Strategic Account Management
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6 Best Practices for Managing and Growing Strategic Accounts
Successful sales leaders build their reputations and careers on the ability to consistently meet or exceed their target revenue goals each year through focused sales strategy execution. Many sales leaders, however, fall short of their annual “number,” which is one of the driving forces behind the high level of turn- over among sales leaders. In fact, research from a variety of sources (including CSO Insights, Forrester, and Richardson) indicates that the average tenure of a sales leader is somewhere between just 18 to 24 months.
More often than not, the defining difference between sales leaders who succeed and those who don’t is not their ability to create the right sales strategy, but their ability to drive sales strategy execution. The term “sales strategy” describes a sales leader’s game plan to achieve his or her annual corporate financial and important business objectives to ensure longer-term viability that will drive future shareholder value (for example, growing market share, successfully launching new products, and improving quality or lowering costs).
How Can Strategic Account Management Help Drive Sales Strategy Execution?
Establishing existing clients as strategic accounts is a crucial component of any sales strategy execution plan. Why? Fundamentally, selling to an existing account is much more profitable and predictable than trying to win new business with a new organization. Industry research by CSO Insights supports this logic; most B2B companies expect on average that nearly three-quarters of their planned revenue, and even a higher percentage of profit, will come from existing customers.
In addition, customers who enjoy strategic account status are typically more receptive to exploring proposals for product enhancements, new products, and new services and solutions. This opens up opportunities for sales leaders to enhance their relationships with customers and establish themselves as an integral part of their customer’s business.
The bottom line is that a customer who plays an integral role in the current and long-term success of your company is an invaluable asset who needs to be managed and treated as an invaluable asset. Here are six best-practice ideas to help you protect and grow a true strategic account. In fact, challenger brands may be more open to your ideas and thus be a better fit as a strategic account.
Know when to designate a client as a strategic account.
First, identify clients who contribute a significant amount of revenue to your company. Ask yourself, “If we lost this account, how much would we worry about filling the revenue gap?” Also, look for clients who are open to experimenting with innovative ideas and new solutions. Early adopter companies or companies that operate in highly competitive industries that require constant innovation are often ripe for strategic account alignments. This gives your company a chance to develop best practices and case studies while you continue to deepen your strategic relationship. This can also be a valuable opportunity for your company to launch research and development (R&D) initiatives.
Don’t be too enamored of “big logos” (such as Fortune 500 companies or a sexy new start- up) when designating a strategic account. Although you may believe that working with these companies will bolster your credibility and create some buzz, many are difficult to work with and very cost conscious. Although they may help raise your profile and improve your marketing, it may be too difficult to make these accounts profitable enough to merit the resources you need to grow a true strategic account. In fact, challenger brands may be more open to your ideas and thus be a better fit as a strategic account.
Tip: When thinking about which customers to name as strategic accounts, take your CEO’s opinion into consideration. Which clients would he or she hate to lose? Which clients does he or she brag about often?
Select your strategic account manager (SAM) carefully.
Trying to get a farmer to hunt is futile. Some people are cut out for new business development, and others aren’t. But the opposite also holds true. You probably don’t want a SAM who is so aggressive that he or she pesters the client or proposes new ideas that are not in the client’s best interest. The ideal SAM should be a problem solver who will be sensitive to the client’s needs. He or she must be willing and able to become an expert in the account’s business and make the connection between the client’s needs and your company’s ability to help. Educating the customer about insights relevant to their business is a major focus for SAMs.
The SAM also needs to have credibility and the ability to marshal internal resources when necessary. Extensive technical expertise isn’t necessary, but an aptitude to call in the right people at the right time is critical to a SAM’s success in seizing opportunities that can further the relationship with the strategic account. The most successful SAMs are also skilled at relating to the needs of a wide range of individuals in the account and building consensus among them. These behaviors are quite different from a hunter’s; hunters often have an “eat what you kill” mentality.
Tip: Study your best SAMs to better understand what makes them successful in their jobs. It is very helpful to use valid, reliable psychographic assessments, along with time and activity studies. Finally, accompany them on some calls to better understand the style and substance of their conversations with their clients.
- Know the players inside the strategic account; build peer relationships.
Nothing will put a strategic account at greater risk than having only a single point of contact in the account or having a SAM own all of the relationships in the account.
