What a stupid question, of course they are. Typically they account for more than 60% of most companies’ income; they are thought leaders and advance a company’s position in the market; most of a company’s top resources are deployed with strategic accounts to retain and grow them and have detailed strategic account plans. Companies love their strategic accounts, but is that love unrequited?
Let me tell you a brief story about some strategic accounts that a company I once worked for had. The target market sector was retail and the company had a significant presence in some top retailers including Marks and Spencer, Sainsbury’s, Waitrose and WH Smith. Not a bad list, and if they were your customers they would probably be your strategic accounts too. These icons of the retail sector bought all their point of sale equipment (tills as we call them) from my ex employer, a business that was worth many millions of pounds each year. No matter how much we loved these strategic customers and how much resource we poured into them we were NOT strategic to them. Why was this the case?
Despite the enormous functionality that these tills had they were in fact just a commodity which could be substituted, not easily or quickly but in an acceptable timeframe to the retailers. The really strategic IT supplier to the retail industry which was dependent upon IBM or IBM compatible computers was not IBM, but a smallish American software company whose product analysed the vast amounts of data the tills generated.
At Koru we use the diagram below to help our customers understand where they are viewed and valued by their customers.
Many companies’ strategic accounts are in Tiers Four and Three, whereas they should at the very least be at the right hand end of Tier Three on a journey to Tier Two. Returning to the story, my ex employer was seen by these customers to be in Tier 4. Not only were we replaceable, we did not, in the customer’ eyes create sufficient value for them to see us as anything other than a commodity supplier.
Joseph Cyril Bamford, the founder of JCB said “Our customers can get along without us; but we cannot get along without them”, which is typical in a commodity environment. What we today should be saying is “Our partnerships flourish because we have a mutual dependency and mutual rewards”.
To end this month’s edition here is an exercise to sense check how safe your strategic accounts are. List out your top 20 customers and put yourself in your customers’ shoes and dispassionately determine if you really are a strategic supplier to them? If not start working towards that goal.