Strategic Account Management Blog
A global dialogue of strategic account management and customer value
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A recent study published in McKinsey Quarterly states that while B2B customers say that price is the ultimate decision-maker for business, what they really want is a great sales experience:
“We found a big difference between what customers said was important and what actually drove their behavior. Customers insisted price was the dominant factor that influenced their opinion of a supplier’s performance and, as a result, their purchasing decisions. Yet when we examined what actually determined how customers rated a vendor’s overall performance, the most important factors were product or service features and the overall sales experience. The upside of getting these two elements right is significant: a primary supplier seen as having a high-performing sales force can boost its share of a customer’s business by an average of 8 to 15 percentage points.”
This, of course, gets to the heart of strategic account management. SAM is more than just a transactional sale, it’s creating and maintaining a mutually beneficial relationship with customers. Strategic account managers don’t just sell, they work with their customers to innovate products, services, supply chain and/or logistics to create and sustain higher business productivity to the customer.
The basics of business-to-business sales success (McKinsey Quarterly) subscription required
Preview: IBM-Issues and Challenges in Managing Global Accounts from SAMA on Vimeo.
This video is a preview of the information covered in Session 25 at SAMA’s 2010 Annual Conference in Chicago.
Description:
Management systems for global accounts help account managers and their teams fulfill coverage requirements and find new customer opportunities. This session will share IBM’s use of account management processes to work across a vast enterprise of competing priorities and address the challenges inherent in managing a global client across a country-focused organization.
Preview: Organizational Challenges in Managing Large Global Projects
Lee Pryor, President of ESSAYONS! Consulting, Inc. delivers a preview of his session at SAMA’s Pan European Conference, February 28-March 2, 2010.
The session highlights the challenges strategic account organizations face in managing large programs and projects for their key customers, with emphasis on how to organize strategic account programs and projects. Teaming issues also will be addressed along with options for funding methods. Case studies and examples will be used.
SAM-level negotiations are often some of the most complex deals, and therefore some of the most frustrating. How do you demonstrate solutions against price? Whether it is reacting to irrational competitive offers, or addressing demands to lower price, the pressure is on the SAM and his or her team to come back with the best deal for the company and the client.
At SAMA University Atlanta February 1-3, Carrie Welles, Vice President of Think! Inc. will be leading a session at SAMA University (Session #4, Strategic Negotiation: Claiming Value in a Negotiation & Turning in a More Profitable Deal) that allows individuals to bring in an account negotiation they are working on to create the best possible deal.
Q - In your session, you talk about determining and acquiring power during a negotiation. How important is this to negotiating the deal?
A - Hugely important. Determining who has the power in a negotiation will help illuminate how probable the deal is. In addition, it can be the difference in winning not just a good deal, but winning a great deal. We’ll review in our session how you determine that power, and subsequently build your courage.
Q - You ask participants to bring in real-world negotiations to audit during the session. Is there a particular type of deal that SAMs should bring into the class?
A - Our session reflects our real world, so any deal that has not closed yet is appropriate. To be most effective, I would suggest bringing a deal that is not set to close right after you finish the session, but rather one where you have room to ‘try on’ the concepts you learn and better your opportunity.
Q - Is there a common structure to strategic negotiation?
A - Absolutely. Research that we’ve done in the past two years suggests 97% of the time you can anticipate reactions of your buyer and use a structured ‘negotiation blueprint’ to help you prepare for a negotiation that previously you may have thought was ‘unpreparable’. 97%! That is a compelling number. AND, the negotiation blueprint encompasses only (3) concepts.
Q - Price is always an issue, no matter how close of a relationship a SAM has with a client. How do you avoid getting stuck on price during the negotiation process?
A - Often, and in this economy especially, price certainly has a way of headlining a negotiation and our buyers & procurement executives are seasoned at keeping it that way. Price is part of the negotiation, no doubt, however a negotiation is never just about price. It really can’t be given all the other intrinsic pieces that make up our solutions, and subsequently, our offer(s). Our job as SAMs is to do a better job of putting value on all those intrinsic pieces and then making them known in our offers(s) so we begin to get credit for all of them. We’ll also learn how to do this in our session.
Q - Irrational competitive offers can often derail negotiation. Is there a way to prepare and protect against this?
