Chapter 4: Key 3: Start with the Right Number of the Right Strategic Accounts

Overview

Strategic account management is as much about deselecting accounts you don't want as it is about selecting the accounts you do.

Das Narayandas, Ph.D., Harvard Business School ^[1]

In this chapter we will discuss the need for focusing on the right number of the right kind of strategic accounts. We'll discuss:

1. How to examine strategic accounts.

2. How to conduct a high-level portfolio analysis.

3. Using strategic account selection criteria.

Firms moving into strategic account management are sometimes tempted to start big—either by starting their program with 150 strategic accounts or by simply declaring their 50 largest revenue producers strategic accounts (whether or not they are profitable). Potential problems are bound to arise if a supplier chooses either direction and aggressively promotes—before rollout—the program's heightened service and relationship quality. If a company makes pre-rollout promises, suppliers, in our experience, will almost certainly find huge broken or nonexistent processes and systems early in their account management implementation. These processes may require months or even years to fix, and, while they are being fixed, customers will not receive their promised service levels.

The danger in choosing customers solely for their revenue levels is that you may find yourself making large investments for little or negative return. We have seldom conducted a portfolio analysis in which there wasn't some huge revenue producer that was unprofitable. There may be a reason to keep such an account: it may be a marquee account, a slowly emerging opportunity, or an overhead account. But in our experience, if a firm has enough overhead accounts, its balance sheet can start repelling investors. The unexamined customer, in our experience, is often not worth having.

The unexamined customer, in our experience, is often not worth having.

^[1]Written in a note to the authors in April 2000.