Strategic Account Management: What It Is And Why You Need It
If you are a sales leader and are planning to increase future revenue, you are thinking strategically. If that plan includes increasing revenue from your best clients, you will need a strategic account management plan. As companies grow, and their account base expands, different clients represent different potential future values for the organization. Treating all accounts equally may not be the right strategy to maximize client lifetime value. In this article, we will explore why growing companies need a strategic account management plan, what the strategic account manager role entails, and best practices for maximizing client lifetime value.
All Customers Are Not Equal
In business, it is wiser to be practical rather than equitable. This may sound like a callous statement but let me explain. Imagine you are a busy, growing software company with hundreds of clients. Your clients range from small establishments to large corporations. Your smallest clients, if you do everything right, may refer you to another business. But your corporate clients have locations worldwide, and just one of these accounts fully sold into could dramatically change the trajectory of your business. Do you really want to treat both accounts equally?
It does not matter if you have 10 clients or 10,000 clients–some will be more valuable to your future growth than others and they will not all be equal. Therefore, if they do not have equal value, it is important as a sales leader to identify your strategic accounts. The best sales leaders create formal, measurable, and repeatable processes to maximize the revenue of their most valuable client relationships. When a company has the capability to grow revenue organically, from their strategic accounts, they can increase market share while lowering their client acquisition costs. Remember, sales are focused on the present, while strategic account management is focused on the future.
Strategic Account Managers Are Not Sales Reps
As a sales leader, if you have taken the time to identify your most strategic accounts, it’s time to identify who your strategic account manager will be. You may be tempted to place a sales rep in the role of your strategic account manager but that would be a mistake. Your strategic account manager should be more focused on long-term success, rather than an immediate sale. Where a salesperson may have a hunter mentality, the strategic account manager is a nurturer.
The strategic account manager will be a subject matter expert for your company. They will take the time to look for new opportunities (problems that can be solved) and create new solutions for the customer. For example, a client reveals their operation is spread out in a dozen regions, with each region having a department director. The directors are creating individual reports in Excel and your client is lacking real-time access to data or KPI dashboards. This is an instance where the strategic account manager can improve the business processes across the client’s organizations, improving their outcome and increasing value for both parties.
The strategic account manager will help clients solve both specific problems relating to your solution and business problems relating to the client’s operations. In the example above, the specific problem is dealing with data that does not share information across the organization. The business problem is inefficiency, because the client is forced to manually create and share reports costing them time and money every day. In general, salespeople are good at solving specific problems, while strategic account managers have the time and skillset to assess the larger picture and move to solving underlying business problems. This makes their skillset different than the ones salespeople possess. The core competencies you want to look for in a strategic account manager include:
- Account Management Skills
- Organization & Planning Skills
- Problem Solving
- Market Awareness
- Strategic Thinking
- Analytical Skills
As the primary contact with valuable clients, strategic account managers end up working alongside key decision-makers at the client’s organization, supporting them with their business outcomes. Therefore, they should possess a strong aptitude for analysis and problem-solving. Because strategic account managers will need to stay abreast of industry trends, they will need a continuous learning mindset.
Land and Expand Strategy
The land and expand strategy is utilized by companies around the world. Strategic account managers should expand on initial wins with high-value clients. The first step is to establish a secure foundation. This means building relationships with key stakeholders within the account. This requires a strategic approach not just salesmanship.
There is a story of Michael Dell, who early in his Dell Computer startup days visited a key company that outfitted an entire floor with new computers. The office was in London and real estate was expensive. The staff was physically assembling computers, unpacking boxes, and loading software. It took an entire team for this process and Michael Dell wondered out loud if it was an effective use of resources for the company. The IT Director asked, “Can you do this for us, because we have no intention of becoming a computer company?” Mr. Dell said, “yes” and expanded the relationships with the client. It not only created a deeper relationship with the client but opened up a new system integration line of business they rolled out to other clients.
You may not be able to visit every client, but for key accounts it’s a gesture they will appreciate. When you see how your key customers work at their business, it can be an eye-opener. The upside is that you may discover a game-changing solution that will benefit all your key customers.
Big Things Have Small Beginnings
The key concept of strategic account management is to start small and grow over time. For some companies, this could be a free trial to get your foot in the door. For others, it may be a proof of concept (POC) in one department at one location. Regardless of the tactic, the general concept is that new business relationships often start through small opportunities and, after trust is earned, grow to larger, more valuable relationships over time. The most important aspect is trust. The more your key clients trust you, the more business they will be willing to provide. The strategic plan recognizes that trust is not given but earned. As a sales leader, your job is to ensure that the account manager will have a plan to increase trust. Trust is the fuel that will keep the relationship growing.
Strategic account management works on the philosophy that your best source of new revenues is your current customer base. Identifying which customers to invest in and providing dedicated resources for growth is critical. Strategic account management is less about upselling or cross-selling, and more about partnering and problem-solving. The long-term business benefits of strategic account management are indisputable; you will keep your best customers longer, increase their value over time, and lower your client acquisition costs. Allowing your best customers to manage themselves is not a strategy. Creating a strategic account management plan is the path to predictable revenue and organic growth.
Strategic account management requires upfront planning and an investment in your people but it’s also the optimal way to increase revenue and build long-lasting partnerships. Could your team benefit from a detailed strategic account management plan? At Janek, we have the resources, experience, and expertise to help grow your key accounts organically. Learn more, contact us today.
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