Strategic Accounts: The Ultimate Source of Intel and Profit
Every Strategic Account Manager (SAM) knows key strategic accounts can make or break a company’s business (not to mention the SAM’s own personal income).
The SAM plays a pivotal role in his or her company’s success. They must protect and defend critical revenue with critical customers.
I specialize in customer experience and voice-of-the-customer research for B2B companies. For more than 30 years, I’ve guided strategic account teams to develop programs that lead to loyalty and growth. The key to success? Asking top accounts the right questions.
Here are five questions that every SAM should ask at their next account meeting to strengthen and protect their critical relationships. To illustrate my point, I’ll bring in quotes from my clients’ top customers. Their answers to these five questions demonstrate why this work is so important.
What cadence would you like us to have for general account activities versus our annual business reviews?
While critical, business reviews are only one aspect of key account management. Too often, our studies show that account managers don’t take the time to ask their customer what they really want when it comes to meetings.
For example, when we asked our client’s biggest customer this question we heard,
“The units run smoothly without any issues, but I don’t hear anything from our key account manager. If they would be more active in their customer care and support, they could become our number one supplier.”
This is a direct quote from a Vice President of Operations at a $16 million account.
Our client immediately (and easily) fixed this engagement issue. By simply understanding what a top account expected beyond annual reviews, this SAM team was awarded $6 million in additional sales in less than six months to become the account’s number one supplier.
We are working on new approaches to solve _________. Would you review some early concepts to see if we’re on the right track to help your business?
Strategic account managers shouldn’t focus on the status quo — as a rule, they must continuously improve their processes to further their company’s growth, as well as their own personal growth and expertise. This is particularly evident when it comes to innovation, and the best SAMs are always on the lookout for ways to contribute to a strategic account’s success.
A recent customer study forced one of our client’s account managers to focus on innovation. The ‘aha’ moment came when she heard a quote from a Vice President of Engineering at a $25 million account.
The Vice President said:
“I have regular conversations with other suppliers about what they’re working on regarding innovation. That doesn’t happen with them.”
What did the SAM do? She listened and adapted to her client’s needs. First, she engaged with her own innovation team to gather early product concepts that might apply to the account. Then, she met with that very same top account to gain preliminary feedback. She was able to identify features that were most important for their next generation of equipment. Plus, her account agreed to sit down with her engineering team to outline a focused test to ultimately help with commercialization.
Their collaborative effort brought incremental improvements to the existing product, as well as an outlined approach for a new product that was fully developed in less than 12 months.
When it comes to our partnership, where are we stumbling — what should we be doing to help your company be more successful?
We helped one client perform a microanalysis of the overall health of their biggest customer. We started to track the win/loss ratio at just this account. The client had to face the music: the number of lost opportunities at the key account was worth millions. He knew something needed to be done and lowering the price wasn’t in the cards. In this case, the SAM’s top account decision-makers had emotionally and professionally moved on. It ultimately cost the SAM's company its relationship and business with its number-one key account. In less than a year, the account pulled $10 million in new business and the following year, awarded its entire business — worth more than $35 million, annually — to a competitor.
We performed a post-mortem review to assess the failure. Our client’s key contact at the account (a VP of Sales) stated,
“I don’t really hear much on a normal basis. I have other suppliers that may give me a call and be more proactive. We only hear from them when there’s a problem or potential problem.”
The SAM took the hit but importantly, he used it to change how he interacted with every top account he was assigned. Additionally, his new selling efforts were directed to identify, find, and land an account with all the characteristics of the one lost. He not only found another top account after 10 months with the same profile as his lost account, but his newfound dedication to proactively engage with his accounts helped secure his existing sales revenue from the accounts in his original portfolio.
Can I come to the plant with our VP of Operations to observe how our product integrates into your manufacturing process? We’d like to see if we can simplify how our product works in your production, as well as to see if there are other aspects we can contribute to enhancing your throughput.
One of the hardest lessons SAMs must learn is that they shouldn’t be the only point of contact with a key account. Customer experience is the job of everyone — not just the SAM. Shipping, engineering, service, manufacturing, and just about everyone at the SAM’s company should be committed to delivering an exceptional CX to top accounts. In many cases, taking the time to bring another set of eyes into the key account’s operations can open huge opportunities — often with a simple solution.
One study participant demonstrated this point nicely. We interviewed senior influencers at a client’s top accounts. A Vice President of Procurement at a $12 million account told us,
“It’s so frustrating — my team opened the pallet to find it’s been packed with the smallest items on the bottom while the largest were on top. Not to mention, the pallet documentation was from the previous order! It was totally incorrect.”
