How To Create A Profitable House Account Strategy w/Jen Tadin @Gallagher
Learn about how you can use the house account strategy to make your business more efficient and profitable with Gallagher’s Jen Tadin.
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In this article:
- About My Guest — Jen Tadin of Gallagher
- What Is a House Account?
How to Create a Profitable House Account Strategy
- Learn How to Manage Small and Large Accounts
- Pay Your Salespeople Well to Win Small Accounts
- Create a Balance Between Sourcing and Managing Accounts
- Create Segments for Your Accounts According to Their Size
- Tailor Your Offers for Each Segment
- Get in Touch with Jen Tadin
Using the House Account Strategy to Create a Profitable Business
House Account Definition: A house account is a high-priority account in a brokerage firm. It’s different from other accounts in the way it’s handled — an executive or the main office manages the house account instead of a salesperson.
About My Guest — Jen Tadin of Gallagher
Jen Tadin is the National Sales Director for Small Business at Gallagher (formerly called Arthur J. Gallagher & Co.). She leads the company’s sales organization across the United States.
Jen also heads Gallagher’s inside sales organization for small business customers. She is a member of the Forbes Business Development Council as well.
Apart from her expertise in sales, Jen also has firsthand experience working with house accounts. Read on to learn her practical tips on how you can create and manage a house account.
What Is a House Account?
In her 15 years working in the SMB space, one observation that stood out to Tadin is how people struggle in the small business space.
These are firms with fewer employees, fewer sales revenues, and less money to spend. Yet looking at the overall economy, it’s a growing segment.
As Tadin said, you can’t avoid working with small businesses. Since this is the case, you have to learn how to work smarter.
That’s where the house account strategy comes in. The main reason why you have to create a house account is to cater to customers like small businesses.
Your house account customers are different from your core customers. For instance, you can’t treat small businesses the same way as medium-sized and large enterprises.
They don’t expect the same level of service or account management larger customers may expect. The question is, what changes do you have to make to cater to these small businesses?
How to Create a Profitable House Account Strategy
1. Learn How to Manage Small and Large Accounts
Gallagher, the company where Tadin works, is a large insurance broker. Over the years, they’ve accumulated 50,000 small business customers.
Small business is a segment you wouldn’t want to avoid because a lot of them actually grow. It’s better to be with a small business as they are starting, rather than going after them when they begin to grow.
Retention is important, and you’ll have a better chance of retaining these customers when you’ve been with them right from the start.
Let me share with you our own experience in the business. In the last few years, we’ve made a conscious strategy to move upstream and start going after bigger accounts.
As we did that, however, we noticed that our competitors took some of our small business clients, and they began to move into the mid-market business.
We realized that we can’t leave behind our small business customers because then our competitors will take them and move them upstream. Whether we liked it or not, we needed to find a way to manage both small and large businesses, and do it productively.
2. Pay Your Salespeople Well to Win Small Accounts
One of the changes you need to do is to reorganize and restructure the way you pay your salespeople for small clients. The reason why you’re calling it a “house account” is because you want to pay your salespeople to acquire that new customer.
You’ll want to pay them quite heavily on it because that job is tough. Bringing in new customers is the hardest part of the sales process.
Create incentives for those who win the accounts. Once you have these accounts, turn them over to your account management or service team.
The renewal commission structure, or the annuity payment to the salesperson, has to go away. If you’re in a business that has a culture of paying producers a renewal commission on small accounts, this will require a change in management.
You need to get your front-line leadership to understand why you’re doing it, and what it means for front-line salespeople.
Ultimately, what you’re saying is, you still want to give incentives for salespeople to source small accounts. Yet, this is not the bread and butter of your business, nor will it be the way to grow a large book of business over time.
How to Manage Your Salespeople’s Expectations on Compensation
Tadin shared with us how they shifted their structure to taking away the annuity payment. In her experience, they exercised flexibility based on circumstance, but only for a certain period of time.
It took them 18 months to shift into this new business mentality. She cited the important role the front-line sales leadership has in this process.
It’s essential for the sales managers to be able to communicate to the salespeople why this is necessary and what the upside is.
This new model actually allows salespeople to earn more because it frees up their time to focus on where they get the most revenue. She admits it’s a hard pill to swallow at first, but over time, the sales reps’ earning potential will go up.
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3. Create a Balance Between Sourcing and Managing Accounts
Some salespeople may have a difficult time balancing between sourcing and managing accounts. They may fail to manage their current accounts because they’re too busy looking for new clients.
On the other hand, it’s also easy to use the small accounts they’re handling as an excuse as to why they can’t find new ones. Salespeople need to find their balance so they can continue to find new accounts, while still taking care of the ones they have.
The duty of the business is to segment the accounts and determine where the profitability and value proposition lie. This way, the whole organization will know where they should focus on.
4. Create Segments for Your Accounts According to Their Size
If your client portfolio includes small, mid-sized, and large businesses, should you create segments for each of them? The answer is a resounding YES!
The size of the businesses you cater to matters because it also affects the kind of service they require from you and how they interact with you.
For instance, in a large structured enterprise, you may have to deal with several people who each have a role they specialize in. Whereas in a small business, you may deal with the same person for different concerns because they have multiple roles in the company.
To handle these different accounts effectively, you need to place them in segments. This way, you’ll also be able to create a house account for your small business clients.
After this, assign people to handle each segment so you can properly provide the kind of service each client requires from you.
Why You Need to Segment Your Accounts
You may notice that some sales reps prefer going after bigger accounts because they can earn more from them. As a result, smaller accounts become neglected.
You can avoid having this problem when you segment your accounts and create a house account. This way, your small-business clients won’t have to compete for your time and attention anymore.
Enforcing these new divisions will convey how much you value every customer you have. It also helps your business stay efficient and profitable.
Tadin shared there were two realizations that triggered Gallagher to segment their customers:
- They were over-delivering to customers and they couldn’t afford to continue to do so
- They were completely under-delivering to their customers and as a result, they were neglecting and losing them
Creating segments and a house account may sound like a lot of work, but they are worth the time and effort. This will give your business more potential to grow and focus on your customers’ needs.
As Tadin said, your profit margins improve dramatically when you start to deliver the right sales and service propositions to your customers.
5. Tailor Your Offers for Each Segment
Since you’re working with clients whose businesses vary in size, you also need to tailor your offers according to their needs. Create a separate proposition for each segment — sometimes you even need to have a segment within a segment so you can nail their specific needs.
According to Tadin, this can turn into a big project for your company, but you will reap well from it. Not only are you delivering the kind of experience your customers expect, but you’re also enhancing it.
For instance, some small businesses will work with you outside the normal office hours. You can ensure that you’ll be able to cater to their needs by having a specific service structure and dedicated team members allotted for them.
Get in Touch with Jen Tadin
If you want to learn more about the house account strategy and how you can use it for your business, you can reach out to Jen Tadin personally.
Send her a message on LinkedIn, or visit the Gallagher website for more information.
Taking the time and effort to create a house account and client segments will help you manage your business better. These also allow you to provide the best customer service at the right time.
As a result, this account strategy will earn you loyal customers and improve profits in the long run.
What account management changes do you need to implement to serve your clients better? We’d love to hear from you in the comments section below.
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