An In-Depth Guide to Strategic Account Management
One of the buzzphrases swirling around the sales stratosphere over the last few years is Strategic Account Management, or SAM. Unlike a lot of trendy words or concepts, SAM is a legitimate, logical strategy that may play a major role in ensuring the long-term viability of your organization.
In today’s post, we’ll examine exactly what SAM is, why you need it, and how to implement it.
What is Strategic Account Management?
Also called key account management, SAM is a methodology that involves identifying important accounts and cultivating mutually beneficial relationships with those clients. Unlike sales, which is often focused on the short term, SAM takes a long-range view. Hence, the best strategic account manager is not necessarily your best sales rep (we’ll talk more about that later).
Why should we use strategic account management?
Because it’s often the single best way to guarantee long-term profitability and existence for your organization. No doubt you’ve heard the 80/20 ratio before (80% of your business comes from 20% of your customers or sellers). While that’s an overly simplistic way of looking at it, the underlying concept is valid – strategically focusing on key accounts will generate the biggest long-term ROI from your resources.
If you’re saying, “Okay, that just means we focus on our biggest clients. We already do that,” you’re getting an incomplete picture. While in many cases, your biggest accounts will indeed also be the strategic accounts, that’s not necessarily the case.
Part of strategic account management involves identifying which buyers have the greatest potential to grow into large accounts and developing your relationship with them so that they can become one of your biggest clients.
How do we determine who should be our strategic accounts?
This is a multi-step process. First, you need to come up with a set of criteria for evaluating all of your current clients and use that to come up with a Strategic Score, or whatever term you want to use for your final quantifiable sum for each account. You should use enough criteria to be able to truly differentiate between accounts, but not so many that you run the risk of selecting the wrong accounts to designate 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 a number of those areas involve looking at where the client is currently positioned and their own current state and potential upside. That’s a good way to go beyond just the present biggest accounts and identify those up-and-coming ones who can grow alongside your organization. Remember, SAM isn’t just about the right now – it’s about the long game and looking further down the road.
Additional note: Make sure you save this process. As you acquire new clients, input their particulars into the system and get a sense of whether you should make them a strategic account. By doing it as soon as possible after acquiring their business, you can keep a strategic account pipeline operating in a parallel structure to the sales pipeline.
Who should be the strategic account managers?
Once you’ve determined a ranking list of your existing clients in terms of strategic account suitability, you can begin thinking about your SAM structure. Naturally, the first priority is determining who your strategic account managers should be.
Some organizations make the mistake of promoting their top sales reps or simply transferring a sales manager over to an account manager role. The reality is, all three of those roles require distinct, separate skillsets. For example, you might think that because a sales manager and an account manager both require managerial skills, the roles are interchangeable.
But they aren’t. A sales manager manages people. A strategic account manager manages relationships. It’s a subtle distinction, but an important one to be aware of. A sales manager works at coaching up their sales reps, helping their team members to hit targets (whether KPIs, sales numbers, or both), and developing their direct reports to become the best sales reps possible. A strategic account manager, on the other hand, works at cultivating relationships with the stakeholders of their accounts portfolio, monitors the clients’ situation, and identifies opportunities for expanding the business relationship as clients’ needs and objectives change.
That means you want your strategic account managers to be people who are patient first and foremost. Relationships don’t sprout up overnight, and it’s rare that there will be a rapid change in a client’s requirements that present an opportunity. The ideal account manager recognizes that this is a lengthy process – one that might require months or even years of careful cultivation and development before it’s time to push for account growth.
You also should have account managers who have excellent organizational skills. There’s a lot of clients and a lot of people they need to work closely with. Not only on the client side (many buying decisions these days are made by group consensus), but on your side. After all, support and maintenance of the relationship is a key part of account management, and that could, for example, involve bringing in your technical experts or service department when issues come up. The account manager would likely be the one to coordinate that service request.
Interpersonal skills and social/emotional intelligence are also a given, but those are prerequisite to all three of the roles we’ve discussed.
How many accounts should each strategic account manager have?
Unfortunately, there’s no hard and fast rule for this. That hasn’t stopped people from trying to come up with a number of course. I’ve seen everything from “10-20, 37-100” or “$2 million of revenue”. But it’s all going to depend on your unique situation.
