Effective Strategic Account Management

Matthew Alleway

Customer
Stakeholders

Strategic
Customer Company
Account
Strategy Strategy
Management

Internal
Resources
Introduction: Strategic Account Management (SAM)

consequently a
Used to ensure
SAM is a strategic It provides a growing number of
the long term
approach means to develop companies have
development and
distinguishable and nurture made SAM part of
retention of
from account relationships with their core strategy
strategic
management major customers for customer
customers.
partnering
Effective Strategic Account Management Model
1

What is SAM
8 2

Making the
Risks and
business
failures
Case

7 3

Planning for Effective Selecting and

strategic categorising
accounts SAM customers

6 4

Alignment in
Stages of the
the
5 relationship
organisation

Developing
relationships
What is Strategic Account Management (SAM) ?
1

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

7 3
Planning for Effective Selecting and
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

1 2 3 4 5 6 7 8
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 buyer-
seller boundaries, described as a process of ‘relational development’.

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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 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

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

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Making the business case
1

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

7 3
Planning for Effective Selecting and
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

1 2 3 4 5 6 7 8
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
1 2
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
3 4 5 6 7 8
Selecting and categorising customers
1

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

7 3
Planning for Effective Selecting &
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

1 2 3 4 5 6 7 8
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 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

Supplier’s relative business strength as seen by the customer

High Low Star customers:

Strategic customers: These are the
The most innovative and strategic customer of
important projects High the future and are an
1
should be developed Investment for
2 5
with these customers -> growth
strategic investment. Strategic 4 Star
customers customers
3
attractiveness
Key account

Status customers: These Streamline

are the strategic 6
customers:
customers of the past, the Customers who
relationship with these 9 negotiate
customers is strong, aggressively and
Status Streamline 11
however the potential for 10 despite the significant
7 customers customers
future growth is low -> level of business the
proactive maintenance. profitability of the
8 account needs to be
carefully monitored ->
Low management for
cash.
Key customer spend

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Stages of the relationship
1

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

7 3
Planning for Effective Selecting and
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

1 2 3 4 5 6 7 8
 Stages of the relationship

Goal
Simple, transactional relationship Interdependent relationships

Selling
Sellingcompany
Company BuyingCompany
Buying company
Selling Company
Selling company BuyingCompany
Buying company

Directors Directors

Finance Finance
Sales &ma rketing
Op erations
Di rections

Purchasing

Op erations
Service Service

Di rections
Strategic
Fi nance

Key

Fi nance
Key
SAM Customer Account Customer
Contact
Manager Operations Operations Contact

Marketing Marketing
Sales Sales

1 2 3 4 5 6 7 8
Developing relationships
1

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

7 3
Planning for Effective Selecting and
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

1 2 3 4 5 6 7 8
 Developing relationships
 Most important attributes are trust and
integrity Senior management
 The main task is developing effective
business relationships with senior customer
Middle management
decision makers and influencers – Per IBM
the most important aspect
 The stronger the relationship, the less Operations transactions
threats will apply – Per IBM key to their
success during recession
 Relationship development can be achieved
by mapping the people inside the customer
Xerox stated “It is vital to
who matter, and deciding with whom you identify one’s friends and
want to have a relationship with enemies, the decision-
makers and influencers,
and the customer’s
priorities”.

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Developing relationships
Tribal Tribal Resources
Customer

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
Sw i nd e l ls

Ki ng s l ey
Ma n n i ng
Ma t the w
Anti-
Sponsor
0 0
Elisabeth Buggins
0 0
Ian Cummings
0 0 3
Peter Spilsbury
4
Paul Taylor
3 2
Peter Blythin
Sponsor/
Champion 4
Aamon Kelly
4 5
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 2
Making the
Risks and
business
failures
Case

7 3
Planning for Effective Selecting and
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

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 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. strategy
and planning, 2. organisation and culture, 3. process.

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Alignment in the organisation
1 2 Rev isio n ‘Th e way w e d o
H igh
thin gs ’

1 1 Fu ll
in tegr atio n

1 0 Beco m in g
key cu s tom er
BEST -
cen tric PRA C TIC E
SAM

9 Eval uati on
Transitioning
8 Ge arin g u p D Change to
OPT IM I SIN G
6 Revie w SAM SAM SAM
in tro du ctio n 7 Red efin ing

3 M akin g th e cas e 5 Roll ou t

fo r SAM

4 C apa bi lity C
2 U nd e rsta nd in g EM BED D ED
b ui ldin g
SA M
th e sco pe

1 Aw aren e ss

B
A I N TROD U C IN G
SCOPING SAM SAM

1 2 3 4 5 6 7 8
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
1

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

7 3
Planning for Effective Selecting and
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

1 2 3 4 5 6 7 8
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

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

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 Its position on the customer portfolio
Top-level strategy
opportunities with strategic account matrix

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

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

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Risks and failures
1

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

7 3
Planning for Effective Selecting and
strategic categorising
accounts SAM customers

6 4
Alignment in
Stages of the
the
relationship
organisation
5

Developing
relationships

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