When you look at your business, every role is essential and contributes to your company’s success in some way—but which role most directly impacts your bottom line?
Your account managers, because their output and the customer relationships they develop produce the net profit necessary to scale and grow your business. Kevin Kehoe, co-founder, and Bryan Mours, vice president of customer success at Aspire Software, examined the role of account managers in a recent webinar, "KPIs for Account Manager Accountability." Here, we recap what high-performing account managers achieve and offer key performance indicators (KPIs) to drive up your sales teams' efficiency and profitability.
The metrics of high performers vs. average performers
The account manager (AM) is accountable for total dollars under management (TDUM), which is comprised of the following numbers:
- Contracts – contract dollars under management, number of sites
- Upsells – number of bids and win rate
- Renewals – number of client issues and number of walks
So, what separates the top of the pack from the salespeople in the middle? Looking at Aspire Landscape users as a benchmark, Kevin Kehoe noted the following: An account manager in the top 10% of Aspire Landscape users has $2.5M+ TDUM and 489 bids annually, at an overhead leverage rate of 3.4%. The average account manager in Aspire Landscape has $1.8M+ TDUM and 301 bids annually, at an overhead leverage of 4.2%. When comparing the numbers of the top 10% of team members versus the average AM, using 2,500 hours at 50% gross margin as an example, the overhead leverage makes a huge difference. You start to see a significant increase in cost of that AM versus the revenue they generate when you start to scale to two AMs and beyond. In this example, two AMs at a leverage rate of 3.4% would have more than $5M in TDUM at a total cost of $170K in salary, versus two AMs at the average leverage rate of 4.2%, who would bring in $3.6M in revenue at a total cost of $225,000 in salary.
Time management for account managers
Another piece of the puzzle is time management—the top performers likely spend more time on higher-profit clients. Examining the effects that the number of job sites has on total dollars under management, using the top 10% stats as a basis, Kevin explains that the top 20% of sites yield 70% of the revenue and an average job revenue of $66,667. Expanding the view further, the top 45% of job sites bring in 85% of the revenue—so it’s clear that where you’re spending your time has a very significant effect on the revenue each account manager can manage.
To drive up total dollars under management, Kevin recommends that account managers:
- Manage core activities, such as site audits or responding to client issues
- Utilize better tools, delegation, and review to eliminate busy work and free up time
- Delegate or eliminate admin or non-core activities
- Plan and manage their calendars; account for where they went and what they accomplished.
Here’s how the top 10 percent of account managers in Aspire Landscape spend their time:
- Estimating/designing – 30% of their time (15 hours per week, sending 10 bids/week)
- Site visits – 20% of their time (10 hours per week)
- Responding to issues – 20% (10 hours per week)
- Budgeting/reviews – 10% (5 hours per week)
- Admin – 15% (8 hours per week)
- Travel – 5% (3 hours per week)
Bryan Mours explains that if account managers are using a landscape business management software or estimating software that allows them to use templates and tools to create estimates, it allows for scalable growth and efficiency, and a better customer experience. With a reliable estimating software, an account manager might be able to create the estimate on-site or hand it off to an admin to get more bids out the door.
KPIs for account managers
Kevin offers some KPIs for account managers to track to ensure they’re meeting their goals. These don’t necessarily have to be in an end-to-end enterprise resource planning system, but it would help, since using disconnected systems or maintaining multiple spreadsheets can create additional work and provide inaccurate reporting. In Aspire Landscape, a customizable dashboard can offer all of this information at a glance.
- Scorecard (tracking budget to actual proposed and closed)
- Pipeline (open and won opportunities and new leads)
- Dashboard issues and responses
- Dashboard site audits
Incremental vs. fundamental improvement
Now we know what high-performing and average account managers produce, how they should manage their time, and which KPIs to track. But how can this information help you grow your account managers’ TDUM and what does that look like? Using Aspire Landscape’s top 10 percent as the high-performer benchmark, Kevin outlines two different methodologies for improving your account manager performance:
Using Aspire Landscape’s top 10 percent as the high-performer benchmark, Kevin explains that:
Incremental improvement = 10% more efficient
This translates to 11 additional contracts and 40 additional upsells for the year, with an upsell job size of $1,540 and a 47% close rate (up from 43% in the original scenario).
Making the 10% incremental change, TDUM for a single account manager increases from $2.5M to almost $2.8M, and AM comp goes up to $95,000/year (up from $85,000).
Compare those results to:
Fundamental improvement = 20% more efficient
This translates to 21 additional contracts and 87 additional upsells for the year, with an upsell job size of $1,680 and a 52% close rate.
Now, with a fundamental improvement goal of 20%, a single account manager can bring in $3.1M (up from $2.5M-2.7M) and see their comp increase to $105,000.
These calculations are based on account managers working 2,500 hours/year, no more than they were working in the original benchmarking time period. It shows that they can excel by driving higher profitability and total dollars under management through managing their job sites and time closely, while also maximizing their efficiency by focusing on higher-profit work.
Time management, project management, and customer satisfaction are important factors to discuss during regular performance reviews with your key account managers. A landscape business management software can help you access information such as client retention data in real-time for forecasting and analysis with your sales reps and your management team.
“This is the goal,” Kevin explains. “It’s not that (account managers) don’t want to get here, it’s often that they don’t know how. The system you create is what drives the profit.
Watch the full webinar, "KPIs for AM Accountability."
If you liked this article, you may want to read, “Utilizing KPIs to improve your landscaping business’s profitability.”