I lost $1.5M in revenue for breaking one rule of a 30 page agreement

How many key account teams want to spend time focused on contract compliance?

Let's face it, it's not the most glamorous part of the job. Usually, there are no bonuses or commission checks tied to compliance. So, it gets deprioritized. Once the contract is signed, the BD team is on to new wins, the delivery team gets busy supporting customer projects and leadership is buried in strategy, operations and managing forecasts.

Gut check: Deloitte's 2024 research found that poor agreement management destroys roughly $2 trillion per year in global economic value. World Commerce & Contracting puts the average revenue loss from contract mismanagement at 9.2% of annual revenue.

This hit home for me personally several years ago. I was getting ready to leave on a business trip when I received an email marked urgent. It was from the Head of Contracts at one of our large life science clients.

Dear Taylor, I'm writing to notify your organization that we are suspending your services indefinitely while we conduct a full audit of your….. "Oh, for f— sake", I thought. My stomach was churning. I was in shock and disbelief. I just looked up at the ceiling wishing all of this was not happening to me.

We were out of compliance with a $5M contract. We had about 10 account team members on this account across several regions. So, not the largest account, but a significant target with tons of upside. The client is a leader in their industry with a solid global reputation. This was potentially devastating to not only our business with them but our reputation with other buyers in that vertical.

What happened? Out of a 30 page agreement, one of our team associates broke the client's rules of engagement. From a process and behavioral perspective, the employee was actually doing something we taught her to do in our sales training. Just so happens that thing was in direct conflict at a foundational level for this client. It came down to a trust issue for the customer and they wanted to suspend us and audit to see if this was a one off or something that is systemic in the partnership. They also wanted to send a message that the contract's rules of engagement will be enforced.

After consulting with my boss, we immediately went into action, ran our own investigation to gather the facts, set calls with the buyer, and developed a CAPA plan (Corrective and Preventive Action) to identify the root cause, fix what went wrong, and put controls in place so it doesn't happen again. We took ownership of the breach of trust.

After three months, we were back in action with this customer, but not before losing 30% of our revenues with them. The lesson was learned, and we maintained a good record with them for the last 15 years.

Contract compliance is 1 of 21 Growth Drivers we tackle in the Vitality Index, The Key Account Growth System. It belongs in the domain of key account growth we call: Foundations. It's experiences like these that fuel the reason for the account health assessments we run and the growth strategy and account plans the system produces so your teams can ensure success in key accounts.

For contract compliance, we handcrafted 48 plays just for this one driver at every level of partnership. Our system will diagnose and score your contract compliance, build the exact growth strategy the team needs now to increase sales in this area, and help guide your sales execution until you become a Vital Partner in this area to your account. So, if you are like most companies that make up the $2 trillion in lost revenues each year due to contract compliance issues, this system could help save you time, money and help protect your most valued asset, your key accounts.

Growing key accounts can be complex, so we distilled this type of work into a system everyone can use no matter what level of experience you bring to the table. It was built from the same approach we used to create some of the largest partnerships in our industry that have lasted decades and are still running.

Winning, growing, and protecting key accounts has been our life's work for the past 30 years. In the Vitality Index, we don't tell you what to do. We show you, because we lived it. This is the system we wished we had years ago. But now, it's here! If becoming a top-producing account team is important to you, then the Vitality Index can help.

We made a sample for you to try. This is not the actual system, but it will show you a practical plan for growing a live customer in your portfolio. This snapshot will give you a diagnostic, analysis, and an actual growth plan for where you currently sit across two of the seven Domains: Relationships and Competitiveness.