Outsourcing Strategic Account Management – What, are you crazy?!

Community Guest Blog post by By Dan McDade

At first glance, the idea of outsourcing strategic account management may seem absurd.

After all, B2B companies usually define strategic accounts as their best customers and prospects based on criteria like potential for revenue, profit and growth. So how could it make sense to use outside resources to engage with target companies this valuable?

The line of thinking goes something like this: “Outside resources cannot possibly understand what our sales reps and account managers know about our company, our solutions and our culture. And externally—when it comes to our market space, our customers and our prospects—outside resources would be even more in the dark around the nuances of our business and conveying our value. They just would not be able to understand our customers’ complex business challenges or handle direct interactions as well as we do.”  

This stance is understandable, and it’s one we hear frequently prior to engaging with clients to provide outsourced support for their strategic account initiatives. But as right as the above objection may initially feel, it’s also important to ask the following questions about your strategic account management program:

• Are we closing the number of deals we’ve targeted?
• On the deals we’ve closed, are deal size and profits what they should be?
• Have we beat competitors in head-to-head opportunities this year?
• Is our strategic account target market 100% covered?
• Are we sure we’re not missing real opportunities?
   

The truth is there are a significant number of external and internal factors that can keep executives—those responsible for strategic account management teams—from responding with a wholehearted “yes” to these five questions. Here are some of the most critical factors that prevent strategic account management initiatives from reaching full potential.

• The intense nature of today’s competitive marketplace means companies who offer similar solutions are working hard to identify and get into both your current strategic accounts and your strategic account prospects.

• The current slow-recovery economy has companies reducing headcounts or executives leaving for other opportunities. Many previous contacts at potential strategic accounts have been replaced by new decision makers not on your radar.

• The lack of internal alignment between marketing and sales causes the two groups to see everything from market definition to lead definition and accountability differently. This will result in inefficiencies and lost deals.

• Internal marketing and sales performance measurement may be based on the wrong metrics.

• A short-sighted focus on immediate results can reduce the proven return from committing to mid- and long-term lead nurturing.

• C-level executives may not be fully committed to supporting a comprehensive strategic account management initiative.

• The initiative may be exclusively focused on previously-identified accounts to the exclusion of other valuable, currently unknown opportunities.

• There may be one universal approach that does not allow for unique offers for micro-segments inside the target list.

• There may be so many strategic accounts assigned to individuals that they can’t possibly focus on the best prospects.

• Internal resources may be incorrectly matched to opportunity type. For example, account managers—also known as “farmers”—can perform well in taking care of day-to-day functions, but they are not the best resources to work and close large deals like “hunters” are. 
   

So how can outsourcing strategic account management prove to be an advantageous strategy? Let’s create a framework for looking at strategic account opportunities. For the purpose of this discussion, let’s view types of strategic accounts as if they are laid out on a four-quadrant grid where the X axis represents your business strength and the Y axis represents revenue potential. Here is a description of the four quadrants (please refer to the quadrant at the top):

Valued customers

(Upper right: high revenue potential & high business strength)

Customers inside this quadrant value your solutions and may be strategic partners. The level of integration is high with joint collaboration in multiple areas. These customers are fully engaged with your strategic account management team.

Desirable target prospects

(Upper left: high revenue potential & low business strength)

While the opportunity to become a valued customer is present, these prospects are currently working with your competitors. Your business strength is low, and strategic account reps are deployed to develop relationships and opportunities.

Current customers who may grow

(Lower right: low revenue potential & high business strength)

These current customers value your offerings and purchase consistently, but they may represent low-volume or low-margin business. The opportunity to grow them into high-value status can warrant higher-touch engagement.

Low-touch customers

(Lower left: low revenue potential & low business strength)

These customers tend to engage in lower-value transactional activity and can be good fits for distributor engagement.

When we work with clients on strategic account management initiatives, we provide value in areas that include market coverage, prospect development and best-practice process flow. Our extensive expertise in analyzing target markets allows us to segment prospects into groups that are most likely to buy and at higher deal sizes. This means that we can add significant value by identifying, qualifying and nurturing opportunities in grid quadrants like “Desired target prospects” and “Current customers who may grow” as described above. Because we offload this functionality from strategic account teams, they are able to focus on working to close opportunities that have been fully qualified by our business development team, as well on working their named accounts.     

I’d like to share an example with you around how this works. A client had a strategic account manager who worked long-term with one customer. This resource initially expressed skepticism about our efforts by noting that he was so well connected inside the customer’s business that he would surely know of any and all opportunities that would arise. As it turned out, we identified and connected with a number of new decision makers at the customer’s business and delivered a multi-million dollar opportunity that the account manager was not aware of.

The key to successfully outsourcing strategic account management functionality lies in partnering with a lead generation and lead nurturing provider that possesses the following characteristics:

• Takes a strategic approach that applies best practices proven to improve marketing and sales alignment.

• Is staffed by experienced sales and marketing professionals capable of conducting high-level business discussions with C-level executives.

• Demonstrates proficiency in market identification, segmentation and testing to assure full market coverage. 

• Incorporates best-practice measurement and reporting to assure accountability and leverage results.

• Has a proven track record of successfully partnering with strategic account teams to deliver sales-ready opportunities.
   

Outsourcing strategic account management is not so crazy after all. In fact, it can improve market coverage and enhance internal resource productivity—actions that ultimately lead to more closed deals and drive greater revenue. 

See the original blog post at http://blog.pointclear.com/blog/bid/77888/Outsourcing-Strategic-Account-Management-What-are-you-crazy