Fresh from Florida

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By Stephen Kozicki

Last week, Peter Browne from Gordian Business was presenting in Florida at the Strategic Account Management Association’s 50th Anniversary Conference. Peter was presenting a case study of a successful client who in a mature market grew profit ahead of their 5 year plans.

“SAM has had the biggest impact of any initiative
we have undertaken in the last five years.
The business is almost unrecognisable.”

Case study, The Managing Director

The Strategic Account management Association (SAMA) have published the case study in their latest ‘Velocity’ magazine released at the SAMA conference. Also at the SAMA conference was the global launch of the practical business-to-business book on Strategic Account Management by Peter Browne and Gary Peacock.

Image: Peter Browne (Gordian Business) & Todd Snelgrove (SKF Global)

“In this book Gary and Peter provide some very practical and fresh ways of how to identify, build and grow relationships with individual and corporate customers.  Critically important, for corporate customers, they explain why some relationships work and why some do not work.  But they don’t stop there; they also offer simple tools and thinking models for how you can enable your team to plan how you can work with your key customers from a strategic perspective.”

Lynette Nixon, Industry Fellow, Innovation and Design Thinking at University of Technology, Sydney

So, if you are considering starting a SAM program in your organisation or are already on the journey and need practical advice to maintain your momentum, then pick up a book. The book is available from www.matrixplustraining.com.au or your airport bookshop, or soon download a copy of the ebook from www.amazon.com. 

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.

Competition – A threat or an opportunity?

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By Stephen Kozicki

A certain amount of opposition is a great help to a person.

Kites rise against, not with the wind.

Lewis Mumford

I have just returned from doing 2 projects in Singapore and Malaysia and had the great pleasure of doing field work in both places, meeting senior managers from my client’s strategic accounts.

One of the key messages from each of those senior executives was that their business reality is changing and changing fast, that they are dealing with unprecedented competition in their markets.

One of the industries that I visited was healthcare. Senior executives in that field are facing ever increasing pressure to reduce costs. They often look at suppliers to cut margins to help them meet their hospital’s financial targets.

They’re clear that most suppliers to hospitals in most categories are now selling products that are merely evolving. No more breakthrough products, compared with a decade ago, when product innovation was revolutionary.

Your role as a senior manager in the way you bring value to your top accounts is more important today than ever before. Most industries, like the medical devices segment, are under constant pressure to reduce prices. Too many jump to price reductions and don’t look at a broader value approach.

Competition is a fact of life.

Your competitors constantly threaten your strategic accounts, so you cannot be complacent. You should analyse your key competitors identified in your account plan, and decide how you will respond (not react) to competitor activities that affect your accounts.

Capture intelligence about any key relationships that exist with representatives from your competitors. There are many industries where people tend to move around the major organisations and so have a wide range of relationships across the industry. It is critical to understand these relationships, especially those with your competitors.

You must know what level of influence they have over the buying behaviors of your account contacts.

Do two things; firstly document the products and services supplied to your strategic account by competitors. Secondly, and the harder but more critical, is understand deeply the value that your competitors bring to your major accounts.

Ask yourselves:

• Why does the competitor have some business with the account – really what is ours and their share of wallet?
• How does it fit with the strategy of the strategic account?
• Does the competitor have any competitive advantage that you need to respond to?
• Can they provide unique value beyond the products and services they provide?
• Can this value enable them to build a stronger relationship with the account and threaten your level of business or plans with the account?

Monitoring changes on a regular basis, keeps you on top of potential threats to your accounts. It can also signal a more widespread strategy from competitors that you can prepare for with your other strategic accounts.

Other organisations with whom your account deals are often overlooked in account planning. They may not be competitors or directly affect your organisation, however they can have a significant influence on how you manage your accounts. If you build good relationships with key influencers they can provide invaluable intelligence. Often they have different relationships within the account that can provide new insights. From their different relationships, they may be aware of unstated or emerging issues or opportunities.

A solid account plan, with regular reviews and all relationships monitored provides the potential to turn threats into opportunities. If your strategic account relationships or account planning processes aren’t secure and embedded, are you really prepared for the competition?

For more insights look at: http://www.gordianbusiness.com.au/strategic-account-management/ or contact us on +61 2 9450 1040 or email stephen@gordianbusiness.com.au. Please share your comments below and subscribe at the top right of the page.

Are your Account Managers scared of your customer’s CEO?

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By Peter Browne

One of the biggest weaknesses of Account Managers is their lack of skills and confidence to build and sustain business relationships with senior executives at their major accounts.

We fear things in proportion to our ignorance of them.

