In March McKinsey & Co. Expert Partner Jennifer Stanley delivered a SAMA webinar entitled “The four megatrends upending strategic account management and how to approach them.” This piece is adapted from her webinar.
How do you deal with a force you can’t avoid or control? A megatrend is this type of force, and it’s one that if you don’t pay attention and respond to, you’re going to be left behind by your competitors who ARE paying attention. Today’s megatrends are profoundly reshaping the way customers engage in their purchase journeys. And when you think of a “customer,” realize that it refers to not only decision makers and procurement organizations but also influencers, peers and anyone else who could be part of the purchase decision journey – whether you know them or not, whether they’re obvious in the purchase decision journey or not. So it’s a very wide interpretation of the term “customer.”
There are four megatrends that are most important for strategic sales organizations because they are affecting how your customers are and will be buying. In turn, they change how you should be working with the very broad audience underneath the customer umbrella. Briefly, these four megatrends concern technology, demographics, user-centricity in B2B buyer behavior and the economics of interacting with customers.
The ABCs of information technology
Regarding technology, there are implications for the buying process ushered in by software being everywhere in our lives – and how customers are interacting with technology, both personally and professionally. I’m referring to the new ABCs of Information Technology that govern how customers interact with technology.
The ABCs — Analytics, Bring your own device and Cloud-enabled collaboration — are shifting buying dynamics, combining to change buyer and influencer behaviors. Today’s buyers are more sophisticated; they have access to more information, more peers and more influencers. Technology makes it really easy for them to understand and develop a view of your organization as a supplier, your offerings and others’ experiences with your offerings.
The world where the SAM can control much of the conversation is gone. It’s become much more one of managing information and shaping the conversation, having a collaborative discussion with the full understanding that the customer has a lot of information that didn’t come from you or from someone else on your team or in your organization.
What is the implication for how you serve the customer? This technology-enabled access to information, to preferences and to others’ opinions results in much higher expectations customers have as buyers as they move through the purchase experience. The main implication for strategic sales organizations is that, along with these changing experiences, traditional buyer organizations are changing, too. Customers are collaborating more amongst themselves, and they are using technology to collaborate and share information, which sometimes may signal their willingness to buy. So paying attention to and across the digital platforms they’re interacting on is really important for picking up on those signals.
What is the impact of caring about technology for a SAM, about systematically going through, and relying on your organization to go through, big data streams that result from so much digital interaction and then applying advanced analytics? Advanced analytics is a broad term and may be used differently in different organizations. Here, it means matching data from three or more sources, one of which is external to your organization. For example, external data could be tracking customers’ digital footprint behaviors – how they’re moving and shifting across the different channels they operate on – or it could be doing a digital footprint scan of your critical influencers, in terms of how their IP addresses move across the various social media channels. This is not always possible because of privacy constraints; but where it is possible, it’s worth it. The idea is to not just look at traditional invoicing and CRM data, but to combine external with internal data to deliver a new set of insights about how to better serve the customer and how to better target segments that are important to you with more tailored offerings. Advanced analytics have to result in something that is practical and useful to the sales organization; otherwise, it’s just numbers.
McKinsey & Company has some data showing that having the backing of advanced analytics makes a big difference. Fifty-two percent of B2B firms are using advanced analytics to generate new customer insights and leads, while 46 percent are using them to create more relevant customer profiles and offerings. And these companies are enjoying 8 percent higher win rates. There have been cases where a supplier has been locked out in a certain market or at a certain customer plant, needing a lead to break into the market or get into the plant. The supplier gained access thanks to more insight from data analytics into how to create a more relevant offering for that specific sub-segment of the market or that specific strategic account. So the data shows about half the B2B firms benefiting from data analytics with better leads and about half benefiting with being able to more successfully tailor their offerings. The data also shows a substantial movement in the conversion rate from proposal through to a completed sale – an 8 percent higher win rate. Particularly in long sales cycles, it’s worth making the investment in data analytics.
Demographic trends: new pockets of growth and the rise of millennials
A second megatrend affecting strategic account management concerns two types of demographic changes: new pockets of growth in emerging markets and the shifting of the guard from boomers to millennials.
The fact that emerging markets are places to be present is not that new or exciting. Emerging markets become far more exciting when what is happening in those markets is considered and translated into where an organization needs to make sure it has a presence and a voice for its strategic accounts, given where its customers are or are going. Looking at China, for example, 220 cities will have populations over 1 million within the next four years. Compared to a mature market like Europe, only 35 cities will have more than a million people by 2020. This is an order of magnitude difference in terms of the number of customers.
