Effective Strategic Account Management

Matthew Alleway
Customer Stakeholders

Customer Strategy

Strategic Account Management

Company Strategy

Internal Resources

Introduction: Strategic Account Management (SAM)

SAM is a strategic approach distinguishable from account management

Used to ensure the long term development and retention of strategic customers.

It provides a means to develop and nurture relationships with major customers

consequently a growing number of companies have made SAM part of their core strategy for customer partnering

Effective Strategic Account Management Model

1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship

5 Developing relationships

What is Strategic Account Management (SAM) ?

1 What is SAM? 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

What is Strategic Account Management (SAM) ?

SAM is a management approach adopted by selling companies aimed at building a portfolio of loyal strategic customers By offering them on a long term basis, a service/product offering tailored for their specific needs it is a progression towards a form of partnership or alliance with major customers characterised by joint decision making and problem solving, integrated business processes and collaborative working across buyerseller boundaries, described as a process of relational development.

What is Strategic Account Management (SAM) ?

SAM is not account management (many organisations frequently think they are doing SAM when it is in fact account management)
Account management Mostly managed as business as usual Coordinated overview of account Opportunity-focused understanding One year plan Strategic account management Managed for growth or change Holistic, helicopter, longer term view Deep understanding of customers business Three to five year complete company-owned business plans (not just a personal plan or sales and marketing plan) Likely to require investment in line with strategy Flexible, cross boundary sharing Requires strategic account/business manager
1 2 3 4 5 6 7 8

No investment or very little Works within normal organisation Requires account manager

Making the business case

1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

Reasons to adopt SAM

Risk management Customer complexity retention means understand the customers business and supply chain Competitors are doing it, the client expect it and request it in tenders Clients want a standard approach especially from complex suppliers Opportunities Ability to influence client lifetime value, especially through solutions More precise innovation through cocreation with clients Greater market understanding and adaptiveness Reduced costs and increased value through better resource allocation

Selecting and categorising customers

1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting & categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

Selecting and categorising customers

The choice of strategic accounts is arguably one of the most important Strategic customers must be aligned to an organisations strategic vision Selection criteria should indentify the customers attractiveness in terms of its potential for the organisation Also necessary to have a good process for deselecting strategic customers Optimum number of strategic accounts is 20-30

Strategic account portfolio

Suppliers relative business strength as seen by the customer

Strategic customers: The most innovative and important projects should be developed with these customers -> strategic investment.

High High

Low

1 2
5 4

Strategic customers

Star customers

Star customers: These are the strategic customer of the future and are an Investment for growth

Key account attractiveness

Status customers: These are the strategic customers of the past, the relationship with these customers is strong, however the potential for future growth is low -> proactive maintenance.

6 9 7

Status customers
8

10

Streamline customers

11

Low
Key customer spend

Streamline customers: Customers who negotiate aggressively and despite the significant level of business the profitability of the account needs to be carefully monitored -> management for cash.

Stages of the relationship

1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

Stages of the relationship

Simple, transactional relationship

Selling Company Selling company
Buying company Buying Company

Goal Interdependent relationships

Selling company Selling Company
Directors Directors Finance Service Operations Marketing Sales Key Customer Contact

Buying Company Buying company

Sales &ma rketing

Finance
Purchasing Op erations

Op erations

Di rections

SAM

Key Customer Contact

Strategic Account Manager

Fi nance

Service Operations Marketing Sales

Di rections

Fi nance

Developing relationships
1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

Developing relationships
Most important attributes are trust and integrity The main task is developing effective business relationships with senior customer decision makers and influencers Per IBM the most important aspect The stronger the relationship, the less threats will apply Per IBM key to their success during recession Relationship development can be achieved by mapping the people inside the customer who matter, and deciding with whom you want to have a relationship with
Senior management

Middle management

Operations transactions

Xerox stated It is vital to identify ones friends and enemies, the decisionmakers and influencers, and the customers priorities.

Developing relationships
Sa r ah At ki ns o n Ph y l lis Sh e l ton We n d y Cl ar k De r ek Fe l ton Ph i l Co l lins

Tribal Customer
Ma t the w Sw i nd e l ls Ki ng s l ey Ma n n i ng

Tribal Resources

AntiSponsor
Elisabeth Buggins

0 0
Ian Cummings

0 0 0 3 4

0
Peter Spilsbury Paul Taylor

3
Sponsor/ Champion
Peter Blythin

2 4

Aamon Kelly

4
Steve Allan

Relationship Strength on scale 0 to 5 Relationship owner denoted by

1 2 3 4 5 6 7 8

Alignment in the organisation

1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

Alignment in the organisation

Organisation Commitment Relationships outside of the organisation depend on the quality of relationships within it Many of the benefits result from crossing boundaries, whether they are internal or external in the customer organisation Role of the strategic account manager Strategic account manager entails the role of orchestrating the firms resources Transition to SAM Use metrics to measure the success of the SAM program. SAM is a marathon and not a sprint and firms should plan their SAM implementation around the three important areas of change activity: 1. strategy and planning, 2. organisation and culture, 3. process.

