Effective Strategic Account Management

Matthew Alleway

StrategicAccount

Management

CustomerStakeholders

CompanyStrategy

InternalResources

CustomerStrategy

Introduction: Strategic Account Management (SAM)

SAM is a strategicapproach

distinguishablefrom accountmanagement

Used to ensurethe long term

development andretention of

strategiccustomers.

It provides ameans to develop

and nurturerelationships withmajor customers

consequently agrowing number ofcompanies have

made SAM part oftheir core strategy

for customerpartnering

Effective Strategic Account Management Model

EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

What is Strategic Account Management (SAM) ?

EffectiveSAM

EffectiveSAM

What isSAM?

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

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SAM is a management approach adopted by selling companies aimed atbuilding a portfolio of loyal strategic customers

By offering them on a long term basis, a service/product offering tailoredfor their specific needs

it is a progression towards a form of ‘partnership’ or alliance with majorcustomers characterised by joint decision making and problem solving,integrated business processes and collaborative working across buyer-seller boundaries, described as a process of ‘relational development’.

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What is Strategic Account Management (SAM) ?

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)

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Account management Strategic account management

Mostly managed as business as usual Managed for growth or change

Coordinated overview of account Holistic, helicopter, longer term view

Opportunity-focused understanding Deep understanding of customers business

One year plan Three to five year complete company-ownedbusiness plans (not just a personal plan orsales and marketing plan)

No investment or very little Likely to require investment in line withstrategy

Works within normal organisation Flexible, cross boundary sharing

Requires account manager Requires strategic account/business manager

Making the business case

EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

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Reasons to adopt SAM

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Risk management

Customer complexity – retention meansunderstand the customers business andsupply chain

Competitors are doing it, the clientexpect it and request it in tenders

Clients want a standard approachespecially from complex suppliers

Opportunities

Ability to influence client lifetime value,especially through solutions

More precise innovation through co-creation with clients

Greater market understanding andadaptiveness

Reduced costs and increased valuethrough better resource allocation

Selecting and categorising customers

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EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting &categorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

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 customer’s attractiveness in terms ofits potential for the organisation

Also necessary to have a good process for deselecting strategic customers

Optimum number of strategic accounts is 20-30

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Strategic account portfolio

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Strategic customers:The most innovative andimportant projectsshould be developedwith these customers ->strategic investment.

Strategic customers:The most innovative andimportant projectsshould be developedwith these customers ->strategic investment.

Star customers:These are thestrategic customer ofthe future and are anInvestment forgrowth

Streamlinecustomers:Customers whonegotiateaggressively anddespite the significantlevel of business theprofitability of theaccount needs to becarefully monitored ->management forcash.

Status customers: Theseare the strategiccustomers of the past, therelationship with thesecustomers is strong,however the potential forfuture growth is low ->proactive maintenance.

Strategiccustomers

Starcustomers

Statuscustomers

Streamlinecustomers

High Low

Key

acc

ount

attr

activ

enes

s

Supplier’s relative business strength as seen by the customer

Low

High

Key customer spend

7

6

3

1

9

10 11

5

4

2

8

Stages of the relationship

EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

1 2 3 4 5 6 7 8

Stages of the relationship

Buying companySelling company

Di r

ecti

ons

Fina

nce

Op

erat

ions

Sale

s &m

ark

etin

g

SAMKey

CustomerContact

Purchasing

Op

erations

Finance

Di rections

Selling company Buying company

Directors Directors

StrategicAccountManager

Finance Finance

KeyCustomerContact

Service Service

Operations Operations

MarketingSales

MarketingSales

Simple, transactional relationshipGoal

Interdependent relationships

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Selling Company Buying CompanyBuying CompanySelling Company

Developing relationships

EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

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Developing relationships

Most important attributes are trust andintegrity

The main task is developing effectivebusiness relationships with senior customerdecision makers and influencers – Per IBMthe most important aspect

The stronger the relationship, the lessthreats will apply – Per IBM key to theirsuccess during recession

Relationship development can be achievedby mapping the people inside the customerwho matter, and deciding with whom youwant to have a relationship with

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Senior management

Middle management

Operations transactions

Xerox stated “It is vital toidentify one’s friends andenemies, the decision-makers and influencers,and the customer’spriorities”.

Developing relationshipsTribalCustomer

Tribal Resources

Ma

tthe

wSw

i nd

ells

Ki n

gsl

eyM

an

ni n

g

Sara

h A

t kin

son

We

nd

y C

l ark

De

rek

Felt

on

Phyl

lis S

hel

ton

Phil

Co

llin

s

Elisabeth Buggins0 0

Ian Cummings0 0

Peter Spilsbury0 0 3

Paul Taylor4

Peter Blythin3 2

Aamon Kelly4

Steve Allan4 5

Relationship Strength on scale 0 to 5Relationship owner denoted by

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Sponsor/Champion

Anti-Sponsor

Alignment in the organisation

EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

1 2 3 4 5 6 7 8

Alignment in the organisationOrganisation 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 firm’s 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. strategyand planning, 2. organisation and culture, 3. process.

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Alignment in the organisation

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1 2 Rev isio n ‘Th e way w e d o

thin gs ’

1 1 Fu ll

in tegr atio n

1 0 Beco min g

key cu s tom er

cen tric

9 Eval uati on

8 Ge arin g u p

6 Revie w SAM

in tro du ctio n 7 Red efin ing

3 M akin g th e cas efo r SAM

5 Roll ou t

2 U nd e rsta nd in g

th e sco pe

4 C apa bi lity

b ui ldin g

1 Aw aren e ss

H igh

BI N TROD U C IN G

SAM

CEM BED D ED

SA M

DOPT IM I SIN GSAM

BEST -PRA C TIC ESAM

ASCOPING SAM

TransitioningChange toSAM

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.

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Planning for strategic accounts

EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

1 2 3 4 5 6 7 8

Planning for strategic accounts

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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 businessdevelopment 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 andprocesses of their strategic accounts perform much better in building long termprofitable 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 youcan genuinely add value

Planning for strategic accounts

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6. Implementation plan

Detailed tactics Budget Risks and contingencies

5. Relationship management

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

4. Customer alignmentCustomers critical success factors (CSF) and supplier relative

performance Strategies to manage the relationship

3. Objectives and strategyIndentify and prioritise the key

opportunities with strategic accountIts position on the customer portfolio

matrix Top-level strategy

2. Strategic account overviewStrategic accounts business environment (sector analysis, competitive situation, major challenges, strategic account SWOT

analysis)

1. Relationship overviews/Executive summary

Current performance analysis Current initiatives with thestrategic account Financial targets Planning assumptions

Risks and failures

EffectiveSAM

EffectiveSAM

What is SAM

Making thebusiness

Case

Selecting andcategorisingcustomers

Stages of therelationship

Developingrelationships

Alignment inthe

organisation

Planning forstrategicaccounts

Risks andfailures

1

2

4

5

6

7

8

3

1 2 3 4 5 6 7 8

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 offquality 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 largecompanies who demand great service at lower cost.

Research has found that often the most profitable customers are often just belowthose that generate the largest revenue.

Important to stay close to strategic customers but reaching out to other customergroups to reduce dependency on a few, and being locked into long term lowperformance with unattractive customers.

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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 orfailure.

This is with the added risk of a customer switching to another supplier, which can oftenbe part of the of the customers strategy.

Therefore it is important not to be over reliant on one customer and avoid the criticalerror of believing that customer is a loyal partner.

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Benefits Strategic Account Management

1. Strategic Account Management -> Take account management tonext 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