being led to believe that offices should be transformed into residential living spaces because of what COVID did to people’s working habits. Nothing could be further from the truth. Transitioning a B2B Manufacturer to Tap into Today’s Office Marketplace Opportunities explores this idea in considerable depth.
[5] The Sale Begins when the Customer Says No, by Elmer G. Leterman.
[6] The best example is from A Miracle on 34th Street, where a mother brings her son to Santa and Santa promises he can get his fire engine even though Mom was signaling to Santa not to do that. After she tells her son to step aside because she wants to have a few words with Santa and proceeds to scold him that she can’t find the fire truck anywhere, Santa writes on a piece of paper the name Gimbles. “They have it,” he says. Of course, Santa is working for Macy’s and the aftermath is the Mom tells the story manager she will never shop anywhere else because Macy’s put children’s happiness above profits. It was the fire truck: it was the EXPERIENCE of the fire truck.