Alignment in the organisation

H igh
1 2 R ev isio n Th e way w e d o thin gs 1 1 Fu ll in tegr atio n 1 0 B eco m in g key cu s tom er cen tric 9 Eval uati on D O PT IM I SIN G SAM

BEST PRA C TIC E SAM

8 Ge arin g u p 6 R evie w SAM in tro du ctio n 3 M akin g th e cas e fo r SAM 5 R oll ou t C EM BED D ED SA M

7 R ed efin ing

Transitioning Change to SAM

2 U nd e rsta nd in g th e sco pe 1 Aw aren e ss

A SCOPING SAM

4 C apa bi lity b ui ldin g

B I N TRO D U C IN G SAM

Alignment in the organisation

Knowledge management
Firms with the most effective SAM make information management at the customer level a core competence Moving to a knowledge management approach has benefits for both the company and the client.
For the company, client knowledge is retained and this is where an IT solution for account management is required. For the client they get the extra value of deeper knowledge from the supplier by mixing with like minded experts.

Planning for strategic accounts

1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

Planning for strategic accounts

Best practice companies adopt a collaborative approach with the customer, developing long term plans for, and together with, their strategic accounts
IBM, 3 Compass all suggested developing an effective joint account plan with the customer is critical to ensuring relationship lock-in, uncovering new business development opportunities and driving rapid implementation 3M found that that short, sharp account business plans that live are best

Strategic marketing planning should in turn relate to the corporate strategic plan Organisations that invest resources in detailed analysis of the needs and processes of their strategic accounts perform much better in building long term profitable relationships
The underpinnings of it all is really having a deep understanding of the customer, not just the power politics, but what their marketplace is and where it is going, so that you can genuinely add value

Planning for strategic accounts

1. Relationship overviews/Executive summary
Current performance analysis Current initiatives with the strategic account Financial targets Planning assumptions

2. Strategic account overview

Strategic accounts business environment (sector analysis, competitive situation, major challenges, strategic account SWOT analysis)

3. Objectives and strategy

Indentify and prioritise the key opportunities with strategic account Its position on the customer portfolio matrix Top-level strategy

4. Customer alignment
Customers critical success factors (CSF) and supplier relative performance Strategies to manage the relationship

5. Relationship management
Customers decision-making unit Contact mapping (who talks to whom, state of relationship)

6. Implementation plan
Detailed tactics Budget Risks and contingencies

Risks and failures

1 What is SAM 8 Risks and failures 2 Making the business Case

7 Planning for strategic accounts

Effective SAM

Selecting and categorising customers

6 Alignment in the organisation

4 Stages of the relationship 5 Developing relationships

Risks and failures

1. Relationships must be reciprocated and appropriate
Common mistake is to assume that the customer want to have close, partnered relationships with their suppliers Many companies do not do business on this basis at all; instead their purchasing professionals reduce all supply decisions down to transactions based on trading off quality with price, and flexing market power to obtain the best result.

2. Large customers are not always the best customers

Assumption that the biggest revenue earners are the most profitable is false, and that great care must therefore be taken to before committing substantial resources to large companies who demand great service at lower cost. Research has found that often the most profitable customers are often just below those that generate the largest revenue. Important to stay close to strategic customers but reaching out to other customer groups to reduce dependency on a few, and being locked into long term low performance with unattractive customers.

Risks and failures

3. Misreading customer loyalty
if the supplier links their future strategy to the success of its customer, it creates a strong dependency and consequently a risk on the customers future success or failure. This is with the added risk of a customer switching to another supplier, which can often be part of the of the customers strategy. Therefore it is important not to be over reliant on one customer and avoid the critical error of believing that customer is a loyal partner.

Benefits Strategic Account Management

1. Strategic Account Management -> Take account management to next level 2. Customers -> Service for life
Build long term strategic relationships with customers Retention of strategic customers - more cost effective to retain customers Spot new opportunities and generate new business Increased consultancy provides the hook for increased downstream activities

3. Internal Integration / Consolidation

Break down internal boundaries and reduce silos Use as part of a Company standard to manage consultancy client relationships with major customers Effectively manage and focus resources aligned to Company strategy