Those emerging cities in China will be home to roughly 60 percent of the world’s consumers. That’s a lot of downstream spend, and it’s likely going to go into some pretty big categories: probably continuing into mobile devices and other types of consumer electronics, in addition to other consumer products that continue to have appeal in local markets. When this is considered along with looking back up the value chain into the supplier world, some staggering opportunities begin to appear. For example, China’s telecom and transportation spend is likely to triple, even in a slowing economy. So if you’re selling into these markets, that’s a pretty important space to be. And if you think about the infrastructure investments to support the growth of these consumer markets, roughly $10 trillion a year will be needed to fuel these types of investments on a global scale.
When you think about how to deploy your strategic account team, looking at emerging markets in this way may help you to think about where you spend more or less of your time. While this is an exciting set of opportunities, it could be daunting because it requires a level of agility and creativity that could be new to your organization or, in some organizations, frowned upon. Having the agility to spot trends ahead of your competitors, to be able to quickly shift in your supply chain and distribution centers to match where global growth is going at the level of cities and neighborhoods, is pretty important.
A second demographic change is the rise of the millennial generation as purchasers and the shifting of the guard away from the boomer generation. Some of the preferences of millennials present both challenges and opportunities for SAMs in dealing with procurement professionals.
This new generation of workers came of age with the internet, with sharing information on social networks. It’s natural and normal for them. Sales leaders need to operate within that context. To put it in perspective, by next year, the share of Gen Xers who are running households will exceed the number of boomers. Tweet: By 2020 at least 50 percent of the entire workforce in North America will consist of Millennials. https://ctt.ec/b98qj+ , and today, 75 percent of that workforce uses digital social networking as a primary communication tool – with the emphasis on primary.
What this means in the strategic sales sense is that customers may have a very different set of expectations about work interactions, about when and how they can interact with us. Information gets shared and networks get built through digital communication. Relationships get sustained that way, which is a different world from the traditional person-to-person interactions, the private interactions that most of us are used to. That’s not to say that personal interaction goes away; it just gets augmented. As those lines between what’s social and work and what’s social and personal get increasingly blurred, it’s really important that SAMs navigate these waters carefully and manage their teams to do so. But there is no doubt you have to swim in these waters one way or another.
User-centricity in B2B buyer behavior
The third megatrend is about the consumerization of B2B buyer behaviors resulting in very high expectations.
The life you lead as a consumer, and the lives your customers lead as consumers, become quite important for thinking about the buying experience. Customers today want “me plus free plus easy”; increasingly their research into and experience of your offerings is based on peer-to-peer conversations in whatever medium is most convenient. Chances are, it’s digital.
If you need to learn something or want a little more insight into marketing analytics or accounting, you don’t have to get formal training; you can take a free course online. If you need more document storage, you can download Dropbox. A small business that needs documents signed can go to DocuSign and make it happen. Every step of the way in getting work done, there are easy ways that feel very natural, where self-service interaction feels like a personalized experience. There’s a heavy degree of user-centricity to it. It’s “me” driving the journey, not a strategic account organization.
So the “me plus free plus easy” that you enjoy as a consumer needs to be reflected in how you think about strategic account management. What do your sales processes look like over the course of the con- tract? Are you making those processes personalized and easy? Organizations often talk about being easy to do business with, but how many times do you put roadblocks in front of the customer, whether time or documentation roadblocks that make it harder for them to do business with you? This will become even more important for strategic account organizations moving forward.
“Me plus free plus easy” boils down to making sure you’re covering these three aspects of interaction, even with the most senior of strategic customers. It can be hard to imagine the informality of using “me plus free plus easy” when dealing with a chief procurement officer or a chief information officer, but this expectation does exist, even if it’s not obvious.
The economics of interacting with customers
The fourth megatrend is what happens as a result of falling experimentation costs and the rise of the sharing economy. For example, there are 19 million handheld electronic drills sold in the United States. Their average active lifetime use is 12 minutes. At that rate, you could borrow a drill from your neighbor and save money. Almost everything is a service and can be shared, and consumers are comfortable with sharing their own idle inventory.
However, imagine a world in which five local hospitals get together and look at the total capacity and usage time of their CT scanners and then realize that, instead of each of them having a scanner, four scanners would be sufficient to meet their needs with no adverse impact on patient experience or quality of outcomes. Ask yourself if there are opportunities for your customers to share idle inventory or capacity, particularly for large capital purchases. If so, your sales forecast would look different because you have to consider those buying networks. This has been seen with the rise of purchasing organizations, but this is different because purchasing organizations represent the demand of the group – not necessarily the individual member’s demand.
