How Are You Treating Your Largest Accounts?
Most large tech companies have a strategic account strategy, providing additional technical, business, product resources, and occasionally targeted investments for those accounts. Some provide “concierge” level access to technical or development resources. Executive sponsors are also typically assigned to these accounts, to help with elevating the visibility of the partnership and to better manage the business and technical issues that come up.
Why do we make these additional investments in strategic accounts? It’s where the money is, and more importantly it’s where the profit is. One study showed that a company’s top five customers alone may account for 22% of all revenues and 21% of annual profits! Other studies suggest that your top tier of customers will generate all of your company’s profits.
Strategic accounts spend more, they are customers longer, and make specific long-lasting platform, technology and relationship commitments.
Yet in most organizations day to day management of the relationship is largely left to chance. Few companies hire true strategic account managers (SAMs), choosing instead to promote their “best” individual reps into a role that requires significant team and process management skills.
They’re putting lone wolfs into a team coaching role. Oops.
Compensation complicates things. While SAMs may be compensated on multi-year revenue attainment, share of wallet gains and customer satisfaction scores, other sales people on the account, the specialist, pillar, or portfolio sales people, typically retain their quarterly and annual quota, and frequently are re-assigned to new companies each year. These portfolio sales people don’t typically report to the SAM, usually have competing business imperatives for their own product sets and may even compete with one another, as multiple products from the vendor may solve a specific business or technical problem.
In short, a primary driver of disappointment in strategic account programs is that the process typically focuses on sales planning or opportunity planning rather than relationship planning and management. Account based selling counts on the latter. And the ARPEDIO platform, for instance, has a specific set of resources to support relationship development and management.
Developing a Plan Isn’t Sufficient
SAMs are typically expected to develop an annual account plan, and some collaborate with their portfolio sales people to do so. Others just wing it. In most cases, the output is indeed a plan…a written document that might be revisited annually…an artifact that provides no guidance for the day-to-day governance of the account.
It is a sales plan with detailed lists of potential opportunities, alignment of products to perceived business or technical problems. The plan typically lacks a thorough analysis of the influence or relationship map within the account or any plans to bolster relationships with important internal and external (partner) stakeholders.
A survey conducted by the Strategic Account Management Association (SAMA) found that, even within their membership, a few years ago, a mere 11% of account plans are “effectively executed.” That’s a pretty dismal adherence rate, given that these plans should be the primary pathway to better customer relationships and higher revenue generation! And I don’t have any evidence that this percentage has grown in recent years.
What to Do?
If your organization is serious about strategic accounts, the first step is to ensure corporate support for a multiyear investment in the process of account planning, management and governance. It’s going to take investment in people and process. While results will appear almost immediately, the full impact of an effective strategic account program will not be seen until the second or third year of the program, at the earliest. If the program is properly maintained, those results should be long-lasting!
The next step is to set up a framework for success, including:
- Hiring SAMs with strong team management skills and providing an effective coaching environment
- Building a comp plan that supports the multi year and perhaps global nature of the SAM activities, while also properly motivating pillar reps.
- Developing programmatic analysis of customer financials, industry growth trends, key stakeholder profiles, installed base, competitive SOW and more…
- Enrolling management of each portfolio sales organization in the process and creating a consistent set of rules of engagement
- Developing a process for thoughtfully identifying the strategic opportunities and challenges within the customer organization
- Implementing a technology platform like ARPEDIO to support the process, both for the team and to provide ongoing management visibility
- Installing a team governance process to ensure success on an ongoing basis
In my experience…and I’ve driven strategic planning for several billion dollars in revenues…the last item in the framework is the real challenge. Teams gather to conduct the planning process…and then scatter to the wind. Individual reps receive conflicting messages from their management, sometimes in conflict with the team. Occasionally they go “rogue” in an effort to land revenue this quarter or fiscal year, upsetting a much larger, more strategic deal.
To address this issue with one very large software company, we established the concept of sales team “program management” for their Account Team Unit (ATU). Initially, the function of program management was handled by an existing team member, with the goal of providing dedicated headcount to take on that function as necessary.
As we developed the strategic account program at another company, one core team member owned team facilitation and governance to support the strengths (and challenges) of the individual strategic account managers.
Thing One – Visibility
The SAM must have visibility on the activities of each portfolio rep (and their sales consultants), ensuring consistent team/account messaging across all initiatives and engagements; and whether individual reps are actively engaged. That visibility also helps the SAM to know where a rep needs help with access or organizational support. Reps gravitate to where they see opportunity, leaving broken promises of supporting the SAM and the strategic account. “If it’s not closing this quarter, I’m not wasting my time pursuing it.”
The challenge here is that the pillar rep has a very different comp plan than the SAM, and does not report to the SAM, except maybe on a dotted line basis. If they get conflicting directives from their direct manager, they’re going to go with what their manager tells them to do.
Thing Two – Value Selling mindset
The SAM and their team must focus on two key topics:
First, Cocreating new possibilities with the customer. Sometimes this is as basic as exploring Why change/why now, and sometimes, it’s creating new capabilities from scratch, like turning a repository of manufacturing and tech support information into insights that drive manufacturing quality improvements, or using real time social media data into operational signals and feedback.
Second, change management. Top sales people help their customers to first answer that question why change, why now, and then…how. Change management is all about outlining the goals of a specific change and the expectations of behavior change for the involved employees. Without effective change management, most strategic initiatives are unlikely to succeed.
Thing Three – Customer Participation
However, even if your organization successfully designs and implements a strong planning and governance framework, this only provides the “inside-out” view. It’s a series of hypotheses around “what we think the customer might be interested in…” And here’s where most companies fail in their strategic account planning process. They neglect to include the single most important stakeholder in the process — the customer.
Sure…it can be challenging to include the customer in the process, and sometimes the customer’s strategic focus doesn’t quite align with what we want to sell. Go figure! Yet, deep engagement with the customer in the planning process leads to more involvement by the customer, better “time and access” for discovery and relationship building, faster decision cycles, larger, more profitable deals, and higher customer satisfaction. That planning process, by the way, is a cycle rather than an event…a series of regular engagements with relevant resources, and commitment to action and investment on an ongoing basis.
Many companies leave the participation of the customer to be handled by the SAM. A few formally drive a “co-creation” process with the customer, ensuring that the customer has a seat at the table in the planning process. I’ve facilitated strategic account planning in F100 customers’ boardrooms, with active participation of key customer stakeholders throughout the process. Their participation provided valuable direction for our sales investments and led to the identification of significant new opportunities.
Once a strong context is established for the joint team, everyone looks forward to the regular discussions. We’re helping our strategic stakeholders to address significant business challenges and they have a sense that we’re “in the boat” with them, that we are truly committed to their success.
Strategic Account Planning and Governance as Competitive Advantage — Actions to Take
If you believe that your strategic account program could drive more value for your organization (and for your customer), a key area of focus is individual sales rep activity, messaging and governance.
And the second key area is customer involvement. If you’re not actively, routinely involving your customer in the strategic planning process, you’re leaving significant money on the table and wasting valuable time and resources on unqualified opportunities.
And the third is to develop the activities and platforms to scale this into repeatable, manageable, processes.
If you want help building or improving your strategic or key account program, please visit aceleragroup.com to schedule an initial conversation.