Chapter 7: Key 6: Regularly Quantify and Communicate the Value Received From and Delivered to Strategic Accounts

Overview

To succeed as a business strategy, strategic account management requires solid returns from its program and its targeted customer investments—quarter-to-quarter and longer term. The program's executive sponsors and those serving the customer, perhaps working with the finance people, will ideally determine the customer's long-term relationship-asset value and its replacement cost. Knowing these numbers, an executive can decide whether a given investment in the relationship is justified. Conversely, others serving the customer will also quantify the value they deliver to those accounts. Without continually quantifying and communicating that value, there is little way to justify premium prices.

Without continually quantifying and communicating that value (delivered to accounts), there is little way to justify premium prices.

We will be discussing two topics:

1. Quantify the value strategic accounts provided.

2. Quantify the value delivered to strategic accounts.

One of the battles that strategic account management has had to continually fight is the charge that it is based primarily on relationship management, which many often see as a "soft" issue. In several decades of work, we've seen that relationship management is a detailed performance issue requiring a strategic account manager with superior interpersonal and business skills and a firm that has dealt substantively with the seven keys in this book. The firms most effective at strategic account management realize that, if they cannot make a financial case—internally and externally—for the value a given strategic account provides and receives, it makes no sense to invest in that relationship. We've spoken about the importance of portfolio analyses prior to naming an account strategic, but suppliers should also reassess resource allocation to strategic accounts regularly in the light of revenue/profit/costs generated.

Strategic account management, unfortunately, does not easily lend itself to traditional ROI measures, which most executives expect. With estimated payback figures, executives justifiably find it difficult to determine whether a given relationship really merits an investment. Throw in the ever-present need for cost control, and you have created the perfect scenario for firms thinking short-term and underinvesting in customers on whose future they depend.