In interacting with customers today, there are three things to remember.
1. Customers expect you to know them before you meet them.
This is not just about getting to know someone new; it could be about someone you’ve done business with for a long time. What’s changed in their personal life and organizational life? Basically, they expect you to know this and be paying attention.
Do you check LinkedIn profiles before meeting with customers, even ones you know well? Learning something new about a customer could help you to continually personalize the relationship. This knowledge could reshape your thoughts on how you open a meeting or on how you shape the tone of the conversation. For instance, one SAM found out through LinkedIn that his customer’s daughter had just won a scholarship to a university that happened to be the SAM’s alma mater. The SAM realized he needed to rethink his upcoming conversation with the customer and thought to offer to take the customer and his daughter to a football game at the university. There is an expectation of pre-fill knowledge before you meet with a customer; millennials, especially, don’t expect that there will ever again be a cold interaction. They put information about themselves out there and they expect you to go get it.
2. The traditional sales funnel is permanently altered.
A new paradigm of customer journeys has emerged, different from the traditional linear sales funnel. This new paradigm forces a reorganization of resources in response to the non-linear behavior of customers. With long sales cycles, customers are making predictable purchases on predictable contracts. However, between those contracts and before the next negotiation comes up, things are still happening as the existing contract is being serviced. Decisions are being made and opinions are being formed that impact the next contract cycle.
In a 2012 McKinsey research study, which is being replicated this year, B2B buyers and influencers in the U.S., U.K. and Germany were asked how much of their pre-purchase, pre-negotiation activities they conduct 100 percent on digital channels, i.e., not in the presence of an account manager. That number was 35 percent.2 In the next round of research, the plan is to include Asia and Latin America, and the expectation is that 50 percent or more of sales will be digitally enabled. This speaks to the speeding up of what access to information can do to a customer’s journey and the need to rethink the role of SAM.
The challenge is to reframe the role of SAM away from the classic end-to-end sales funnel – lead generation to close of contract and staying on top of servicing that contract – and to think of the SAM’s role instead wholly in terms of being in the customer’s shoes. When you do this, you begin to think about a much more pervasive relationship with the customer, which leads the SAM and the SAM’s team to take on more of a marketing role earlier in the journey, where they are the personification of the brand and the experience for the customer and its decision makers. So you’re starting always with whatever the customer’s trigger is, which may be as obvious as “I’m in the middle of a contract and deliveries are late,” or “I have a need for increased volume” or “There’s an issue with products that are off spec.” Reframe what you do as a SAM to help not only solve the problem but also reshape the expectation for the next time the customer is researching suppliers for the next RFP process. It takes you out of the world of “I’m solving a post-sales servicing need” into a world of “I’m servicing a pre-sales need and sharing new information, resetting an expectation of what customers should think about as they begin their next journey for their next purchase.”
One of the secrets of sales success, to be out in front of your customer physically as much as you can, is not true anymore.
When you begin to think more from the customer’s viewpoint, this can also help you think about where to deploy your team resources most effectively. Ask yourself, “Is this a time when it makes more sense to let our marketing organization work its magic and to devote our time elsewhere? Or is this a time when nothing but our personal interaction will do?” Of course, a negotiation prior to the actual buy is one of those times where personal interaction is necessary.
3. The world is multichannel 24/7.
How do individual senior executives with their strengths, insights and capabilities exist in a world that is multichannel 24/7? The interactions customers are having with you are happening in other channels. Getting used to the new equilibrium of the role of the personal SAM, versus what it used to be in a world where access to other channels was a lot tougher, means you have to up your game in terms of orchestrating and shaping those journeys for the customer and, in some cases, suggesting there’s a better way for them to interact versus talking to you.
Figure 1 shows a real customer mapping of interactions across multiple channels resulting in a low customer satisfaction score for this B2B buyer. The company was trying to understand the pathways a customer takes through all of the offered channels that were creating bottlenecks and unpleasant experiences in the customer’s journey—and what the company could do to improve. When looked at from a strategic account perspective, it’s magnified because this is not a one-time transaction; these are multiple interactions over long periods of time. In its research, McKinsey asked customers about their interaction experiences. It was found that even at the strategic level, almost 60 percent said they are frustrated with inconsistent experiences with their suppliers, not just their channels but the actual people behind those channels. The average B2B customer engages with an organization via six different interaction channels. That’s a lot of opportunity for frustrated customers, but it’s also a lot of opportunity for delighted customers.
