The world of strategic or key account management (SAM/KAM) is the growth area of sales, which makes sense given how technology is overtaking so much of the transactional sales space. With customers no longer in need of someone to educate them on products or services, they need salespeople who can step beyond the information available online by delivering real insights that help them solve real problems. Welcome to SAM.
SAM is new to many companies. In others, it is transforming from relationship management to becoming a true problem-solving resource. During this time of transformation there is no better resource than SAMA (Strategic Account Management Association). They have been at the center of the universe for all things related to SAM research, learning and networking for more than 50 years….before SAM was cool!
Over that time, SAMA has benchmarked hundreds of B2B companies to identify what the best SAMs do differently. Keep in mind: I’m not talking about all the criticalSAM program elements like executive sponsorship, account selection, compensation and the like. I am talking about the actual nuts-and-bolts work that a SAM must do with his or her internal and customer teams to be successful.
Challenging or provoking your customer has become all the rage due to popular books and magazine articles. In fact, our own decision science-based research demonstrates that when you are trying to displace an incumbent or defeat a competitor, you need to use an approach that deliberately disrupts your prospect’s status quo bias.
But new customer acquisition isn’t the only selling situation strategic account managers face — far from it. Most times, you are the incumbent, which begs the question: Should you continue to challenge and disrupt the status quo when you are the status quo?
That question drove our recent research aimed at determining the best messaging approach to communicate a price increase while also securing the all-important contract renewal with an existing customer.
Some research has shown that the majority of buyers prefer to interact with suppliers through virtual means – primarily email and some type of voice call. And though the handshake is not dead (roughly a quarter of respondents included it among their preferences), buyers overwhelmingly prefer being contacted by email and phone. These results demonstrate the importance of making sure what is “said” in writing or voicemail is well thought out and articulated clearly.
Being thoughtful and clear in every virtual setting can be a challenge even in our most comfortable work settings. But imagine the added complexity when working with people from other cultures and countries.
B2B sales leaders who use digital effectively enjoy five times the growth rate of their peers who don’t. But a recent McKinsey & Company survey of B2B customers highlights a more nuanced reality. What customers want are great digital interactions and the human touch, depending on what they’re trying to do.
Companies that respond to customer preferences and add the human touch to digital sales consistently outperform their peers. They capture five times more revenue, eight times more operating profit and, for public companies, twice the return to shareholders. This data holds true over a four- to five-year period.
Many sales organizations, however, have trouble putting this human-digital program into practice. The truth is that there are no tried-and-true methods, though technology lies at the heart of customer interaction models to power or inform either the digital or human interaction. Companies need to create the human-digital blend that is most appropriate for their business and their customers. This should not be a random process of trial-and-error testing. What is needed is a systematic way to evaluate the optimal human-digital balance.
This human-digital balance is thrown into particular relief when it comes to artificial intelligence (AI), which is having an impact not only on the broader selling profession but also on strategic account management (SAM). Take, for example, the case of “Andy,” a bot introduced recently by a company to help identify, contact and set up appointments for SAMs at their customers. These appointments were in customer business units that had been either unserved or underserved and that displayed decentralized, regionalized buying behaviors.
Andy’s key capability is her ability to rapidly learn what kinds of outreach and communications are working and to instantaneously adapt her methods to suit. After just a few months, new leads were up 50 percent compared to the year before, while new costs for obtaining those leads were down.
Bots are already managing relatively mundane tasks like this at many companies, but could a bot like Andy manage an end-to-end sale for something like a transactional good to a small- or medium-sized business? Researchers at McKinsey Global Institute (MGI) have studied more than 2,000 discrete human activities across 800 professions, in 50 different countries, to assess the degree of “automatability” of activities in those professions. In some cases it was 100 percent; in others, it was zero. For management professionals, like SAMs, it was around 30 percent.
Comparing skills that are most crucial for the SAM role — things like managing teams, co-creating value with a customer, managing stakeholder interactions and others — with other types of activities that we don’t traditionally think of as part of the SAM role, the three most essential SAM tasks are only marginally automatable.