Building an account plan will help you identify all of the key players who influence the need or preference for your solution. LinkedIn is an amazing tool to help support this activity. If you are linked to your SAM and your SAM is linked to contacts in the account, you will have visibility into these contacts and the ability to connect with them. When people change jobs, they often update their LinkedIn profile quickly. If you’re in their network, you and your SAM can manage the situation proactively.
Tip: It’s important to identify potential buyers and strong influencers early. One way to accomplish this is to establish executive sponsorship programs in which your senior executives build peer-to-peer relationships with executives in your strategic accounts. This muscle helps fortify the relationship and expedite decision making and protects you from changes in executive leadership or company strategy.
Ideally, you want to become part of the fabric of your strategic account’s organization — in other words, you want them to be dependent on you. This dependence can be demonstrated in these ways:
- Operational dependence (e.g., channel partnerships)
- Technological dependence (e.g., Microsoft’s relationship with resellers)
- Business dependence (e.g., providing special terms or financing)
- Contractual dependence (e.g., asking for multiyear or automatically renewing contracts)
Tip: Sometimes, clients won’t be 100% satisfied, or they’ll hire new, key personnel who’ll introduce new biases and preferences. If they’re dependent on you for their business, however, it will be difficult for them to sever ties without giving you a chance to make things right.
Provide insight to create value for the client’s business.
Here’s where you need to look beyond the obvious and seek new win-win opportunities in your client’s business. A SAM typically provides value by helping clients save their money, make more money, or manage their risk. Opportunities to do these things crop up in one of three ways:
- The first option is for a SAM to respond to an opportunity. In this scenario, the opportunity comes directly from the client, usually in the form of a proposal request. In order to act quickly on this kind of opportunity, the strategic accounts management team must already be set up to respond quickly.
- The second option for a SAM is to shape an opportunity. The shape opportunity is when a solution is either on the client’s radar or is close to being on the client’s radar, but executive leadership has not had time to develop an initiative around the opportunity. For example, a client company learns it’s breaking into a new market and must hire 100 salespeople in ten different countries. This could be an opportunity to partner with the client and offer them various solutions to assist with this effort.
- Finally, a SAM can create an opportunity. A SAM must create opportunities when the account is too busy or overwhelmed by challenges to give innovation and strategic planning proper attention. In this case, the client company values a partner that can bring them ideas, help them understand their challenges, and shape solutions that will help them achieve their goals.
SAMs who can shape and create opportunities within their accounts benefit by mitigating competition, reducing price sensitivity, and building deeper and higher-level relationships in the account.
Tip: Again, choose your SAM carefully based on core competencies. The SAM needs to be much more than a farmer. He or she needs to be a consultant, an educator, an advisor, and above all, must possess strong business acumen. These skills can be developed, but many require specialized training and coaching to become truly authentic, confident, and effective in the role of a SAM.
Strategy Execution - Validate the Plan.
Managing a strategic account is an important job that requires rigor and discipline. Think of it as running a business within your business. Account planning is important to help identify the resources that you need to achieve your growth objectives. And it is a collaborative process that requires involvement from the client to be valid. Too often, account plans are more fantasy than reality — many organizations go through an annual account-planning exercise and then forget to execute the plan.
As a sales leader, you need the revenue from your strategic accounts to achieve your goals. This means your SAMs need valid account plans, and you need to hold people accountable for executing their account strategies. Identify the objectives, goals, and key performance indicators to track progress, just as you would manage your sales pipeline. Make sure your SAMs have what they need to meet their goals and help coach their strategic account teams to success.
Tip: Don’t consider a strategic account plan final unless your client has seen and agrees to the plan. You should involve the client in the process to ensure that the plan is valid and actionable.
Conclusion: Do Not Get Distracted From the Fundamentals for Strategic Account Management Strategy Execution
It is easy to get distracted from the fundamentals necessary for strategy execution. While there are an unlimited number of initiatives around people, process, and technology that can help you reach your goals, few will be as impactful as establishing key clients as strategic accounts and managing them well. Before you embark on your next strategic initiative or brainstorming session, ask yourself how much potential exists within your strategic accounts and what you need to do to protect and grow these assets. In the end strategic account programs will provide consistent, stable revenue that will help you sustain long-term growth and success for your company.