So when a SAM helps a strategic customer think about the best way to use the channels, explaining when one channel works better than another for a particular customer need, the SAM is then managing the conversation and creating a more pleasant experience for the customer, outside the craziness of a buy, a negotiation or putting the finishing touches on a contract. This is what should make the job of a SAM fun: when the SAM works with customers along their journeys to figure out what works best for them.
Too much face time
What else can SAMs do differently? What do B2B customers cite as the most destructive account management behavior? “Not rapidly responsive” feels like the right answer. However, the actual answer is this: too much face time. When senior people in an organization are asked what is the most frustrating thing a SAM can do, the reply is often spending too much face time with them. This is not to say they don’t value the insight; it’s just that the world that SAMs lived in for a very long time, where you’ve worked out of this paradigm that one of the secrets of sales success was to be out in front of the customer as much as you can, is not true anymore. Customers are saying they don’t like it, they don’t need it and they don’t want it. And that’s because they have so many other ways of interacting with you.
So think through your account plans and how you mobilize your team to ensure you get rapid response, that you have enough engagement after the deal has been inked, that your people are really sharp on the features and benefits and all of that. And figure out how you can do all of this by making use of digital platforms in addition to face time so that the customer experience isn’t one of “Stop bugging me for times for meetings.” Instead, they are calling YOU for times for those meetings. Make yourself more desirable for face-to-face time rather than assuming it’s the most important thing to the customer.
How much face time is too much?
Sixty to 70 percent has been thrown out as a number to aspire to. Customers surveyed by McKinsey say to cut that in half. The ideal is probably somewhere in between, around 40 to 50 percent. This doesn’t mean it’s not revenue-generating time or customer-engagement time. If you think about time on digital platforms, response time and activities with other decision makers or influencers in a customer’s organization, these would be included as well. Don’t drop your revenue-generating time to 40 or 50 percent; rather, challenge yourself and ask if the face time you’re spending is really time that’s worthwhile. Of course, the appropriate amount of face time depends on what your customers like and how they like to engage.
Some final thoughts
1. Use big data to your advantage.
You have the right to demand this from your organization. You need to know some things about your customers that are more forward looking, more granular.
2. Share your pitch.
This doesn’t mean pitch in a typical sales sense, rather whatever you are bringing to your customers to help propel them forward in their journey. This could be a proposal or access to people from your organization, such as when you’re having a voice-of-the-customer discussion. Any time you have an opportunity to help your customer engage and learn something more about your organization, that’s a pitch. Think of yourselves less as account managers and more as community facilitators. How are you present on social media and other platforms so that you are regularly connecting to customers and regularly helping them get educated on new offers? How are you selling them on your offering before an official RFP? Are you really seen as an expert in your space? Many firms have rules for what their employees can and cannot do and say online or in in-person industry forums, such as trade shows. However, many don’t have ways to help SAMs live by those rules and still be effective. The concept here is that you’re sharing your benefits all along the customer’s decision journey and being seen as that community facilitator.
3. Manage the multi-channel decision
Every touch point represents an opportunity for a different type of customer experience and a different outcome for their next purchase. So it’s very important for you and your team to understand what is happening at different touch points in the journey so that you can continue to shape the conversation.
4. Challenge your thinking.
If you think of a SAM as a community facilitator, expert networker, someone at the center of a customer’s world, then you have to think about your offering in a very different way. It’s then not about selling product, not about capital expenditures, not about adding on a service – rather, it’s moving to a world that’s more of a platform consisting of products, services and information exchange. It’s enabling sharing, whether equipment or information. It becomes an environment where you, the SAM, are at the heart of juggling many balls to create a fundamentally different experience that the customer can only get via the platform of interactions, experiences, products and services that your organization has to offer.
The trends are clear; the data is clear; the direction is unavoidable. The key is to adapt now and plan to continue adapting later. Perhaps you’re not adapting as fast as you and your customers can benefit. Have a conversation with your teams about what these megatrends mean for all of you and your organization. You really can’t afford not to.
Want to learn more about trends affecting strategic account management? Check out this short video from SAMA’s 2017 Annual Conference.
- The Essential Seven Factors for Unlocking Strategic Account Growth - November 11, 2022
- The Acumen Sextet: An Evergreen Framework for Account Management and Customer Success - November 4, 2022
- The Secrets Of Successful Strategic Account Management With Richard Santucci And David Hughes - August 18, 2022