Effective Strategic Account Management

Matthew Alleway
Strategic
Account
Management
Customer
Stakeholders
Company
Strategy
Internal
Resources
Customer
Strategy
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
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
1
2
4
5
6
7
8
3
What is Strategic Account Management (SAM) ?
Effective
SAM
Effective
SAM
What is
SAM?
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
1
2
4
5
6
7
8
3
1 2 3 4 5 6 7 8
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 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-owned
business plans (not just a personal plan or
sales and marketing plan)
No investment or very little Likely to require investment in line with
strategy
Works within normal organisation Flexible, cross boundary sharing
Requires account manager
Requiresstrategic account/business manager
Making the business case
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
1
2
4
5
6
7
8
3
1 2 3 4 5 6 7 8
Reasons to adopt SAM
1 2 3 4 5 6 7 8
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 co-
creation with clients
Greater market understanding and
adaptiveness
Reduced costs and increased value
through better resource allocation
Selecting and categorising customers
1 2 3 4 5 6 7 8
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting &
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
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 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
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Strategic account portfolio
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Strategic customers:
The most innovative and
important projects
should be developed
with these customers ->
strategic investment.
Strategic customers:
The most innovative and
important projects
should be developed
with these customers ->
strategic investment.
Star customers:
These are the
strategic customer of
the future and are an
Investment for
growth
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.
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.
Strategic
customers
Star
customers
Status
customers
Streamline
customers
High Low
K
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Suppliers 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
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
1
2
4
5
6
7
8
3
1 2 3 4 5 6 7 8
Stages of the relationship
Buyingcompany Sellingcompany
D
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F
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&
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k
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SAM
Key
Customer
Contact
P
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O
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Sellingcompany Buyingcompany
Directors Directors
Strategic
Account
Manager
Finance Finance
Key
Customer
Contact
Service Service
Operations Operations
Marketing
Sales
Marketing
Sales
Simple, transactional relationship
Goal
Interdependent relationships
1 2 3 4 5 6 7 8
Selling Company
Buying Company
Buying Company
Selling Company
Developing relationships
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
1
2
4
5
6
7
8
3
1 2 3 4 5 6 7 8
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
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Senior management
Middle management
Operations transactions
Xerox stated It is vital to
identify ones friends and
enemies, the decision-
makers and influencers,
and the customers
priorities.
Developing relationships
Tribal
Customer
Tribal Resources
M
a
t
t
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S
w
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n
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s
K
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M
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A
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W
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C
l
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F
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P
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S
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P
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C
o
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l
i
n
s
Elisabeth Buggins
0 0
Ian Cummings
0 0
Peter Spilsbury
0 0 3
Paul Taylor
4
Peter Blythin
3 2
Aamon Kelly
4
Steve Allan
4 5
Relationship Strength on scale 0 to 5
Relationship owner denoted by
1 2 3 4 5 6 7 8
Sponsor/
Champion
Anti-
Sponsor
Alignment in the organisation
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
1
2
4
5
6
7
8
3
1 2 3 4 5 6 7 8
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.
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Alignment in the organisation
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12 Revision The way we do
things
11 Full
integration
10 Becoming
key customer
centric
9 Eval uati on
8 Gearing up
6 Review SAM
introduction
7 Redefining
3 Making the case
for SAM
5 Roll out
2 Understanding
the scope
4 Capabi lity
bui lding
1 Awareness
High
B
INTRODUCING
SAM
C
EMBEDDED
SAM
D
OPTIMISING
SAM
BEST-
PRACTICE
SAM
A
SCOPING SAM
Transitioning
Change to
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.
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Planning for strategic accounts
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
1
2
4
5
6
7
8
3
1 2 3 4 5 6 7 8
Planning for strategic accounts
1 2 3 4 5 6 7 8
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
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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 alignment
Customers critical success factors (CSF) and supplier relative
performance
Strategies to manage the relationship
3. Objectives and strategy
Indentify and prioritise the key
opportunities with strategic account
Its position on the customer portfolio
matrix
Top-level strategy
2. Strategic account overview
Strategic accounts business environment (sector analysis, competitive situation, major challenges, strategic account SWOT
analysis)
1. Relationship overviews/Executive summary
Current performance analysis
Current initiatives with the
strategic account
Financial targets Planning assumptions
Risks and failures
Effective
SAM
Effective
SAM
What is SAM
Making the
business
Case
Selecting and
categorising
customers
Stages of the
relationship
Developing
relationships
Alignment in
the
organisation
Planning for
strategic
accounts
Risks and
failures
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 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.
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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 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.
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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