Figure 1. The degree of automatability of tasks by bot (left side) and by humans (right side).
But do customers want to interact with machines? The answer depends on context, as figure 2 shows. Figure 2 shows the research on how customers buy. The answer: It depends on the context.
When working with a new supplier or vetting a new offer from an existing supplier, 75 percent of customers say they want to deal with an actual human being. As customers move into the evaluation and active-consideration stages, digital tools that provide information, such as comparison tools or online configurators, come into their own, especially when combined with a highly skilled salesforce. When it’s time to renew or update standard terms and conditions, the equation flips, with 85 percent saying they prefer a fully digitized interaction.
In essence, buyers are saying that when co-creating something new and different with a strategic supplier, they’re all for engaging with the SAM. Yet most B2B companies still reward reps more for spending time keeping customers loyal and repurchasing than for uncovering new customer needs or driving demand, which is exactly where customers say they want face-to-face expertise.
So there remains a time and a place for intimate, significant human interaction, and there is a time and a place for bot interaction. The trick is to understand which is which and to adapt the strategic account management approach accordingly.
In particular, there are five areas where humans are needed and can do a better job than AI-empowered machines:
#1: Managing exceptions to standard protocol. Advanced analytics and machines get it wrong a lot of the time, and sometimes you need a human being to actually make the call. A materials company during the height of the economic downturn faced a situation where one of its strategic accounts was experiencing a credit crunch. By any kind of financial or data-driven standard, this supplier should not have extended additional credit to this customer. Now, what a machine couldn’t know is that this was a family-owned business and that the father was getting ready to retire. One son had been tapped to take over the company, while another brother worked at a key competitor that also happened to be one of this supplier’s strategic accounts.
So while the decision not to extend credit may have been “obvious” based on the data, the head of strategic accounts, who was familiar with the situation, worked with the father to find a solution. In the end, the father was happy, which made both sons happy — and which kept both strategic accounts in play.
#2: Using judgment in situations of ambiguity. When data is new and unlike anything that a machine has seen, the machine won’t know what to do with it. That’s where managers come in.
A company may be in an industry experiencing substantial mergers and acquisitions or business closures. In a merger situation, it is highly likely that the customer having the more advantageous terms with a supplier will ask for those same terms for the other account. It takes human judgment to plow through those terms and conditions and to make tradeoffs based on the role the strategic account(s) plays in an overall portfolio.
#3: Shaping strategy. Humans still must shape the overall commercial strategy in light of their growth goals — even if machines take over part of the work, like analyzing buyer trends, determining new sources of growth or predicting whether accounts are at risk of full or partial churn.
#4: Nurturing a complex ecosystem of relationships. Because today’s customer-supplier ecosystem is so complex, with interconnected webs of relationships including those forged digitally, it requires even more thought to select the most appropriate people to invite into the ecosystem and then to manage the content shared with them. SAMs need to determine not only who is in the network but also on whom to focus at different times and in different situations with the customer. This requires SAMs to know who are the most influential decision makers within an account and to build this knowledge into their account plans. While there are tools today that can illustrate the breadth and depth of relationships based on social media presence and suggest who are the influencers, such machine-based data still cannot replace you knowing your customer deeply –- who is on the way up, who is on the way out and who you will need in your corner. When we rely too much on the data to tell us how our customers are likely to behave and not enough on our own intuition and personal knowledge, that’s when SAMs can run into trouble.
#5: Focusing the power of advanced analytics. SAMs should embrace advanced analytics for their ability to help us to have more, and more productive, value-creating conversations with strategic customers. This is the area where AI can make our jobs not only a lot easier but also a lot more fun.
This means taking the data for what it is but then testing and retesting it. If the data suggests ways to generate additional volume, grow revenue, cut costs — whatever the outcome is that you’re looking for with your strategic account — you can pilot, you can test and you can learn. But you still need to use good business judgment. For example, experimenting with next-product/service-to-buy algorithms can support cross-sell activities, but if it’s not a good time to have the conversation with the customer, those activities need to wait.
