The new role of account managers

Balancing the short-term need to close a sale quickly to the long-term goals of understanding and matching a customer’s needs with solutions offered is vital if customers and service providers are to build an enduring relationship, says Paras Rastogi

Today, the IT spend of most companies is shrinking and with growing competition it is becoming more and more important for companies to leverage their relationship with customers. The market place is changing rapidly and competitive advantage can be quickly lost. It is important to maintain a healthy business relationships with your customers on an ongoing basis. Buying power, today, is more than ever concentrated in fewer, more professional customer organisations. The practice of strategic account management is now a profession, an ongoing focus of academic study and a matter of keen practical interest to companies seeking to survive current economic conditions, achieving competitive advantage and creating future growth. Many large organisations today don’t look for an IT equipment supplier but a vendor who can understand their business needs and translate them into an IT solution. The key value proposition that any organisation can offer to its customers is its flexibility with regard to relationship and engagement models, which can be customised to suit the customer’s business needs.

A few years back when most organisations were building their IT infrastructure, there were requirements for a range of products—right from an entry level desktop to high-end enterprise servers—and now most of the purchases are either need-based or linked with an organisation’s growth. Companies that had realised the importance of account management at that time are able to build their credibility with the organisation in a much better way than IT companies who have interacted with these organisations only on a sales opportunity basis.

Each organisation has a political and structural dimension, which is also very important for the account managers to understand. Relationship building is an art where you have to understand the principle of making others win. Successful account management revolves around managing key people within the account. After defining sales strategy for the account, always re-look the strategy not as a sales person but as a customer. Most of the time when we define strategies we only think about our wins and miss the wins of the purchaser. It’s important to understand that each sale can generate benefits to the organisation and can benefit several people involved in making that decision.

One should not get carried away with the large IT spend of the organisation and assign a dedicated account manager. It’s very important that we define whether the purchases are more hardware-centric or solution-centric. The matrix shown in the figure clearly defines the four quadrants in which one can classify most of the accounts. A customer in quadrant II will be more profitable in business terms than a customer in quadrant I. However at the same time customers in quadrants I and IV cannot be ignored. In the long-term, customers of quadrants I and IV will move to quadrant II and at that point of time they would like to work with vendors whom they have done business with in the past. To move a customer from quadrant I to quadrant II requires a kind of leadership and a kind of thinking that leads customers to a phase where they don’t know enough in the technology sphere, yet want to adopt newer technologies.

What is needed from an account manager is to identify the points across the value chain where access to information will provide the value to customers or their businesses. Evaluate whether information needs to be captured almost instantaneously to support day-to-day business operations or on a less frequent basis
to enhance the strategy development process. On one hand the challenge is to understand the customer process, while on the other hand, the emphasis tends to fall on producing more business from existing accounts. Although existing accounts represent the greatest opportunity for growth, they also represent the greatest coverage challenge.

As an account manager one will always have short-term and long-term objectives. In short-term, you want to close as many deals as you can. In the long-term you want to maintain healthy relationships with customers so that they make further purchases from you in months and years to come. It would be great if these two objectives always coincided but you know that they don’t. At times the account manager lands up making a commitment keeping short-term goals in mind and later pays a huge price for the same. To maintain relationships with customers, at times you may have to take tough decisions not to close a sale, even though it is possible to do so. A common example to explain this scenario will be selling a product to a customer that is not tested on a particular operating system. However customer has not defined in his requirement about the operating system but as an account manager you are aware that the customer would like to run that particular operating system, if not immediately, two months later. This example highlights the importance of an account centre strategy and not a sales-oriented one .If you concentrate chiefly on tactics, you are likely to ignore your current clients and focus only on winning new deals.

What account managers should do and what they are reluctant to do is—think differently. This is quite a difficult task, as it requires taking a critical look at current assumptions and working knowledge and willingness to face the music when things go wrong. To penetrate or develop a business relationship with clients where you have no presence it is important to have a strategy to develop a niche within their guidelines. This kind of strategy always requires risk-taking in the business, however the trickiest issues often involve financial decisions such as whether to grab the deal at no-profit, no-loss basis or charge for the product but subsidise the service component. When addressing such accounts it is always necessary to identify what factors are ‘very important’ to those that are ‘absolutely essential’ when they make a purchase decision for the product. It is critical that initially data is captured and analysed to get a clear understanding of requirements and the present IT structure. No detail is too small when it comes to understanding the buying pattern and buying process of such organisations Identify the areas which you would like to address in the short-term. For that analyse your current position, think about alternate situations, devise an action plan with relationship-building focus and not sales-oriented approach. Always remember that a sale is fallout of a good relationship.

Account strategy should revolve around the principle of ‘3R’s’—right place, right people, and right time. In an account when we refer to a right place it is about the various strategic business units (SBUs) within that organisation. If the sales strategy is built keeping these three R’s in mind, you can certainly have more strategic approaches than tactical approach. While handling a large client one should be capable of processing bulk information with lot of factors attached to the same. Never ever plunge into the selling situation without having a reliable method of sorting, organising and analysing the vast data because then you may land-up in a position that might result in losing customer credibility as a responsible account manager. Customer buys because he perceives a relationship between your sales proposal and his organisational interest. The art and craft of selling is demonstrating the connection between your proposal and his organisational growth/interest.

A good account strategy is not just about driving revenue or closing sales deals; it includes more effective investment in relationship management and better understanding of the competitive landscape and customer expectations and then allocating resources accordingly. As an account manager you have to always think like a farmer where you have the same piece of land year after year and you have to maximise revenue by harvesting the right crop in the right season and making sure that soil fertility is maintained. Smarter account managers always develop a strategy that improves bottom line over the long-term.