Strategic Account Management begins with what accounts make up the portfolio. How do you identify the strategic accounts within your customer base? The most common method that companies gravitate towards is to list the customer accounts that contribute the most to their revenue. Another tendency is to equate the potential of an account for you to how large the company is. This leads you to portfolios that are more akin to ‘Your top 10 customers’ or ‘Top 10 customers by size’
The question to ask though is – is the portfolio of Strategic Accounts you have chosen, reflective of the potential of your customer base for you? Are these customers relevant in light of your company strategy, do these customers help you evolve your products and services?
Go beyond the dimension of revenues while identifying and investing in your strategic accounts. Let us ask a few questions to clarify this point. Has your customer inspired or helped you introduce a new product or service? Has your customer helped you to elevate or significantly improve your offerings? Have you penetrated a new market because of a customer? Do you impact this customer’s strategic metrics? Can you attribute non-linear ROI to a relationship with your customer? The larger point is that you are not maximizing the potential of your customer base if you are going merely by the revenue size.
Identifying the customers who would enable you to grow and elevate your business is only part of the equation. Strategic relationships are two-way streets. Your customer has to view you as strategic and treat you accordingly as well. These relationships take time to build. When you are going through the exercise of identifying the strategic accounts in your portfolio, you have to evaluate whether you can aspire to be a strategic partner to this account. This takes time and consistency of ‘promises delivered’ against ‘promises made’ by your firm. Your abilities, compatibility of your cultures and your tenacity to commit to the long-term should also factor into your decision-making process. If you are starting with your Strategic Account Management program, our advice is to start small. Removing accounts from your list as you grow, is contrary to the tenet of staying committed to make the relationship work.
The third aspect of finalizing your set of strategic accounts is about committing to how far you are willing to go in building those relationships. It takes time, money, effort and patience to execute this well. You have to commit your top talent to service these accounts. You need to support the account team with time, attention, and resources. You have to take a long-term view and commit to the process. These are easier said than done. Naming an account ‘strategic’ should imply a different level of commitment on your firm’s part to deliver on promises made. At the same time, resist the temptation to please customers by calling them ‘strategic’. No matter how large your company is, there is a handful of customers that form the strategic apex in the hierarchy of customers. Where we have seen strategic account management most effectively play out, the number of strategic accounts is limited to 5 for small firms, 25 for mid-sized firms, and only up to 100 for even the Fortune 50.
In summary, be selective and clear in choosing the right accounts, and don’t be discouraged by short-term hiccups while building long-term relationships.
This discipline in identifying, investing, and nurturing strategic accounts has the desirable effect of committing your entire firm to delighting the accounts. Your account management team will start reflecting on the value they are adding and newer ways to create an impact on the customer’s business. This has a positive effect on your organization’s culture. It is also a virtuous cycle – the more strategic your account managers are, the more impactful opportunities will emerge for your business. If done right, these customer relationships can become a competitive advantage for your firm.