To stay ahead, there are two areas where SAMs need to raise the bar in terms of using advanced analytics to help deliver on customers’ needs:
#1: Know your products, services and data offers much more intimately than you do today. Customers today have access to a wealth of information about your offerings via digital platforms and their own personal networks; if they are going to have an actual conversation with a SAM, they expect a deeper level of insight and expertise than what they can find online.
#2: Become an expert advisor. Data is best at suggesting different options, but where humans can provide the most value is in making decisions using that data. SAMs need to get good at making sense of data to make better decisions. For example, there is a global producer of wind turbines that uses AI and big data to guide decisions on where customers should locate their next round of turbines. But even with this data, succeeding with large customers still requires a SAM to have a nuanced, highly informed and consultative conversation with stakeholders whose job it is to decide where to build and place the turbines. While data like barometric pressure, predicted weather forecasts, topography, population demographics and more are critical inputs to those decisions, humans still need to choose whether or not to follow the data in light of other investment considerations.
In the end, the biggest benefit of AI to the SAM profession may be in its ability to make the job more fun. SAMs spend only about 10 percent of their time on creative pursuits, such as brainstorming new offers. With all the time SAMs currently spend making appointments, following up on invoices and putting out fires at the customer, that is time that could instead be spent coaching teams, boosting social and emotional intelligence, and on other high-value activities. This is where the bots can step in and help. SAMs should embrace the bots for what they can do to free up time that can be spent doing more interesting and creative things – like becoming more human with their customers.
Jennifer Stanley will deliver a keynote address at SAMA’s Pan-European Conference 14-15 March 2019 in Amsterdam.
Digitalization is both a source of disruption and an enormous opportunity. We argue for the latter. Never has there been a better opening for SAM programs and strategic account managers to take on a bigger role in securing the future of their organizations.
The implications of digitalization are forcing SAM programs — and the SAMs who drive them — to redefine themselves on multiple dimensions. While many traditional SAM traits will remain, the overarching trajectory will see SAMs having to become even more strategic than they are currently.
The practical manifestations of becoming more strategic will take three distinct shapes:
SAMs will take alignment to the next level by becoming drivers of strategic development cross-functionally and inter-organizationally.
Strategic account management will be liberated from the shackles of the seller-buyer dynamic by transforming from account management to ecosystem or stakeholder management.
SAMs will develop new processes and skill sets that will make the future one of leadership, rather than of management.
The role and responsibility of the SAM are transforming from advanced, consultative, insight-based selling focusing on one customer relationship towards orchestration of mutual value creation in a larger ecosystem of organizations. To simplify, one could argue that strategic account management is becoming strategic ecosystem leadership — no longer SAM but SEL.
The elevated SAM’s new and important roles are summarized in diagram below.
From aligning to driving: strategizing
Traditionally, SAM has been viewed as a set of management practices that aim at inter- and intra-organizational alignment: Inter-organizational alignment to jointly (with the customer) develop a value proposition and a process for the delivery of the value proposition…and intra-organizational alignment to create a collaborative, flexible and committed customer-centric culture that enables value creation for the customer and value capture for the firm.
The goal of aligning functions and processes between selling and buying organizations is not disappearing, but the new digital reality means that it is no longer enough. Increasingly, SAMs will need to assume the role of “change champions” who drive change and strategy development.
Being a change champion can take several forms, but key to them all is to not fall into a trap of becoming an administrative and commercial coordinator – someone who spends her/his time on aligning, without having a development trajectory aiming for new value creation. A change champion may drive development in three different ways:
Driving strategy for the selling firm. The strategic account manager needs to be involved not only in executing strategy but also, increasingly, in driving strategic initiatives within his or her own organization. The SAM program should be a vehicle for top management to identify new business and renewal opportunities and to shape the firm’s strategy by providing deep understanding of strategic customers and the overall market.
Driving strategy for the customer. The strategic account manager needs to focus on helping the customer create value in new ways. Sometimes this takes the form of challenging various influencers in the customer organization and suggesting modifications to its present ways of running things. This implies new types of processes and skill sets, where strategic account managers are tasked with becoming “value innovators and transformation agents” by helping customer organizations to strategize.
