RTM: So what is a strategic account?

LN: That depends on the company.  I’d say that it is a customer who can shape or change your future. So it needn’t be the largest.  It could be small, smart and about to grow very fast. It could be the customer you haven’t got.  I don’t think big, transaction-oriented dinosaurs should be seen as strategic accounts.

If you pick smart customers you should benefit from their intelligence. The strategic account should also see your company as strategic to their business objectives.

"The customer is not represented at all at the highest echelons of the company."

RTM: That’s a little radical. Don’t most companies see their Top 10 or their Top 100 customers as their strategic accounts?

LN:  Yes, they often just apply the strategic account label wholesale. It is very dangerous. Strategic accounts should be customers whom you understand and work with in a unique way.  A Top 100, ‘one-size-fits-all’ approach is expensive and wasteful.

For instance, you will end up wasting resources on trying to sell value to customers who just want price. You should be asking: ‘How can my company best go to market with this customer?’

RTM: Do companies spend enough time on these definitions?

LN:  No. And that leads to a lot of pain later.  Typically, suppliers dilute their efforts over too many strategic accounts. If an account manager is in charge of 15 "strategic accounts", then they can’t be strategic. Even when the account selection is relatively sound, the approach to these relationships should be determined customer by customer.

RTM: So how is the practice of strategic account management evolving?

LN:  You could argue that it isn’t, at least not nearly fast enough!  I’d say that the skills gap is growing between the procurement department within the customer and the account management teams from the supplier.

RTM: Why is that?

LN:  The last two decades have seen companies spending on their supply chain.  Even in the downturn of the last few years, they have invested in best practice procurement. Conversely, in a downturn, the account management structure at the supplier tends to come under scrutiny because those expenditures are seen as overhead, not as investments.

RTM: Yes, all those highly paid salespeople with fancy titles are the first to go. So what does this mean, in practice?

LN:  Customers are often more knowledgeable than their suppliers. It’s not unusual for procurement to know more about what the supplier is doing than the supplier does!  And this turns everything on its head. How can you be a problem-solver, or start a dialogue at a strategic level, unless you have the rights tools to compete?
RTM: So how does this skills gap manifest itself?

LN:  A lot of suppliers struggle to even identify how much they sell to a given customer worldwide. They have to ring them up to find out!  It can be that basic. Of course, that has nothing to do with the skill of the account manager - it is a matter of organisational competency in terms of having a whole view of the customer relationship.

You can have the best account managers in the world, but if the systems and structures and data are not there to support new ways of engaging, then it’s not going to happen.