Risk Management is a key part of Account Management
As we saw with Gary’s post last week, the world of strategic account management is changing faster than the world of social media. To remain a key partner, you must be relevant and you must help your top accounts manage risk, this is the essence of account management.
In our consulting and training workshops we talk about how you can frame risk more effectively with the key decision makers within your top accounts. You may have discovered an opportunity to help one or more of your strategic accounts deliver a better business outcome for them, but it means changing one of their business processes and at the moment that is risky.
Our model on framing risk (model 1) looks at the classic approach to risk management, but as a strategic supplier, you will take it to a new level. Your focus is not to try and eliminate risk, but manage risk and to help your account manage changing one of their business processes.
Let’s look at the model and its application. There are four elements to our model, — avoid, transfer, accept and reduce.
Avoid: Avoiding the risk for your key account is often a decision that they need to take about how they deal with their customers (B2B or B2C). Often through consulting we can help the client see that a change in a business process can help them avoid risk with the account's customers in the next step of the value chain.
Transfer: Transferring the risk of changing the key account's business process by outsourcing the business process to a third party supplier can enhance the outcome. For example, often another group may have a speciality in supply chain management that can actually increase customer satisfaction for you. The beauty of this approach is that any negotiation with the third party supplier can be linked to success metrics for your top account.
Accept: Accepting the risk often means staying with the status quo. Perhaps persuading your account to accept a change might involve too big a change. If it is clear that outsourcing is not going to work, find ways to help them brainstorm and come up with ideas to manage current costs more effectively. Your job is to find that impossible problem and then help them solve it.
Reduce: Reducing the account risk for a new idea or a better way of doing business is a way you can be most ‘relevant’. Often lessons from other key accounts can be applied to this account. For example, by showing how you have helped another account using your speed to market model to increase their revenues.
When we work with our clients on live negotiations, we often run a number of ‘what-if’ scenarios to develop better outcomes. The same applies for you with helping your top accounts manage risk more effectively. You need to understand their business at a deeper level, because if you find an opportunity for your top account, often you will have to “frame the risk” differently so that they can see the benefit to making the changes.