Driving market development. As markets become more dynamic and malleable, and strategies are less market-driven and more market-driving, the SAM becomes a key market shaper and can, for instance, push the market boundaries by finding customers who are early innovators and then engaging them as lead customers in a process of collective learning. Additionally, facilitating dialogue with customers and other actors in the ecosystem can challenge dominating assumptions about the market, reexamine existing market boundaries and expand market boundaries.
Becoming a driver of strategic development has two consequences. First, it will heighten the importance of value quantification and verification. To drive customers’ strategy or how the market develops, the SAM will need to tap into available data to show the potential for reconfiguring resources in the ecosystem to enable value creation relevant to influencers inside the ecosystem. Using data analytics will be the basis for credibility creation – a necessary foundation on which to build the case for change.
Second, SAM practices will need to be modified to better fit with the idea of driving change. Account planning will need to look beyond the buyer-seller dynamic to become increasingly collaborative. Value propositions will need to be made based on deep insight into influencer and stakeholder situations, and new tools will need to be applied to engage influencers and stakeholders in a collaborative process of co-creation. Digitalization provides tools and techniques for these modifications.
From account to ecosystem: orchestrating
A dramatic development that supports the elevation of SAM is the expansion of the “unit of analysis” – moving focus from the seller-buyer dynamic of strategic accounts to the larger ecosystem. If global accounts that involve hundreds of individuals are viewed as complex, then widening the perspective to include entire ecosystems makes them exponentially more so.
Increasingly, companies face situations where no single firm possesses all the resources or capabilities required to deliver the value required by strategic accounts. As solutions become more complex and components of the solutions become more digital, they are increasingly created and delivered by a “competency system,” or ecosystem — a combination of collaborating industry players.
The consequence is that strategic account management needs to be emancipated from the shackles of the seller-buyer paradigm so that it can focus on generating a better understanding of how resources in the broader ecosystem can be reconfigured to increase resource density for the strategic account. To put it succinctly: SAMs need to become industry players, ecosystem architects and ecosystem orchestrators – all roles that require a new set of skills and new tools.
In an ecosystems view, success is less dependent on the resources that a firm controls than on the resources to which the firm can connect. This flips traditional strategic account management on its head. Rather than start with what the firm controls and look for ways to leverage it, tomorrow’s SAMs will need to begin with the opportunity and then assemble the required resources in its wake. Key will be the ability to orchestrate actors and resources in the larger system to allow the firm to assemble and flexibly reconfigure resources so that value can be created for the entire ecosystem.
To seize opportunities that lie outside the grasp of any one firm, SAMs need to assemble partners, create alliances and enter into joint development efforts in which influencers and stakeholders are guided towards a common vision.
From management to leadership: facilitating
The key to being successful in driving strategic development in a customer organization or in an ecosystem of stakeholders is a simple realization: Change will never happen unless you can engage other individuals in the process. It requires leadership that facilitates others – customers, suppliers, other business partners and sometimes even regulators – to engage in a common change journey.
Moving from a firm-centric view to an ecosystems view implies an acceptance of complexity and uncertainty – and a corresponding loss of control. A successful strategic account manager encourages novelty and innovation not by directing but by allowing; not by stabilizing but by disrupting stifling patterns. In fact, in order to become a driver of change, one must decouple leadership from the individual and distinguish between “leadership”and “leaders.” SAM leadership should be seen as an emergent, interactive and distributed process of learning, influenced and enabled by the SAM process and strategic account managers.
Hence, we are not arguing that strategic account managers need to become better leaders, but rather that they will need to engage in processes of leadership that are characterized by facilitation and rotating leadership:
From self-centric to allocentric innovation. Orchestration of resources and activities in the ecosystem will require strategic account managers to switch from a self-centric, firm-based view to an allocentric (“other-centered”) view in which value is created for the whole market system by integrating resources from an ecosystem of organizations. To seize opportunities outside the firm’s grasp, the SAM will have to facilitate processes that help to assemble partners, create alliances and enter into joint development efforts.