You might, for example, have a key account that is your biggest revenue generator by far and requires a lot of high touches and service, so you dedicate an account manager to handle just that account.
Conversely, you might have many moderate revenue accounts that don’t require a lot of contact, so you’re able to assign numerous accounts to one manager.
This is something that will require the most monitoring by leadership. As the demands of your key accounts change and as the number of strategic accounts changes, so too will how you assign and distribute their maintenance to your account managers.
As a corollary to this question, your initial number of account managers and how they change over time will depend on the size, complexity, and contact requirements of your strategic accounts. Again, there’s no set formula for this – it’s something you’ll need to calculate during the strategic account determination process.
What number of contacts/touches should strategic account managers strive for with each client?
As you’ve probably already figured out from our earlier discussions, it depends on the individual account. Some will want or need more frequent contact – whether e-mails, follow-ups, meetings, check-ins, etc. – than others. Asking the client is one way to find out what each account prefers.
Whatever ultimate cadence is decided upon, stick to that. An account manager’s contact cadence is a promise, and failing to adhere to it (either by contacting less frequently or more often than agreed upon) is failing to live up to that promise and harms the business relationship.
What should an account manager do to expand the business with existing accounts?
This is a large question, and just like with figuring out who your strategic accounts are, is a multi-step process.
Step 1 – Build a thorough customer profile for each account.
Who are the stakeholders involved in purchasing decisions with your company’s products? What are their target markets? What are their goals – both short-term and long? What are the specifics of their industry and own offerings? Who is their primary competition? Those are just some of the questions that a complete, accurate profile will answer.
Step 2 – Draft a needs assessment for each account.
In this phase, you’re studying what a given client’s needs and issues are – both current and potential future problems. Obviously to be able to do this effectively, you’ll need to review the profile you built in Step 1. In particular, you’ll want to identify where there’s intersections between current and future problems and the solutions your offerings provide. Being able to anticipate that is arguably the most important ingredient in the recipe for determining when it’s the right time to explore growing the account.
Step 3 – Create a contact cadence plan
While this was partially covered in the previous question, knowing who your customer is (Step 1) and current and future opportunities for account expansion (Step 2), will allow you to both establish the starting contact cadence and know when to organically and naturally accelerate the cadence – when the opportunity arises to, for example, suggest that they add another one of your services, there will naturally be more frequent communication than when there isn’t one.
These three steps work in synergy to help foster the relationship between your respective organizations at a pace and in a style the client is comfortable with, while still maximizing the revenue potential of your strategic accounts.
Step 4 – Write up a Strategic Account Plan
Completing the first three steps also gives you the material to draft a strategic account plan for each client. Typically, this is a 1-3 year roadmap of how the relationship will proceed, progress, and grow over that timespan. It includes the information you’ve uncovered in the first three steps and provides a clear direction for both the account manager and the respective individual account.
This plan should not be implemented unilaterally. Once the plan is drafted, it should be shared with the client for feedback, adjustments, and ultimate agreement. That way, everyone is on the same page, knows the expectations, and avoids unwanted surprises. It also signals to the client that your organization is invested in this relationship for the long haul, and that this isn’t just a one-off transaction.
Which, as you might expect, is why selecting the right clients to receive the strategic account designation is so critical. There are some clients who might seem to tick off a lot of the boxes, but aren’t in a position or interested yet in forming a strategic relationship with your organization.
Step 5 – Keep track of how each account is progressing
Your organization will have its own metrics, benchmarks, KPIs, etc. that will help strategic account managers assess how the relationship is progressing for each account and when one can create or execute an opportunity to grow the respective accounts. Obviously, the account manager will keep tabs on those things.
But it’s also important to consider it from the client’s perspective. Perhaps the timeline for increased business has changed (either moved sooner or needs to be delayed), or perhaps the key stakeholders or decision-making process has changed. There might be some other indicator that the originally agreed-upon strategic account plan needs to be adjusted.
Either way, it’s essential to remember that this is a bilateral arrangement – a partnership where your organization and the client strategic accounts are working together for the mutual benefit and prosperity for both companies.
Strategic account management is a complex, involved process that requires the investment of a lot of people and resources on both sides of the relationship. But it’s also the optimal way to increase revenue and build long-lasting partnerships.
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