The single most predictive indicator of future growth is the level of attachment that your best customers have towards your business. As part of an overall account management strategy most companies will be able to segment their client base into various categories, such as small, medium, large and strategic. A client is defined as strategic based on a number of factors other than pure spend.
1. Customer spend
Spend plays a role, of course. The most important aspect of this is not to look at how much that customer spends with you at present, but to determine what the potential spend is. If you have a customer who may never spend more with you, is it a strategic account and why?
2. Profit margins
Some clients will always squeeze you on price. At the same time, there is an extra cost associated with a strategic account manager. Therefore, it’s unwise to allocate this type of high-level resource to an account that is not going to deliver a decent return on investment for your business.
Certain clients may not be big spenders, but they may wield a great deal of influence in a particular market. When KreditInform, the company my partners and I founded in 1982, wanted to ensure that our message was spread into the market, we would try to influence these customers, not only to buy our products, but to buy into the processes and procedures we wanted the industry to follow as a whole.
4. Industry leadership
If a client is a market leader, it’s advantageous to have them as collaborators with you. We placed a lot of emphasis on being associated with market leaders. That meant we would ‘go the extra mile’ to enhance our proposition and to ensure we blocked the competition.
We had several clients whose requirements enabled us to develop new and innovative products that were subsequently used by the industry as a whole.
This approach to innovation was such that industries became part of our strategic planning for the business. We would meet with them to discuss their problems and the challenges they faced in their industries, and then develop a ‘dream solution’ for them.
That closeness to the clients enabled us to grow our own reputation and to become truly innovative in our field of expertise so that we too became the industry leaders. The value of this type of relationship is more difficult to measure than one based purely on profit, but position your business correctly and your competitors won’t stand a chance of putting their foot in the door.
5. Strategic account manager profile
What does a strategic account manager look like? They have to be great communicators who are persuasive. They have to be attentive – and that goes beyond paying attention. They must be perceptive people who see possibilities, not only in the client base, but in the industry and the broader market too.
If they can provide valuable feedback to customers, your business will gain that slight edge over your competitors which, in our highly commoditised world, can place you streets ahead. Perseverance is another key quality.
Strategic accounts may take years to develop. At the start of the relationship, some may spend very little. But it’s the relationship building that counts. For example, a strategic account manager may identify an individual with whom it’s worthwhile cultivating a solid relationship. As that person moves up the corporate ladder, they will continue to use your products and services because your account manager will have become a trusted advisor.
Start by conducting a needs analysis for each client and then assigning the right level of sales person to the account.
If the client is spending less than they could be, it makes sense to assign a sales person who is a specialist at growing existing clients. On the other hand, if the client has reached maximum spend, it’s best to assign a customer relationship specialist to them to nurture and maintain the association. It’s vital to create a profile of your customer before you hand over to a strategic account manager.
Alignment between the two is essential to pave the way for a good relationship. Ideally, a strategic account manager interacts with the leaders of the business, not the managers. Operating at the C or D level is what makes them strategic. At this level, you’re not selling, you are collaborating.
Strategic account management checklist
Generate the best value from your accounts:
- Define what a strategic account means for your business.
- Conduct a thorough needs analysis to determine whether you can align the clients’ objectives with your value proposition.
- If it’s strategic, develop a proactive strategy to own the account, you don’t want to share it.
- Use your strategic accounts to develop services and products. Listen to what clients want and what they don’t. This will give you the edge in the market.
- Develop a performance matrix to measure strategic account interaction vs ROI. A strategic account manager worth their salt will be expensive, so ensure that the performance criteria are specific. Remember, these are not trans-active sales people so think long-term
- Nurturing customers is usually less expensive than acquiring them.