How do you know if your strategic relationships are getting stronger?
As more companies move from sales management to account management, we regularly get asked “how can we measure improved strategic relationships?” In sales management, we are focused on the short term so typically we measure sales results and sales prospects in dollars. Yet if we are serious about developing strategic relationships, then the results will typically begin to appear between 18 and 24 months after we start behaving strategically.
So managers used to managing to deliver results in this financial year get uncomfortable, saying:
“So, you want me to invest time and money into strategic relationships and I won’t see increased sales for up to two years?”
They ask, “How will I know I am on track?”
The short answer is to look at how much the client is committing to the relationship and measure how that is changing. If the relationship is developing then the client should be committing more of their resources to the relationship: more man-hours of their people.
In simple terms, if the relationship is developing then we may see progress something like this.
1. A short meeting (upto 1 hour) with 1 client person
2. A longer meeting (more than 1 hour) with 1 client person
3. A short meeting (upto 1 hour) with 2 or more client people
4. A longer meeting (more than 1 hour) with 2 or more client people
From experience, as you move through these four steps each step is slightly harder than the previous step. Getting a longer meeting means the client needs to see more value in the relationship. Similarly, for the client to invite someone else to the meeting, the client needs to see more value in the relationship.
To measure the relationship we need to score different steps. But, if each step is harder than the previous step, we need to recognise this in the scoring. So, when we score each step, then the score for a step can’t just increase by the same amount. We want to give Account Managers a reward in scores for the effort needed to move the relationship to a higher level. We can do this by having a bigger difference in scores as we move through the four steps.
Whenever you create a score or KPI, one risk is you measure what is easy and not what is important. So, if we look at activity with a strategic customer we can easily measure how many emails we send or how many phone calls we make. However when making strategic relationships stronger, emails and phone calls are interesting but not important as the quotation below captures.
The table below shows how we score activities for developing strategic relationships. The reason we score emails as zero is they do not develop the relationship, they are simply transactions. Phone calls are better because we have person to person contact. But phone calls are no substitute for being face-to-face to make relationships flourish. So, we score 1 for each phone call.
The table above shows how we score the activity for strategic relationships. Next we examine how the scores would increase each month as a strategic relationship develops.
Let’s imagine we have a weak relationship. This could be what we call a cup-of-coffee relationship: the account manager meets 1 person at the client for a coffee four times a month. Then using the table, we would score this as 4 x 3 = 12 points for the month. Next month, imagine the account manager has three short meetings as usual. Then in just one meeting of the four meetings the account manager has a longer, let’s say 2 hour meeting, with the client. Then using the table we would score this as (3 x 3) + (1 x 5) = 14 points.
In the next month, imagine again the account manager has three short meetings with one person as usual. Then in just one meeting, the account manager meets 2 or more clients in a short meeting. Using the table we would score this as (3 x 3) + (1 x 8) = 17 points. Similarly if the following month, the account manager has three short meetings as usual. Then in just one meeting of the four meetings the account manager has a longer, let’s say 2 hour meeting, with two clients. Then using the table we would score this as (3 x 3) + (1 x 13) = 22 points.
In the account review, we would look at the trend in the monthly scores.
So, from the monthly trend, the relationship is improving.
Once you start measuring the relationship score, Account Managers will want to show an increase in the score each month. One way is to have more meetings. However, Account managers are usually time-poor so they tend to try to convert their existing meetings into longer meetings or meetings with more people, or longer meetings with more people. So, the score drives the right behaviours to improve the strategic relationships.
We would normally expect to see multiple people from our organisation meeting multiple people in their organisation. With multiple people, it’s complex to understand if the strategic relationship is improving. Try calculating the score for all meetings for the last three months and see what the trend in scores is. Then your will know: If your strategic relationships are getting stronger.
Here is a tool for you to measure if your strategic relationships are growing.