Is That Account Strategic?

I was chatting the other day with Sam Reese, the CEO of the giant sales training firm Miller Heiman about various selling issues. He says that one of the most persistent problems among sales organizations is the inability to recognize when a customer is strategic to their success.As Sam explained it, there's a lot of confusion out there about the difference between a "major" account and a "strategic" account. A major account is any account that generates a large amount of revenue. A strategic account is quite different. A strategic account is one where the ongoing relationship is critical to success of your firm and (just as importantly) critical to the success of your customer's firm.

An account can be major but not strategic if the customer treats your products and services as commodities that can be easily replaced. An account can be minor (in terms of revenue) but still strategic if, for example, that account provides credibility in a key market that will lead to future sales. In other words, an account is only strategic if the relationship has a business purpose beyond generating revenue.

Managing a strategic account requires a different set of skills than simply servicing a major account. A strategic account manager must have a broader focus than just making the sale. A strategic account manager must value building long-term relationships in the firm belief that they will eventually generate revenue.

For a strategic account manager, progress with the account involves a deepening of the relationship between your company and the strategic account. Even if a strategic account manager loses a big sale at that customer, he or she considers it a win if the sales engagement developed new contacts inside new departments, provided access to higher management, or led to the account manager's inclusion in strategic planning meetings.

This generally only happens when the account considers the account manager to be a strategic resource, not just in a business sense, but also in a personal sense. Ideally, the contacts within the account should regard the account manager as critical to their own careers. The account manager should be able to add value to the account beyond what the selling firm supplies, generally in the form of expertise they can't find elsewhere.

According to Sam, the big challenge for a strategic account manager (and the firm employing one) is setting appropriate goals and compensation. Because the point of the strategic relationship isn't revenue, the typical "make quota, get commission" model would drive the wrong behavior. Typically, the account manager needs to define a set of reasonable, quantitative goals (e.g. inclusion in three key planning meetings next quarter) that sales management can measure and assess.

Food for thought.