An In-Depth Guide to Strategic Account Management

An In-Depth Guide to Strategic Account Management

One buzzphrase swirling around the salesworld is Strategic Account Management or SAM. This is also called Key Account Management. Unlike a lot of trendy words or concepts, SAM is a legitimate, logical strategy. More importantly, it plays a major role in ensuring the long-term viability of your organization.

According to Gartner, 70 percent of CSOs say delivering higher returns from key accounts is a priority. However, current account management channels fall short. In fact, only 28 percent of sales leaders agree these regularly meet cross-selling and account growth targets.

What is Strategic Account Management?

SAM is a methodology that involves identifying important accounts and cultivating mutually beneficial relationships. Unlike sales, which often focuses on the short term, SAM takes a long-range view. Hence, the best strategic account manager is not necessarily your best sales rep. More on that later.

Why should we use strategic account management?

Simply, it’s the best way to guarantee long-term profitability for your organization. The 80/20 ratio states 80 percent of your business comes from 20 percent of your customers or sellers. While that’s overly simplistic, the underlying concept is valid. Strategically, focusing on key accounts will generate the largest long-term ROI from your resources.

If you think you already focus on your biggest clients, you’re missing the big picture. In many cases, your largest accounts will also be strategic accounts. However, that’s not always the case.

Part of strategic account management is identifying buyers with the greatest potential. After recognizing them, you can develop your relationships, so they grow into larger clients.

How do we determine who should be our strategic accounts?

This is a multistep process. First, set criteria for evaluating current clients. Then, come up with a Strategic Score. You may use whatever term you want for your final quantifiable sum. However, use enough criteria to differentiate between accounts. Just don’t use so many that you risk designating the wrong accounts as strategic.

Some areas to consider:

  • Likelihood of continued relationship
  • Client’s ability to grow as a company
  • Product/service fits to client needs
  • Projected revenue potential
  • Pre-existing personal relationships
  • Client’s current financial health

Notice how many areas involve the client’s current position, state, and potential upside. That’s a good way to see beyond your current largest accounts. Now, you can identify up-and-comers that can grow with your organization. Remember, SAM isn’t just about right now. It’s about the long game and looking further down the road.

Additionally, make sure you save this process. As you gain clients, input their details into the system. This gives you a sense of whether you should make them a strategic account. Do this as soon as possible after acquiring their business. This way, you can keep a strategic account pipeline operating parallel to the sales pipeline.

Who should be the strategic account managers?

Once you’ve ranked existing clients by strategic account suitability, you can plan your SAM structure. Naturally, your priority should be determining strategic account managers.

Gallup research shows the importance of account managers. They note 40 percent of B2B customers who are very satisfied with their account manager are fully engaged. If they are not very satisfied, this drops to 13 percent. Also, with only 29 percent fully engaged, 71 percent are at risk of leaving for a competitor.

Some organizations promote their top sales reps. Or else they turn a sales manager into an account manager. These are mistakes. The reality is, all three of those roles require distinct skill sets. You might think that sales managers and account managers are interchangeable. After all, both require management skills. But they aren’t the same.

Sales managers manage people. Strategic account managers manage relationships. It’s a subtle but important distinction.

A sales manager coaches their sales reps. They help their team members hit targets (whether KPIs, sales numbers, or both). They then develop reports so sellers can improve.

A strategic account manager cultivates relationships with the stakeholders of their portfolios. They monitor each client. As a client’s needs and objectives change, strategic account managers identify opportunities to expand the relationships. Some of the main skills needed include the following:

  • Patience
  • Organization
  • Relationship building
  • Emotional intelligence

As account growth can be a lengthy process, strategic account managers must be patient. It’s rare that a rapid change in a client’s requirements presents an opportunity. But when it does, be prepared.

Account managers work with many clients. And each has multiple important players. This is not only true for clients, but your organization as well. These days, most buying decisions require a consensus of many diverse stakeholders.

When issues arise, relationship support and maintenance may require experts. Account managers typically coordinate service requests.

Within such a web of personalities, strategic account managers must maintain their composure. A big part of the job description is “managing” their own and other’ emotions.

How many accounts should each strategic account manager have?

There’s no rule for this. It depends on your unique situation. A key account may be a revenue generator, but it needs a lot of high touches and service. You’d then dedicate an account manager to just that account.

Conversely, you might have many moderate revenue accounts that don’t require as much contact. For these, you can assign numerous accounts to one manager. Of course, this requires monitoring. As the number and demands of key accounts change, distribute their maintenance to account managers as needed.

Your initial number of managers depends on the size, complexity, and contact requirements of your strategic accounts. There’s no formula for this. It’s something you’ll need to calculate during the process.

How many contacts/touches per client should strategic account managers strive for?

This depends on the account. Some want or need more frequent contact, whether emails, follow-ups, meetings, check-ins, etc. One way to find out what each account prefers is to ask the client.

Next, determine a cadence for that account and stick to it. Think of your cadence as a promise. It ensures regular contact, check-ins, and support. Failing to honor that promise harms the relationship.

How should account managers expand business with existing accounts?

This is a complex question. And like figuring out your strategic accounts, it’s a multistep process:

Step 1 – Build a thorough customer profile for each account.

  • Who are the stakeholders involved in purchasing decisions?
  • What are their target markets?
  • What are their short- and long-term goals?
  • What are the specifics of their industry and offerings?
  • Who is their primary competition?

Step 2 – Draft a needs assessment for each account.

  • Identify the intersections between current and future problems
  • Determine the fitness of your offerings.

Step 3 – Create a contact cadence plan, including:

  • Email
  • Phone calls
  • Videoconference
  • In-person

Use a range of contact types, and always tailor the type of contact to the need. Problems may require a more personal touch, such as video or in person. The same may be true of opportunities, like adding service. Also, account growth necessitates more frequent communication and contact.

Step 4 – Write up a Strategic Account Plan
Typically, this is a one-to-three-year roadmap. It should show how the relationship will proceed and grow. Include the following:

  • Customer profile
  • Needs assessment
  • Account cadence
  • Clear direction for both the account manager and account
  • Feedback/adjustments from the account

Sharing this with the client is essential. It ensures uniformity and clear expectations. It also avoids surprises and shows the client this isn’t a one-off transaction. You are invested in the relationship.

This is why selecting the right clients to be strategic accounts is so critical. Some might tick all the boxes. However, they may not yet be interested or able to form strategic relationships.

Step 5 – Track account progress. This should include:

  • Metrics
  • Benchmarks
  • KPIs
  • Timeline
  • Update stakeholders/decision makers

These should assess how relationships are progressing and when to create or execute an opportunity for growth. Account managers should keep tabs on these things.

But it’s also important to consider it from the client’s perspective. Perhaps the timeline for increasing business has changed. Maybe key stakeholders have shifted, or the decision-making process has evolved. There might be other indicators the agreed-upon strategic account plan needs adjusting.

Remember, this is a bilateral arrangement. It is a partnership where organizations and strategic accounts work together for mutual benefit.

Strategic account management is a complex process. It requires the investment of many people and resources on both sides of the relationship. But it’s also the optimal way to increase revenue and build long-lasting partnerships.

Editor’s Note: This article, first published in July 2021, underwent revisions to enhance its coherence.