Does your business need SAM (Strategic Account Management)?

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By Gary Peacock

 

Only those who will risk going too far
can possibly find out how far one can go.

T.S. Eliot 

In business there is a constant tension between managing risk and capitalising on opportunities. SAM is a critical element for doing both.

From our experience the top 10 to 20 accounts of any B2B organisation typically represent 60-80% of revenue and profit. We have seen cases as high as 95%. The consequences of losing one of these customers are dramatic, and in today’s business environment it is almost impossible to replace these customers; your competitors will protect them at all cost.

Do you have a problem?

Depending on a few accounts for your revenue		Do you rely heavily on a few large customers for most of your revenue? Is the revenue generated by these large customers growing as a percentage of total revenue? Over time, industries consolidate and the big get bigger. If you are an industry where this is happening it is likely you have a problem.
Losing large accounts		Have you lost a large account and you don’t know why (sorry, price isn’t the reason)? Repeatedly, companies lose key accounts and rationalise the loss of a one-off, caused by actions of a desperate competitor. They are rarely one-offs. They are a signal the market is changing and more is to come. Do nothing at your peril.
Serious financial consequences of losing a large customer		Have you assessed the financial impact of losing one of your largest customers? Would it be manageable or would it be fatal? How easy is it in your industry to replace a lost large account with a new one? In most industries this is becoming harder; if not impossible. Big accounts are locked into long-term agreements and competitors will defend them at all costs.

Businesses also need SAM because customers have become more sophisticated in their buying strategies. Successful sales and management teams need to become more sophisticated in their key account management strategies. Rethinking and adapting approaches for each customer is imperative. As industries and customers evolve, so too does the way they make buying decisions and manage supplier relationships.

Is your market changing?

Different competitors		Are you seeing new or different competitors emerge? Many industries are experiencing new niche competitors nibbling away at their revenue, or online channels creating low-priced and convenient alternatives. Are generic products a growing threat? Can you justify the premium customers must pay for your branded product – and for how much longer?
Different buying processes Different relationships		Is the way your key accounts buy changing? Are procurement and the senior executive team becoming more involved? As organisations apply greater governance and executive oversight, decisions are being made higher up. This is clear trend. Is your account team equipped to deal with these changes in the buying process?

If you identify with a problem or market change above then you would benefit greatly from a SAM program in your organisation. If you are looking to start a SAM program or are already on the journey and need additional practical advice to maintain your momentum, this is the book for you: Managing B2B customers you can’t afford to lose.

If you are thinking about starting a SAM program at your organisation then check out http://www.gordianbusiness.com.au/strategic-account-management or call +61 2 9450 1040 or email gary@gordianbusiness.com.au. We would love to hear your comments below and subscribe to our blog at the top right of the page.