The Relationship Review for Key Accounts
Last year, IndustryWeek published an article titled “If You Don’t Know What Your Customer Values, You’re Not Selling It.” It’s useful to highlight the key messages in this article as you plan to conduct relationship reviews with your most important key accounts. A couple of excerpts from the article:
If you think your product/service defines your value to customers, think again. Your value is what your customer believes it to be and nothing else. Even if you’re selling the fastest, smartest, most efficient or effective, if you’re not reinforcing what your customers value, or worse yet, you don’t know why they keep buying from you, you’re not selling value. Of course, if they don’t see your value they’ll be more easily lured away by the competition, and that’s expensive. According to research spanning financial services to retail to manufacturing, it can cost 5 to 10 times more to replace a customer than to retain one. The opportunity costs are enormous, too. According to Bain & Company, an international consultancy, a mere 5 percent increase in customer retention can increase a company’s profitability by 75 percent. Reliably providing your customers with the value they seek isn’t necessarily easy, but it isn’t complicated either. You need to:
- Understand what they value
- Sell that value
- Deliver it
- Reinforce it
I want to make sure I help everyone get on the same page with regard to our definition of Account Management. First, it’s about penetrating our key accounts, getting into every service or business unit that we desire to have a relationship with. This works on two platforms. On one, it’s about serving all of the account. On the other, it’s about getting as many of our products, services and solutions into all of the account. If we’re doing this well, and have the right level of relationship with our customers, then we fulfill the second role of Account Management which is to create the kind of relationship that effectively locks out the competition. Third, Account Management has a very important role in targeting and creating new business within the account base or account portfolio. This could be in the form of brand new accounts, new products, or finding new routes to market.
Account Management Best Practices support a 5-step process – profile, segment, create, select and execute.
- Profile – Conduct market research and internal research (customer information) to understand everything you can about your customers. This includes all their businesses, locations, their industry sectors and their customers.
- Segment – Certain slices of an account can be more (or less) attractive than others. So you need to segment the account – establish which particular pieces are of high value to both SIFCO and to your customer.
- Create – Once you’ve prioritized, you can look to create new opportunities. The solutions must address the business needs of the customer, based on your ability to understand those needs.
- Select – As you uncover new opportunities, you need to select the appropriate strategy and approach the account by focusing on those areas that will provide maximum return on your efforts.
- Execute – Keep in mind that when a ship misses a harbor, it’s rarely the harbor’s fault. With the right strategy, you need to focus on great execution – building a business development plan for the account while leveraging marketing, technical, partners and other resources to help you succeed.
The roles you play in your accounts will have a big effect on your success or failure with those accounts. Sales is becoming more strategic and, increasingly, companies (particularly larger ones) expect that sales people are business people who can sell. In other words, your buyers and customers expect to do business with people who can think strategically and not just take orders. It’s critical to understand your customers’ customers – what end user products they are involved with and have at least a general understanding of their market sectors and industries.
There are 4 levels of relationship you can possibly have within an account that mark the level of relationship you enjoy with the business and/or various divisions or units you have contact with. Think about what level you may occupy in each of your key accounts.
- Vendor – This has turned into a culturally sensitive word. In some corners, it can be viewed as demeaning or at best an impersonal term used to describe the lowest of the low (think Deltas and Epsilons in Aldous Huxley’s “Brave New World”). But a vendor can be a perfectly acceptable term used to denote where someone falls in the supply chain. Typically, you are viewed as a vendor when your products attract RFPs. At this level, you are usually tactical, rarely strategic. On the commodity side of the business, it’s typical to be viewed as a vendor
- Credible Source – This term is used to describe the level of relationship where you have become a steady, reliable supplier of products or services. You may have developed a few contacts apart from the purchasing or procurement manager in your account. In contrast to a vendor, a Credible Source enters the process just before the customer is ready to evaluate products, probably because you are on an approved supplier list already – that has the added bonus for you of providing a barrier to new vendors looking for a slice of the pie.
- Problem Solver – As a Problem Solver, you are more a part of the account’s fabric than the Credible Source. This level takes on a more strategic dimension, is deeper and more rewarding. At this level, you’re getting to be pretty knowledgeable about the customer’s industry and what makes it tick. As a Problem Solver, your involvement expands further and your appearance in the decision process occurs earlier and lasts longer.
- Trusted Advisor – This is hallowed ground. Here, you work with executives to explore emerging needs and direction, oftentimes on a confidential basis. You become more of a consultant than a salesperson. Frankly, in the business of SIFCO, this probably doesn’t happen very often.
Remember, the key goals of the Relationship Review are to learn what the customer values and then find a way to consistently deliver that value. You start the review by looking to get answers to:
- What should we start doing?
- What should we stop doing?
- What should we keep doing?
- How are we doing with you?