Neglected Customers Soon Shift Allegiance and Switch Suppliers

Strategic account management and key account management definition for training account managers.

Sales Compensation Management

Everyone knows that repeat business from established customers is much easier to obtain than business from new customers. Repeat business is nine times easier according to some sources. We don’t need to do the math to recognise the truth in this statement yet it is so easy to take existing customers for granted. By far the most significant reason given for changing suppliers is poor service. This is why many businesses hire account managers to look after important relationships.

For larger customers and key accounts, the term ‘relationship’ is apt to be misinterpreted. Account managers might maintain good personal relationships with several people in the customer’s organisation, thus creating a warm and fuzzy feeling that everything is alright. Good relationships may obscure an account managers personal status with important people. Friendliness can be disconnected from a suppliers standing with a customer.

Being considered a trusted advisor by the most influential people in a customer’s organisation should be the benchmark by which account managers measure their relationship status. How those same people rate the strategic value of a supplier determines the security of a business relationship. Imagine an independent survey that asked the most influential people within a customer to rate these two perspectives:

On a scale of 1 to 10 with 1 meaning ‘not at all’ and 10 meaning ‘complete agreement’ how would top influencers in your key accounts answer the following two questions?

  1. To what extent do you consider [supplier name]’s account manager to be a trusted advisor?
  2. To what extent do you consider [supplier name] to be fulfilling the role of strategic partner?

If you can trust yourself to make an honest estimate of what each important customer contact would say, this simple test might provide an early warning of impending disaster.

While changing suppliers can be painful it can also have many benefits. New suppliers will work harder for the business, make stronger commitments, and lavish attention at least in the short term. A change in supplier can be used to achieve all manner of change within an organisation that may have otherwise have resisted transformation efforts.

Key account managers need to do a lot more than provide a reliable and attentive interface between the respective organisations. Here are a few suggestions:

  1. Understand the current goals, objectives of the customer organisation. It is very difficult to think of account managers as being ‘onside’ if they don’t know what the side is aiming for.
  2. Understand the markets that the customer is addressing. Having more than a superficial understanding is necessary to appreciate the declared goals and objectives.
  3. Understand the strategies being used to guide accomplishment of important objectives. As for 1, it is difficult for someone to be perceived as a contributor or business partner if it seems that he or she doesn't understand the ‘how’.
  4. Understand the dynamics of the customer’s organisation – who is responsible for what and how the organisational landscape is changing. Without an appreciation of the continuous shift in influence and authority, it is difficult to prioritise relationships.
  5. Understand the aspirations of competitors and how to monitor their activities. Without taking the trouble to identify and monitor warning signs, account managers can find themselves firmly on the back foot reacting to a competitive assault.
  6. Adopt a systematic approach for covering all aspects of account management deemed essential. Most key accounts and large customers are complex organisations that soak up supplier resources. Efficient planning and management is critical if mistakes and poor service are to be avoided.

Companies rely on repeat business from high value customers. The unexpected loss of an important customer can drastically damage business performance. Many organisations are the wrong side of Pareto’s 80/20 law and derive most of their business from just a few customers. “The nicest thing about not planning is that failure comes as a complete surprise and is not preceded by a period of worry and depression”, wrote John Presto. The same sentiment is expressed by Sun Tzu thus, “Never assume an enemy will not come. Instead, prepare for his coming”.

Article by Clive Miller

If you need a better key account management definition or ways to improve strategic account management, we can help. Telephone +44 (0)118 983 3887. We will be pleased to discuss your needs or talk through some options. Send email to custserv@salessense.co.uk for a prompt reply or use the contact form here.

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