By Jonathan Hughes, Partner, Vantage Partners; Ben Siddall, Partner, Vantage Partners; and David Chapnick, Principal, Vantage Partners
In November 2010, Jonathan Hughes, Aram Donigian, and Jeff Weiss published an article in the Harvard Business Review titled “Extreme Negotiations” that highlighted lessons in effective negotiation under extreme pressure from the U.S. military that also apply in the business world. Today we revisit those lessons in a very different world. The COVID-19 pandemic has shaken world markets, created significant political and financial instability, and reduced business predictability. Many companies have experienced a slowdown in business activity, with resulting revenue losses over the past several months.
As the news changes every day, timeframes for recovery are uncertain and will vary significantly by industry sector. As we saw in the 2009 financial crisis and subsequent recession, challenging contract renegotiations are a predictable result of this new reality. As companies in many industries confront shrinking demand, higher levels of unused inventory and increased uncertainty, they will undoubtedly turn to suppliers for cost savings while simultaneously looking for guarantees of supply assurance.
Sales teams will need to respond to heightened pressure from customers to reduce pricing, while negotiating to protect revenue and margins — even as they work collaboratively with customers to meet their needs and address their constraints. The current environment thus raises the stakes in customer negotiations and also increases the risk that negotiations become adversarial.
A key insight underlying the ideas in the 2010 HBR article is that negotiation behaviors tend to be deeply ingrained and are often reactive rather than deliberate, especially in high-stakes and stressful situations. Today’s environment can be viewed through the same lens. These strategies are not only useful at the bargaining table but can (and should) also serve to reshape planning and positioning far in advance of formal negotiations that we know are coming. A strong (collaborative) offense is the best defense.
Editor’s note: This article has been edited for length. The full piece, featuring multiple customer examples, will appear in the Fall issue of Velocity magazine.
Strategy 1: Broaden your field of vision, question assumptions, and rethink objectives
Start by identifying key assumptions and subject them to scrutiny; use negotiation planning and execution to continually gather new information and revise strategies accordingly.
One hallmark of the “extreme” negotiation is a feeling of danger creating pressure to act fast to reduce the level of perceived threat. In the face of this pressure, negotiators often begin acting before they fully assess the situation. They act and react based on gut feel and initial perceptions. Given the added pressure to look strong and gain (or remain in) control, they tend not to test or revisit their initial assumptions even as the negotiation progresses. As a result, they often negotiate based on incomplete or incorrect information. This often leads to conflict, impasse, or, at best, a resolution that addresses only a part of the problem or opportunity at hand.
It is quite rare you get into a global economic struggle with two, simultaneous disruptive factors, but we have just this situation now with the combination of the COVID 19 pandemic and the deterioration of the price of oil. As if one of them wouldn’t be enough to wreak havoc around the globe, it’s almost like they joined together to achieve their goal of maximum disruption.
The overall impact of these two simultaneous disruptors is something I doubt any of us will forget any time soon. It has forced decision makers to enact abrupt cost cuts (fixed and variable), encourage remote working, reduce active manpower on sites, adopt high dependence on virtual communications and virtual teamwork technologies, and finally to acknowledge the harmful impact of the pandemic and seek to at least minimize the damage. Only a lucky few end-users are still on the upper side of the revenue/cost chart.
I would say there has never been a more important time for strategic account managers to proactively steer business efforts aimed at creating new business value for both the supplier and the customer. While SAMs have surely already created and captured real business value for his or her accounts, it’s time to take these efforts to the next level. But how?
By Robert Hueber, Business Unit Director, Packaging, Herrmann Ultraschall
Artur Wagner, Founder and Partner, MP Consulting
Today, an increasing number of medium-sized B2B technology companies are establishing a global strategic account management (SAM) program for their most important customers. This was not always so. In the past, CEOs of such companies did not believe that customers, vastly larger than themselves in size, would be interested and willing to engage in a partnering and co-development process.
The SAMA slogan “It’s not about size, but all about relevance!” can become reality if the foundations for such a program are laid and a systematic process for building a SAM program is established.
We are convinced that our findings are perfectly applicable to larger companies as well. Many of these have already implemented a SAM initiative, but not all are reaping its benefits. This, we will argue, is mostly due to a sub-standard design and/or faulty implementation.
The aim here is to provide a specific methodology for assessing an optimal level of customer-centricity and the best way for integrating the SAM organization into the matrix organization.
