“Where we are at now – that’s not for me to worry about. Where we are going – that’s what I care about. And our suppliers better care about that too if they want to be our suppliers”

- President, EMEA – Industrial Products Manufacturer

Based on a 2010 study of senior managers from manufacturers, retailers and distributors in Europe and North America, only 15% of organisations measure up when it comes to managing their key accounts in a truly strategic manner. Alarmingly, 65% of companies believe they are managing their key accounts strategically, so there is a whopping disconnect between what organisations think is strategic account management and global best-practice.

In addition, the study identified that organisations with an effective strategic account management program had continued to improve their approach. This means that not only were the competitors falling behind, the gap between them was increasing. They had differentiated themselves and successfully increased the barriers to entry against their competition.

Companies that fail to address their key accounts strategically typically find that:

• They are increasingly reliant on price as the primary negotiation lever
• They are incurring costs with accounts that deliver little or no value
• Margins are declining
• They are not growing

The same study identified a number of common shortcomings in strategic account management practices.

Sales led

Many organisations think that if they have some large accounts, a dedicated account management team and some form of account planning system, then they are strategically managing their accounts.  This is simply a better than average way to allocate and sell to large accounts.

To build a strategic relationship there must be broad and deep connections between all levels of the relationship. Senior level engagement is the most critical. The growth of your company is inextricably linked with your key accounts so senior managers must be intimately aware of and involved in strategies with key accounts.

Revenue focussed

The primary focus of most account management programs is short-term revenue growth and account retention. The account plan and objectives of the account manager all relate to revenue opportunities and what the organisation can win from the key account.

The primary objective of strategic account management is to build a strategic relationship with the key account, which will achieve sustainable long-term revenue growth, increase organisational differentiation and create significant barriers to entry and exit.

Failure to identify and create value

Sales teams too often focus on what they want from the account. Not enough time is focussed on understanding what the critical success factors are with a key account, and what “value” means from the account’s perspective.

Strategic Account Management requires the account team to ask a lot of questions across the key account, and make conscious observations of what they are seeing and hearing. This information needs to be distilled into insights that provide clarity on what real value is for the key account. Only then can a focussed and actionable account plan be developed and executed.

Summary

Whilst there a many more success factors for your strategic account management program, these are some of the most critical. The fact is that companies that have effective strategic account management programs achieve better growth and financial returns than companies that do not.

We have worked with many organisations to develop and implement strategic account programs, and identify ways to deliver more value to your largest accounts, so if you need help to make this shift please contact us at Gordian Business on +61 2 9450 1040 or www.gordianbusiness.com.au.