A - Without question, however it does take the will to do the work and prepare appropriately, earlier on and in conjunction with your consultative sales process, so you can devise your negotiation strategy & stick to it. We offer a tool called “Multiple Equal Offers” that will allow a SAM to take pressure off price, competitive offers and all the while giving customer’s a few solutions, not just one. These solutions, or offers, encompass business relationships that you can have with your customer that will get titled - generally a departure of what we do - and are reflective of the business issues you will solve for them. This concept allows for a ton of flexibility and responsiveness to our customer!
Hat tip to Walker:
A article in the January/February Harvard Business Review makes the argument that the corporate strategy of maximizing shareholder value, championed prominently by former General Electric CEO Jack Welch, has failed as a driver of sound long-term business practices. But author Roger Martin does not shed a tear bemoaning this failure. Instead he heralds a coming era when corporations increasingly will place maximizing customer value at the top of their priority lists. This will be the age of customer capitalism. In the 1970’s and early 1980’s as corporate executives and boards of directors began to name maxed-out shareholder value as their number one goal, Mr. Welch became arguably the most celebrated businessman in history for championing this approach. But after 30 years, the companies that emphasized maximizing shareholder value (Coca-Cola and General Electric) fared no better than companies that clearly put customer value ahead of shareholder value (Procter & Gamble, Johnson & Johnson), Martin writes. And ironically 2008-2009 saw a historically unprecedented plunge in shareholder value (and after all those years of executives and their boards “putting shareholders first”!) We hope Martin’s article is just the beginning of a discussion on better business practices in the 21st century. Highly recommended!
Article here (membership or subscription required):
In the 12/14/09 issue of Businessweek, an article discusses the merits and drawbacks of a new management fad coming out of India, called jugaad. One of the elements of jugaad is the ability to innovate on the fly. And while it’s often associated with cutting corners in India, the concept as a management tool is being employed by some very impressive companies.
Excerpt:
U.S. companies are starting to put jugaad into practice. At Best Buy’s headquarters, in Richfield, Minn., Kalendu Patel, the retailer’s executive vice-president for emerging business, is holding jugaad workshops to help store personnel and managers come up with new products or services that could be added easily and inexpensively to generate more sales per store. Among the ideas: home health-care equipment.
This kind of thinking reminds me of one of the key concepts of Strategic Account Management–creating demand.
A successful Strategic Account Manager will partner with his or her customer to develop new, scalable solutions. If done correctly, it can be scaled up to a global level or down to the local level. The partnership uses co-creation methodologies and techniques which allow the strategic supplier and the strategic customer to innovate business solutions directly relevant to making money and bringing growth to both partners.
What’s important to remember is that while this new fad may have some merit, there are already developed and proven methodologies that make SAM work.
The history of mergers and acquisitions is filled with the best laid plans that — oops — left out one tiny detail: the sales force. A new article in the McKinsey Quarterly online newsletter tackles the issue of sales force integration, a topic that SAMA has addressed often in the strategic account management context. The McKinsey article begins:
Make no mistake: mergers are challenging. Even so, they can provide organizations with transformative possibilities. One of the biggest—the integration of sales forces—is central to ensuring revenue growth and driving the value that mergers promise but often fail to realize.
Read the full article here (membership required).
Johnson Controls, a SAMA Corporate Member, shared its story of successful sale integration after its merger with York Internation. Link to order article here
A column in this week’s Economist magazine lists several companies taking new directions in the middle of this recession. This is recommended reading for strategic account managers and SAM executives! Cisco, a SAMA corporate member, is among those mentioned. Here.
Dennis Chapman
It’s true that you can’t manage what you don’t measure. Metrics have an increasing role when managing strategic accounts. But what do you measure? Is there such a thing as the right metrics? With so much data to measure, many companies aren’t sure how to create the right mix of metrics to accurately plan for future growth.
Dennis Chapman, President and CEO of the Chapman Group, leads a one-day session at SAMA University Chicago (Session #13-Metrics that Measure SAM Program Readiness and Effectiveness), October 19-22 that directly addresses how to use metrics to analyze your SAM program, and the future for you and your clients.
Q - In your session “Metrics that Measure SAM Program Readiness and Effectiveness,” you say that while measuring revenue increase is critical, it is not “predictive.” Could you give some examples of leading rather than lagging indicators?
A — First, one should understand that what most companies do is to forecast the future by looking at what has happened in the past — while the past is important it is only a piece of the whole forecasting process. Companies often determine sales success (effectiveness) during the year by how well they are doing in actual revenue and profit versus targets. While these facts are important, revenue and profit are lagging indicators — they tell us what we have accomplished — not what revenue and profit we will accomplish in the upcoming months.
Continue reading…
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