By Tania Lennon, Global Space Lead, Talent Assessment and Leadership, ZS Associates, and Namita Powers, Principal, Customer Engagement Excellence, ZS
ZS has conducted extensive research into strategic account management success profiles. Using in-depth profiling, behavioral observations and manager reviews, ZS has identified critical competencies, skills and characteristics that drive high-performance outcomes in SAM roles, such as a shift in focus from achieving goals to achieving success and a more sophisticated approach that ZS identified in women account managers.
Men and women: Different paths to success
While there were some clear themes in the drivers of success for SAM roles, there were also some gender differences in how they achieved success. The graph highlights the key areas of difference between successful men and women SAMs.
Women SAMs demonstrated more sophisticated skills in three key areas important for success.
To challenge or not to challenge? That is the question.
Ever since CEB published its seminal book “The Challenger Sale,” the challenger paradigm has reigned supreme. It has been taken as gospel that the best way to win more deals is to disrupt the status quo by taking control of customer conversations and introducing new, provocative ideas. (On the other hand, SAMA has always considered the idea of “taking control” of your customer to be misguided at best, disastrous at worst.)
Corporate Visions has been at the vanguard of partnering with academics on research designed to test whether challenging actually does what it’s supposed to — and if so, under what conditions. In other words, challenging may work when you’re trying to convince a prospect to move business to you. But does it also work when you’re trying to convince existing customers to:
Stay with you?
Pay more for your products/services?
Do more business with you?
Forgive you for a lapse in service?
(Sneak preview: The answer is NO.)
If you missed the SAMA/CVI next-practice symposium Feb. 12 in Chicago, first of all: Shame on you. But second of all: You’re in luck, because I’m going to lay out many of the key takeaways here. Read on…
They also assume you were born clairvoyant, omniscient and all-powerful. No pressure, right?
Even though Schneider is one of the longest-running members of the SAMA community, I was 20 years into my career before I attended my first SAMA event.
My first reaction was: “Why didn’t I do this sooner?”
I remember having conversations on the sidelines with complete strangers (many of whom I now consider close friends and even colleagues) that yielded nuggets I immediately put to use with my own customers. It’s a powerful experience.
But what I remember most vividly is how soothing it was to finally – at last! – be surrounded by hundreds of people who “get it.” Working as a strategic or key account manager can be lonely — and that’s what makes being a part of the SAMA community such a powerful experience.
It’s hard to believe, but the holidays are nearly here. I always find it useful to look back at the year that’s passed and — more importantly — what’s ahead in the year to follow. It’s easy to forget the past year’s accomplishments amid the excitement of what’s to come, and I want to be sure SAMA is providing the insights and knowledge you need. With that in mind, I’m pleased to have a chance to do a little bit of both in this space…a quick look backward and forward.
A look back
#1. We put into words what we believe is SAMA’s entire reason for being: To equip our customers (i.e., you) with the tools, insights and knowledge you need to become indispensable to your customers. I’ve found these words incredibly helpful for clarifying our mission and ensuring our offerings meet this expectation. If we can help you become indispensable to your customers, then the business results will follow.
#2: We added 23 member companies 96 individual members to the SAMA community. This is extremely important to the insights and value we offer you. Our community comprises, without exaggeration, the smartest, most forward-thinking B2B companies in the world, and we leverage their knowledge and expertise to synthesize and disseminate best and next practices in strategic customer management. Our strength is truly in our members, and every new company we add brings fresh potential for ideas.
#3: In 2019 SAMA minted 65 new Certified Strategic Account Managers. Not only have these exceptional SAMs invested in themselves by becoming certified, but they have transformed themselves into role models within their organizations and evangelists for the SAM approach to customer management.
#4: We developed partnerships with like-minded providers in France, Germany and Brazil. Why is this important to you? Because this will allow us to expand our ability to deliver training and thought leadership in these critical regions, further spreading the cause of strategic account management.
#5: We launched The Facilitator, a tool enabled by a process that we developed to help our customers make better strategic account selection decisions. We have had 11 engagements to date, and the results so far have been tremendous. (More on this in 2020!)
A look ahead
So what larger trends and challenges is SAMA looking at for 2020 and beyond? Keep in mind, it’s still 2019 — so this agenda can and will change. But here are five topics SAMA is looking at for the year ahead, and we think you should be too.
#1: Bulletproofing the SAM program against cost cutting. With talk of recession (shhh! Don’t say that too often), SAM programs need to do all they can NOW to prove their value. Once you’re under pressure — whether from activist investors, a hyperactive CFO or just your Board — it’s already too late. You need to trumpet your success stories internally, continue to build the SAM brand within your organization and use the voice of the customer to demonstrate the value of the SAM approach.