Christian Nestell Bovee

Don’t just take it from us. A 2013 survey by Executive Conversation revealed that the highest priorities for training of salespeople were:

1. Training on financial acumen and ROI
2. Training on selling to customer executives

When you start to manage your major accounts more strategically, this issue often emerges. To manage their major accounts more strategically, Account Managers need to develop new relationships. These new relationships include C-Level leaders such as the CEO, CIO, CFO and even Board Members.

However Account Managers are used to dealing at the operational and mid-management level. So for many Account Managers, building relationships with executives is unfamiliar territory. So they lack the confidence and knowledge to initiate and develop C-Level relationships.

Typically, once Account Managers are in roles where they must meet with a senior executive they have three questions:

1. How do I get a meeting?
2. What questions should I ask?
3. How will I know if the meeting was successful?

 To be effective, Account Managers need to overcome their anxiety. They believe there are some special skills that they need that they don’t have. However in our experience, if they are used to dealing with management, they have the required relationship building and question asking skills; they need to change their perspectives: 

From	To
Your company’s products & services	Your strategic accounts business issues
Only creating value for your company	Also creating value for your strategic account
Operations	Strategy

However changing perspectives isn’t easy. Most Account Managers have spent their career focusing on short-term revenue and results. So changing their focus to understanding the senior executive’s key business issues, creating value for the strategic account and discussing strategy for future financial years requires some investment. They need help to transform their thinking. That is why sales training in this area has become the No.1 priority for many companies.

For companies who want to develop and sustain strategic account relationships, establishing and sustaining relationships with your customer’s senior executives is a critical capability.

So if this is an area your Account Managers struggle with we hope this blog gives you some ideas. Of course if you need more ideas or help look at our workshop; http://www.gordianbusiness.com.au/executive-interviews-workshop or contact us to discuss ways to improve the skills and confidence of your team to more effectively manage senior executive relationships. Contact us on +61 (02) 9450 1040 or email peter@gordianbusiness.com.au. We welcome your contribution so please comment below and subscribe to our blog at the top right of the page.

How to pick a winner?

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By Gary Peacock

As the excitement mounts for the Melbourne Cup, the horse race that stops Australia, many people are trying to pick winners. In horse racing you win, not by listening to what the owners say, you win by looking at form: what the horses have done.

“The spirited horse, which will try to win the race of its own accord, will run even faster if encouraged.” Ovid.

In business, with your customers, how do you pick winners? By winners we mean profitable and loyal customers. Similar to horse racing don’t listen to what customers say, you win by watching what customers do. In some markets when a customer says they want to partner with you, what they mean is they just want to reduce your prices to take some of your margin. If they really wanted to partner you would see some specific actions to show they were serious about building a stronger and deeper business relationship. Later we will explain what you should see if your customer is serious about being a partner.

Our first tip about picking winners is a technical one: segment your customers.  By segmenting we don’t mean what the marketing department means— segmenting using customer demographics and customer needs. We mean segment customers by their relationship with you.

We use a simple method: how important is the relationship with you to them; how much value do you deliver to them, as they see it. This gives us four possible segments:

Relationship (to them)	Value (To them)	Segment
Low	Low	Transactional
Low	High	Technical
High	Low	Relationship
High	High	Partner

To pick winners, once you segment your customers you must treat them how they want to be treated. Some people think winners can only come from the Partner segment. In our experience, winners can come from any of the four segments.

For the sake of brevity, we will discuss just two segments. Transactional customers are the toughest. They want your lowest price and fastest delivery. Nothing else. Spending time on relationships or spending time sharing technical information is wasting time and wasting money.

If you want to pick a winner with a Transactional account: make it as easy as possible for the customer to do business with you. Find ways to automate transactions and take all possible costs out of the relationship. Spend less time and money with them. Automate the transactions in ways which build barriers to your Transactional customer swopping to another supplier. Can you create unique connections to their systems and processes?  

Some of your people will resist automating transactions and talk of moving this account to another segment. In our experience, it is tough to move a Transactional account to another segment. If you are going to assign time, money and people to moving an account from one segment to another, then try to move a Technical account to a Partner account. It’s easier and more likely to succeed.

So, how about customers in the Partner segment? Typically, your staff want to put more of your customers in the Partner segment than belong there. The killer question is: how much of their time, money and people are they investing in the relationship, compared to your company? If you have been investing far more in the relationship for more than two years, then this customer does not belong in the Partner segment.

If your customer is serious about being a Partner, then what should you see? Over two years you should see more of their people, more senior of their people attending more meetings to discuss more strategic issues in their business.  If you see this, you have picked a winner.

For more insights into segmenting customers look at: http://www.gordianbusiness.com.au/strategic-account-management/ or contact us on +61 2 9450 1040 or email gary@gordianbusiness.com.au. Please share your comments below and subscribe at the top right of the page.