Learn from jazz (i.e., rotating leadership): Part of orchestration relates to improvisation and allowing others to play their solos. Even if a jazz band has a leader, his/her roles are very different from the traditional orchestral conductor. The latter stands alone, high on the podium, and controls the performance with his baton, based on a score. By contrast, in jazz the leader is one of the players. And leadership rotates during solos, as everybody else builds a platform enabling the soloist to shine. Research has shown that rotating leadership — where organizations take turns leading the inter-organizational collaboration in distinct phases — and consensus leadership — where organizations work together, agree to common objectives and follow shared decision making — are associated with higher innovation outcomes than collaborations dominated by a single actor.
Strategic account management traditionally has been a set of primarily managerial practices: to make account-specific plans, execute them and follow up. Simultaneously, the more advanced programs have engaged in activities geared towards impact without authority, acknowledging that SAM programs on the one hand have an element of conflict management in them, but also that strategic account managers can exercise considerable power if they play the game well.
The managerial part of SAM is not going to disappear, but the leadership part will need to be elevated. This does not mean that strategic account managers will need to become more “leaders” than they are today, but rather that the SAM process will need to be designed in such a way that it enables distributed leadership in a collaborative process. Digitalization provides tools for this. Cloud-based collaboration also can, at its best, enable work to be organized more in projects and less in functions, and can enable the formation of flatter organizations. This would facilitate more people to be engaged in leadership.
An exciting time
To reap the benefits of digitalization, we need to ensure that digitalization is not used to engage in more administrative work or building more elaborate account plans. The name of the game is increasingly about added value, co-created between many stakeholders in the ecosystem. And this co-creation puts demands on strategic account managers’ abilities to navigate inside their own company as well as inside the customer’s and other stakeholders’ organizations.
For those who are ready for this new role, these are exciting times! Want to go deeper? Read the entire SAMA research report on which this post is based here.
Kaj Storbacka is professor of Markets and Strategy at the University of Auckland Business School’s Graduate School of Management. Elisabeth Cornell recently retired after nearly two decades at SAMA, most recently as senior knowledge content developer.
It’s widely accepted that the introduction of new technologies like blockchain, Internet of Things, augmented reality and others is changing business faster and like never before, creating uncertainty for customers and suppliers alike. But if you’re unnerved by this state of uncertainty, good news from the front lines: Your customers are looking for help navigating the complexity of digital transformation, and if your company can provide answers, you’re going to be sitting pretty.
At a recent SAMA Executive Symposium, Anton Chilton, the global head of field operations for manufacturing software company (and symposium co-host) QAD, offered a comprehensive take on his company’s approach to dealing with the changes wrought by new digital technologies. (QAD makes ERP software for manufacturers.)
He outlined three of the biggest high-level challenges facing his customers:
Industry disruption. For evidence of how quickly industries can transform, look no further than the automotive world, once thought to be immune to disruptors due to its astronomical barriers to entry. Not only has Tesla advanced to become a major player in just a few short years, but Dyson (yes, that Dyson) is working on an electric vehicle.
Smart manufacturing. Technology isn’t just changing businesses themselves but also how customers conduct business — from how they interact with their supply chains to how they optimize their shop floors.
Geopolitical turmoil. From trade wars to Brexit, the world is seething with change and uncertainty. If you’re a global manufacturer, how do you decide where to invest?
What does this mean for you, as a strategic supplier? Chilton suggests that adaptability will become (if it hasn’t already) the new competitive business advantage. He suggests four key traits to maintain your organization’s agility.
Ability to read and act on signals. The time to react to changes is growing ever-shorter, so you have to be highly focused on the external world. Look at what’s happening in the world around you — with your customers, with their customers, with their supply bases and with your competitors — and be prepared to act on those signals.
Ability to experiment. Much of the potential business value from digital transformation is, as yet, in the realm of the imaginary. The use cases may yet not exist. But you don’t want to make a big bet on something that *might* work. The ability to experiment, and the willingness to “fail fast,” is critical.
Ability to manage complex systems. Because of the interconnectedness of everything, you will increasingly need to excel at knitting together multiple systems, from multiple parties. Only the most nimble suppliers will be able to pull this off successfully.