#2: Customer success management is all the rage. What does it mean for strategic account managers? We believe it simply reinforces the fundamental wisdom and necessity of the SAM approach, which revolves around understanding customer pain points and value drivers, connecting them with their own internal capabilities, organizing and aligning an ecosystem capable of solving customer challenges, and then quantifying the co-created value in terms of the customer’s own metrics. It is a trend we are actively monitoring.
#3: Countering the “what now?” phenomenon. In other words, once you’ve set up your program, begun working differently with your most strategic customers and institutionalized the SAM approach across the organization, where do you go from there? Uncovering ways to unlock additional innovation and efficiency for mature SAM programs will feature prominently on the SAMA 2020 agenda.
#4: Understanding and optimizing the entire ecosystem of support around the strategic account manager. Today’s SAM is blessed with a myriad of tools in her arsenal, from digital marketing and customer success to inside sales and advanced analytics. We will be looking to make headway into understanding (a) what’s the optimal team construction and (b) how to upskill the SAM to ensure he’s able to properly leverage all these complementary skills.
#5: Technology supporting the SAM. As I mentioned earlier, we rolled out a new process-enabled tool to help customers make better, more objective decisions around whom to partner with. We also published a special issue of Velocity dedicated specifically to highlighting tools designed to enable the customer value co-creation process. We surveyed many of you earlier in the year, and one big takeaway is that our customers are looking to us to bring to the table tools that support both the SAM and the SAM organization. So this will undoubtedly be a prime focus for us in the year ahead.
Enjoy the holiday season! Take stock in your accomplishments, and let’s all anticipate greatness in the new year.
At SAMA we strive to be innovative in how we deliver value to our customers, and that means experimenting with different formats and media for learning, training and networking. That’s why we have partnered with Edmund Bradford, a former global account manager who is now an author, educator and game designer. He is the managing director of Market2Win and developer of SAM2Win, the world’s first online game that teaches strategic account management.
SAMA Assistant Director of Knowledge & Training Dave Schweizer recently sat down with Edmund to discuss the SAM2Win training/simulation, which SAMA will offer beginning in November.Their interview has been lightly edited and condensed. You can listen to the entire interview here:
Dave Schweizer: Thank you for joining us, Ed. So what exactly is the SAM2Win program?
Edmund Bradford: As far as I know, it’s the only game in the world that actually teaches strategic account management, rather than selling. I think the best way to think about it is it’s kind of like a flight simulator for account managers and teams based on over 30 years of research and experience from myself and my colleagues, both practitioners and academics. In the simulation, we have five global companies all competing for the business of one complex global account. Each company typically has about one to five players, who act as the account manager or act as an account team if they’re playing as a team. And the participants or the teams play against each other — not against the computer — with all the fun and irrational behavior that generates from that. And simply, the winner is the company that makes the most profit at the end.
DS: In the simulation, participants can make certain decisions. What kind of decisions can they make, and how do they enter those?
EB: We pose three big questions to the participants. The first big question is “Where should we compete in the account?” In other words, which sales opportunities are the best for the future? We want them to be future-oriented in this. So, “Where should we compete in the account?” Sales opportunities, in other words.
Second question is “How do we beat the competition?” Which, in other words, really means, “How do we craft superior value propositions that fit current and future needs of customers and that will also beat any other competitor offers out there?”
And finally, the third question that they need to think about is, “When do we want to see the results?” So do we have lots of time in front of us, or do we need some results here in this particular period that will affect the kind of decisions the account makes? So it’s sales opportunities within this account, how to invest to generate the best customer value, share of wallet and profit (both for now and for the future) and how to invest to outsmart the competition.
We also look at the decisions, and analyze those decisions and provide feedback on how they’re making those decisions. So we give course correction guidance as we go through the simulation.
DS: How are the outcomes of each decision calculated?
EB: We typically run about five decision rounds in the simulation. When each decision round closes, our software engine compares all the decisions made by the different companies, and the companies that grow the fastest are those that invested most effectively in creating the best value propositions and the best sales opportunities.
So it’s all about getting your strategy right, getting the tactics right for how you are generating value and making sure that your decisions and your thinking are better than the competition. It looks at all the decisions from all the teams and says, “Who’s making the best decisions from the customer point of view and, therefore, from a customer point of view, where would you place your business?”
DS: Sounds like a very complicated thing to develop.
EB: I would say probably 10 years of real experience of creating and supporting account programs in companies went into it. Even before we put the software together, there was a lot of research and experience that went into it because we really wanted to get it right.
DS: That’s very impressive. So what knowledge can the participants expect to gain from the simulation?
