I know at Ferrazzi Greenlight we have talked a lot about the reorganization of the corporation, where sales is not necessarily at the top, but at the center of the corporate org chart. Why? Because if you are going to make good on a claim of customer-centricity, which is a tired but still valid mantra by now, you have to put the people who are closest to the customer, sales, right there with them in the center. At the highest performing firms, sales can be counted on for a lot more than just “sales”. Customer insights, input to product design, strategic partnerships (e.g. joint ventures, R&D and marketing programs), delivery of more customer-centered marketing activity, are all a part of what these sales organizations do in a day. How do we know this is an increasing trend? Here’s one insight that will surprise you. Cisco, who have led the strategic accounts movement since 1994, and have been awarded and acknowledged for their advances many times over the years, brought a new revelation to this year’s conference. Each of their client directors now have P&Ls. In other words, if you want to be truly customer-centric, you need to gather and invest resources directly around a client business. Consider that this firm is in the middle of a $1B cost cutting initiative, and yet in the past year they opened a new P&L for each one of their key accounts. In my mind, that’s their ticket out of the doldrums they’ve been in for the last couple of quarters. That is customer centricity with some real teeth to it.
The practice of strategic accounts is still quite youthful. Despite SAMA celebrating its 47th year, most companies claim its formal roots began in the mid ‘90s, with companies like Cisco, Xerox and Siemens setting up formal programs at that time. Many interviewees claimed their programs were only five years old or less, and in fact, the strategic accounts movement is experiencing a new heyday, as companies who were too busy selling in the mid 2000s, are now trying to find an effective counter to the heightened pressures of commoditization today. Attitudes towards sales and its role and capability in the organization are changing as well, for the better. Still, this is no CRM, ERP, or Business Process Re-Engineering movement just yet. One indicator of that is the presence of consulting firms at the conference. There were several niche players, but the big firms have not yet dropped in on the movement. Most firms choose to install a Strategic Accounts program via internal resources, and the more formal and skilled they want to be about their program, the more they will engage outside specialists for things like training, account planning models and templates, strategy tools/technology, and recruiting capabilities.
Most of the companies I spoke with were surprisingly aware of what was in it for them, in terms of pursuing a high performance Strategic Accounts program. At least the best practitioners were. In fact, the data has been kept like a dirty little secret, as perhaps participating members don’t want their competition to catch on. On average, most companies are reporting at least a 2x revenue growth rate gap over conventional accounts. Some specific firms (that I cannot disclose yet), showed me numbers that were 3x and 4x over conventional sales. And then of course, there’s the dramatic increase in profitability that comes from operating and being seen as a strategic partner, which I touched on in my first point. Given the tremendous pressures today among the Global 500 to produce organic growth, it’s a wonder that more firms don’t have a well-developed strategic accounts program. The question is, are these figures a circumstance of organizing a program around a company’s best customers, who might already be more revenue and profit-bearing, or a product of the greater discipline and effort invested in strategic accounts. My discussions yielded that it’s a bit of both, but more the latter. Consider that the #1 criteria for account selection, as gained from a SAMA survey, is “current revenue volume”, and right behind that factor, on a long list of 12 others, is “potential revenue volume”. That would suggest to me that the achievements of the Strategic Account organization are the cause of the greater performance, because large revenue volume accounts, by definition, cannot grow at higher than average year over year growth rates, and potential revenue accounts are code for “we don’t have the growth rates we want yet, but we think we can get there because the client will accept us as a strategic partner”. So, congrats to all who’ve honestly achieved those substantial gains, and a “heads up” to everyone else who wants in on the action.
By my estimation, and just counting up the attendee list, hi tech firms accounted for nearly 70% of attendees, with financial services and professional services, pharmaceuticals and a scattering of other industries rounding out the mix. The density of high tech firms present (there are only so many Global 500 hi techs), made for some interesting competitive pressure (i.e. people didn’t want to easily give away the secret advantages of their Strategic Accounts programs). “Early adopter” financial services and professional services firms were clearly getting great value from the conference, learning about how they could apply leading edge models to their businesses. But still, B2B hi tech products companies are the prime operators of Strategic Account programs, and are leading the way for the rest of big business.
Most participants observed that procurement gained significant power during the recession, as companies fought to cut costs in order to report earnings growth despite the topline stall. Most believe this power will not be rescinded, and coupled with the ever progressing perfection of information trend, sales is now facing its toughest fight ever in the pricing war. Being seen and operating as a strategic partner would appear to be sales’ #1 weapon in this fight against commoditization. The data supports the claim as well, as according to one E&Y study, Strategic Accounts contributed 80% of the profits at companies operating a Strategic Accounts program. Another study by consulting firm Vectia, Ltd., confirms high performing strategic accounts are three times more profitable than their low-performing counterparts. These profitability differences seem to be correlated with access to business unit leaders outside procurement, being able to gain sole-sourcing or no-bid opportunities, and positioning one’s firm as a critical partner in the client firm’s growth agenda – something that good Strategic Account sales groups have been far more effective at achieving.
Comments (0) 
Themocracy