Ability to mobilize. With the pace of change accelerating, none of the first three traits will “play” if you can’t translate strategic thinking into action and deliverables.
For QAD, this has created a host of new business model imperatives. As Chilton says, these things have always been true. But they’re “even more true now.”
Results-oriented. It’s easy to get excited by new technologies, but you can’t forget that they have to lead to good business outcomes. Don’t be seduced by tech for tech’s sake.
Rapid response to change. If new technologies are transforming your customers’ businesses (and they most certainly are), you can’t take five years to roll out a new project.
Risk & change management. So many big capital projects run over budget, run late or fail to deliver the promised business benefits — sometimes all three. More and more, customers will be looking to their strategic suppliers to help them both manage risk and manage change.
Research reveals that the only way to grow business with existing customers is to bring them new ideas and fresh perspectives. That is the strategic account manager’s raison d’etre. Good SAMs are experts at taking their company’s existing capabilities and leveraging them to solve their customers’ problems. But increasingly, customers look to their suppliers for a distinct point of view on digital technologies whose business impact may be an open question. Suddenly, a SAM can find himself in uncharted territory.
So how does QAD attempt to navigate this untrodden train? Chilton’s team puts emerging technologies in one of four buckets, based on how close they are to having real-world impact: (1) research/monitor, (2) educate/evaluate, (3) innovate or (4) productize. Chilton likens the framework to a “virtual time machine,” which helps QAD keep tabs on emerging technologies while staying focused on the ones most likely to yield dividends.
Of course, it’s still up to the SAM to ask probing questions with her strategic customers to tease out which emerging digital technologies could be leveraged to solve a customer’s business problems.
“It’s a difficult conversation to have,” Chilton admits. “You don’t want to give the impression you’re out there just fishing. You don’t want to seem clueless.”
This new paradigm makes it more critical than ever to find and develop SAMs with the right blend of traits to have productive, probing conversations with customers around future challenges.
What follows are the traits Chilton prioritizes when adding new talent to his strategic accounts team. For the most part, these attributes have always been important to SAM, but they’re doubly so now as interactions shift from the known to the unknown.
Curiosity. If SAMs are not naturally interested in how their customers are using new technologies, they aren’t going to be able to harvest insights on QAD’s behalf. More than ever, they also need to be curious about the technologies themselves. What is it, how does it work, what are some examples of how it could be used? These insights can help QAD build a roadmap.
Key observation skills. Who at the customer is using these new technologies? Whose job could potentially be changed or improved with the use of new digital technologies? What kind of things are they being used for?
Networking. There are an increasing number of key decision makers at our customers. In the past, QAD always worked with the IT group, but that’s changing and expanding. Especially with big digital transformation projects, many more people need to be involved than in the past, so SAMs have to seek out and cultivate relationships with the customer stakeholders who may be impacted by new digital technologies.
Collaboration. This means both internally and at customers. No one is going to own any “digital transformation space,” so there will inevitably be third-party providers bringing solutions you will have to introduce and integrate at the customer. Collaboration will be become even more important than it already is.
Courage. It’s hard to sit in front of a senior customer and navigate a successful conversation in areas in which you’re not an expert. And with so many emerging technologies out there, this will be an inevitable condition of many customer conversations. Self-confidence will be absolutely critical.
Coaching. You grow existing accounts with fresh ideas and by convincing the customer you’re the only company that can solve a given problem. Coaching the customer (as well as internal stakeholders) will only grow in importance.
Chilton ended on a note of fierce optimism. While digital transformation may be disrupting industries, including yours, the fact is that no one has the answers. Your customers know this, and they’re looking for help from their suppliers. If you can empower your SAMs to help customers navigate this uncertain time and start developing answers, your company will be primed to take advantage of the uncertainty created by digital transformation.
Wish you could have seen Chilton speak in person? SAMA’s executive symposium series is open to all SAMA Corporate Member companies. Want to become a member? Contact Chris Jensen, SAMA’s Director of Membership & Strategic Accounts, at email@example.com or +1 312-251-3131, ext. 10.