EB: Well, there’s a huge amount, both in terms of knowledge and skills. First, they learn how to apply a good needs-based segmentation to the account. One of the first real wins is for them to go back to their account plans, get back to their strategic account analysis and say to themselves, “How should we divide up this account? Maybe there are cross-division, cross-country needs, which are similar. We just need to find that ‘golden vein’ of needs that run across the whole account.”
Second, we teach some great tools about how to pick the best sales opportunities for the future. So “Where should we focus our spend effort to generate the best long-term relationship with the account for the future?”
Third, it’s about developing superior value propositions — understanding what value actually means, crafting value propositions that are superior to anything the competitors are providing and making sure that we communicate that to customers.
Fourth, I think it’s about just getting better strategic customer analysis. For example, in the simulation, there’s a big procurement piece. With our good mutual friend David Atkinson, we’ve put a lot of good thoughts into the simulation around understanding procurement and how to align our account strategy with the procurement strategy — seeing how we’re positioned in the eyes of Procurement, both as a supplier and also in terms of our category of spend.
Those are the big knowledge areas, but I would also say: learning the art of strategic focus. So many account plans have this idea that we’re going to compete everywhere, against all competitors, in all sales opportunities, equally all of the time. And every time there’s an RFP coming up, we’re going to leap on it with all our resources. And the trouble is there’s not enough time to understand what the genuine needs are, and so that leads to shallow value propositions, very poor co-development of value and then stressed, unhappy and dissatisfied customers.
DS: Fantastic. How much time per week should participants expect to allocate for this program?
EB: You’re talking really about two days of effort over 16 weeks, and that equates to roughly about one-and-a-half hours per week. So it’s not nothing, but neither is it going to take over your life.
DS: How else do participants benefit from the simulation?
EB: Well, I’m glad you asked, Dave. First, it’s about account leadership skills, particularly around strategic thinking and execution. Participants become good at sort of rising above the details to understand the future, to not get buried in all the data. They become basically good at sort of, you know, seeing the companies play, understanding their future, recognizing their company’s place in that future and learning how to get there. So they are proactively aiming their company at a good place in the future rather than being dragged into bad places by the customer or by the competition.
Second, I think the benefit is that players are free to fail. The simulation allows an opportunity to experiment and take risks in a safe environment. And the nice thing is that no one gets sacked from playing the simulation. You learn from the mistakes and think about how you can apply the lessons learned to real life.
Third, players become very good at thinking about the issues and putting account plans together.
An unexpected result that I’ve seen: When we get people from different functional backgrounds, we see better alignment because – whether they’re coming from Finance or Logistics or Marketing – playing the simulation, they get a better understanding of what account management is all about. People end up sharing a common language. Some of the best games I’ve seen have been from cross-functional teams from the same organization.
DS: Do you have any tips on how to win?
EB: Do you watch “The Great British Bake Off”? Well, if so, you know Paul Hollywood. He’s asked, “Any final tips before the competitors go out there and bake their cakes?” I’m a little like Paul: I don’t want to give too much away. But I’ll say two things. Number one: Do your homework. Number two: If you’re losing, it’s probably because you’ve misdiagnosed the real problem. I’ll just leave it at that.
Company focus on customer-centricity is increasing rapidly, and the earliest movers are outpacing their rivals. But Vantage Partners’ findings have shown some industries have been slower to evolve.
Customer-centricity has become a hot topic over the past few years — and with good reason. Market leaders in customer-centricity and customer experience enjoy a myriad of benefits, from greater revenue growth and profitability to increased innovation and reduced costs.
As a classic example on which numerous business school cases will be written, Target and Walmart invested heavily in digital infrastructure and prioritized customer convenience. Sears, meanwhile, failed to adapt to changing consumer preferences. The consequences have been ruinous for Sears, while Walmart’s e-commerce growth accelerated to 43 percent in the third quarter of last year, and Target posted a record 49 percent year-over-year surge, according to Bank of America Merrill Lynch.
The differences in performance and the customer-centric choices each organization made could not be more stark.
As soon as I was appointed strategic account program vice president for Schneider Electric, the global energy management and automation firm, my boss asked me a simple question, “Eric, what is the main preoccupation keeping you awake at night?” I didn’t even take one second to think about it, the answer was so obvious: “For sure, the internal alignment of the company!”
Even if your program is very mature and well structured, it will always be a challenge to transform a great account strategy in the SAM’s computer into an operational plan capable of mobilizing all the energies of your company to be at the disposal of the performance of your account. Rather than a strict process, I propose guidelines and an eight-step methodology. If you tick all of these eight boxes and respect the chronology, you’ll be on your way to your goal.