The client realized he needed his whole company to be more committed to overserving this whale of an account. In this case, this SAM addressed the issue with his operations and customer service teams to identify ways to error-proof his company’s process for this key account. The SAM recognized that his team’s last step (shipping) was his account’s first step (receiving) — and it was totally misaligned but very correctable.
In as few as three months, the company’s shipping department had modified and perfected their method of packing and shipping pallets and documentation to be sure it was error proofed. The improved delivery process encouraged the SAM’s account to add additional stock-keeping units (SKUs) to its next order resulting in a 10% increase in revenue month over month.
If you could magically change one thing about our relationship, what would it be?
This is a simple question that always sheds light on opportunities for improvement.
According to one SAM, one of the biggest advantages she had in asking this question was its ability to change the conversation. She was able to identify areas that she didn’t realize her key account cared about. A key stakeholder at a $60 million account told her,
“You all have great programs for us as a company at the corporate level, but you’re terrible when it comes to local support.”
By focusing more resources and realigning territory responsibilities, this SAM successfully grew the relationship year over year by 20% annually. The key was rolling out a vendor-managed inventory program at the local level — a very difficult but highly rewarding strategy.
SAM Golden Rule: Helping Your Company Understand How Key Accounts DefineSuccess
These five questions have one thing in common: they are all proactive ways for SAMs to engage at key accounts by changing the tone and conversation. In these cases, the SAM is proactively asking, observing, and exploring ways to make the Strategic Account more successful.
These questions are all solution-driven, not sales-driven. Strategic Accounts expect more than a quality product delivered on time and in full. In today’s world, disruption (from supply to pricing) has put pressure on every aspect of a key account’s relationship with its suppliers.
The best companies help their Strategic Account Managers prioritize which accounts matter the most. By their nature, strategic accounts matter, but if a company is trying to provide the same level of service and care to all accounts, the SAM program will fail.
Great SAM programs start first with data. Which customers are most critical? Use revenue data to identify the top accounts that are responsible for 50% (or more) of your company’s revenue. Then, determine which should have oversized resources — and a robust CX program. In many cases, that pool of your top 50%-ers may only be three to five accounts.
How to Identify Which Accounts Really Should be in a SAM Program
We use Quartile Analysis to identify which customers should matter enough to warrant a truly robust SAM approach. Use past revenues as your data basis. We recommend looking at 12-18 months if the sales cycle is more annualized; 3-5 years if the sales cycle focuses more on capital-expense purchases. Divide all customers’ revenue in equal quartiles of 25% each. Our analyses for companies around the world consistently show that the top 25% of customers will be driving 89% of your revenue with the second 25% responsible for about 7%. That leaves the bottom 50% of customers contributing less than 5% of revenue. That top quartile should be a SAM’s priority.
Once you know your true SAM-level accounts, make sure you have addressed the five foundational questions to ensure basic customer success. Next, you will be ready to assess several additional CX options to profitably grow your top strategic accounts. Collaborate with internal leadership and your top accounts to configure and customize their CX for maximum ROI.
- Should the account have its own customer service team?
- Should the account have a dedicated manufacturing cell?
- Should the top strategic account have a dedicated team of engineers to identify innovation, sustainability, or Internet of Things (IoT) initiatives that can be tested and commercialized with the account’s help?
- Does this account warrant a manufacturing or fulfillment site that’s more strategically located?
- Does this account need an operations liaison to monitor continuous improvement on a regularly scheduled basis?
Sometimes, there are strategic accounts that have not hit top-account status but will — perhaps they have all the characteristics of a strategic account and need to be nurtured. For these accounts, the only caution is to be sure they warrant the time and attention of your SAM program. And, most importantly, determine an ejection point: qualify and quantify a trigger point if they don’t live up to expectations.
The biggest responsibility of a SAM (aside from moving to a solutions-oriented approach) is to understand the best opportunities for profitable growth and retention of his or her key account in a three-to-five-year timeframe. The work starts by asking hard questions at the account and even harder questions among leadership. Can you fulfill the account’s needs, and will leadership provide the resources you need to do so?
Of course, the real question is are you willing to hear the answers?
ABOUT THE AUTHOR
Kay Cruse is a seasoned veteran of customer research, strategic planning, and brand development. A proven leader with over 25 years of experience, she champions client success by focusing on business strategy and maximizing their ROI. She specializes in customer insights, prioritizing strategic opportunities, and tactical implementation.
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