How Structure Affects Strategic Account Management
“Chains of habit are too light to be felt until they are too heavy to be broken.”
Many companies work in silos, geographically or by business units. Implementing a company-wide initiative like Strategic Account Management (SAM) poses many challenges, particularly around the main resource - staff.
Breaking through functional silos
Global companies often have regional CEOs or Vice-Presidents who are responsible for the region's performance; however, they often don't have responsibility for key people or functions. For example, it is common for sales, service and technical support to report to senior executives based overseas.
So, for leaders of caompanies with these siloed structures getting the whole company aligned around strategic customers, and committing time, money and people can be a major challenge. To overcome the potential risks leaders have two options:
- Negotiate internally to gain control of local resources by getting their structure changed.
- Use their influence to get all SAM stakeholders on board.
The first option is appealing; however, most companies have their rules and changing the rules for one leader in one region to help their SAM program is rarely enough reason to change long-established structures. This option also involves a long-period of internal negotiation which delays starting SAM.
The second approach has worked well in many cases. The most successful SAM programs don't rely on having direct control of people involved in the program. They do rely on having a cross-functional team involved with strategic accounts.
Including a cross-functional team in SAM training, account planning and account reviews, changes how the whole team thinks about strategic accounts. This is because they start to understand the customer more deeply, and how each of their functional responsibilities connects to your strategy with the account. So, when asked for help, they understand why it is good for your customer and why it is good for your company. Cooperation and commitment are natural byproducts of their involvement and understanding.
So, even though the Strategic Account Manager doesn't have direct control over the technical services team or application specialists, when they ask for help they get it. This understanding and alignment around customer objectives means SAM programs can be established quicker and results achieved faster.
Having inadequate support resources
Coordinating SAM activities takes some effort. In companies with more than one site, global companies or global accounts, the effort is magnified. Securing and confirming people's availability for internal account reviews and meetings with the strategic account can be a recurring challenge.
To overcome this; first create a rolling calendar of your SAM activities. A calendar enables contacts in the account and in your company to plan all their activities including their SAM commitments.
“Firms badly underestimate the time needed to manage relationships. ”
Second, to manage a successful SAM program appoint someone in the company to be the SAM coordinator. This resource may come from sales support, an executive assistant or a receptionist with spare capacity. Their role is to communicate and manage the calendar, follow up attendees, book meeting rooms and the other administrative and logistical demands. Getting the logistics of the program well managed is critical, and can make a significant difference to the success of your SAM program.
For example:
One company had established a very successful SAM program. However, with a change of CEO, the focus swung quickly to cost reduction. When he joined the company, he reviewed every cost in the business, with an emphasis on 'non-essential' employee costs. As a result, the role of SAM coordinator was made redundant.
Over the following year, the activities that had helped make their SAM program successful quickly eroded. Internal review meetings were less frequent or didn't happen. When they did happen, not everyone who needed to be there attended. And the effort to coordinate the SAM activities fell on the Account Manager, so they spent more time on administration than creating value for their accounts. In the following years, the company did the minimum to maintain SAM, and did it with fewer accounts.
After a few years, it was evident they weren't creating value for their accounts. They returned to a focus on price and fell into a discounting mindset to retain business. They had saved the cost on one employee; however, over the next five years the impact of not having that one role set off a chain of events costing the company millions of dollars.
This example reinforces why active involvement from the CEO and other senior executives is so critical. One way to build a proactive defense against this risk happening is to track the results you are achieving from SAM. Measuring account retention rates, revenue growth rates compared with the market, and return on investment from your SAM resources are essential. Then having regular forums established to keep the senior team informed of your SAM successes, so its relevance and impact on results is never questioned.