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. It 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 always the case.
Part of strategic account management involves identifying which buyers have the greatest potential to grow into large accounts. After identifying, you can develop 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 your current clients and use that to come up with a Strategic Score. You may use 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 don’t use 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 many areas involve looking at where the client’s current position, 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 with 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 get new clients, input their details 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 transferring a sales manager over to an account manager role. The reality is, all three of those roles require distinct, separate skill sets. You might think that because a sales manager and an account manager both need management skills, they are interchangeable.
But they aren’t.
Sales managers manage people. Strategic account managers manage relationships. It’s a subtle but important distinction.
A sales manager works at coaching up their sales reps, helping their team members to hit targets (whether KPIs, sales numbers, or both). They develop their direct reports to become the best sales reps possible.
A strategic account manager works at cultivating relationships with the stakeholders of their accounts portfolio. They monitor the situation of each client. This helps them identify 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. Relationships don’t sprout up overnight. 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. It might need 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 are a lot of clients and a lot of people they need to work closely with. Not only on the client side but on your side. (Many buying decisions these days happen by group consensus.)
After all, support and maintenance of the relationship is a key part of account management. 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. Those are prerequisites 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. 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 have a key account that is your biggest revenue generator by far and needs 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 the number of strategic accounts changes, the way you assign and distribute their maintenance to your account managers will also change.
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 speed it up.
When the opportunity arises to, for example, suggest that they add another service, there will naturally be more frequent communication.
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. This isn’t just a one-off transaction.
This 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 the managers measure success. They should assess how relationships are progressing and decide when to create or execute an opportunity for growth. 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). 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 adjusting.
It’s essential to remember that this is a bilateral arrangement. It is a partnership where the organization and the strategic accounts work together for mutual benefit.
Strategic account management is a complex and involved process. It 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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