Evolution of Partnering
2.4 Describe the evolution of partnering and the nature of strategic account management
“Partnering” became a buzzword in the early 2000s and today it has become a business reality.25 Partnering has been driven by several economic forces. One is the demise of the product solution in several industries. When products of one company are nearly identical to the competition, the product strategy becomes less important than the relationship, customer, and presentation strategies. By contrast, some partnerships grow out of the need for customized products or services. Many manufacturers have formed partnerships with companies that offer flexibility in terms of product configuration, scheduling of deliveries, or some other factor.
Today’s customer wants a quality product and a quality relationship. Salespeople willing to abandon short-term thinking and invest the time and energy needed to develop a high-quality, long-term relationship with customers are greatly rewarded. A strong partnership serves as a barrier to competing salespeople who want to sell to your accounts. Salespeople who are able to build partnerships enjoy more repeat business and referrals. Keeping existing customers happy makes a great deal of sense from an economic point of view. Experts in the field of sales and marketing know that it costs four to five times more to get a new customer than to keep an existing one. Therefore, even small increases in customer retention can result in major increases in profits.26
Partnering is a strategically developed, long-term relationship that solves the customer’s problems. A successful long-term partnership is achieved when the salesperson is able to skillfully apply the four major strategies and, thus, add value in various ways (Figure 2.5). Successful sales professionals stay close to the customer and constantly search for new ways to add value.
Figure 2.5
Partnering is a strategically developed, long-term relationship that solves the customer’s problems. A successful partnering effort results in repeat sales and referrals that expand the prospect base. The strength of the partnership increases each time the salesperson uses value-added selling strategies.
The salespeople at Mackay Envelope Corporation achieve this goal by making sure they know more about their customers than the competitors know. Salespeople who work for Xerox Corporation are responding to a sales orientation that emphasizes postal service. Bonuses are based on a formula that includes not only sales but also customer satisfaction.
Strategic Selling Alliances—The Highest Form of Partnering
Throughout the past decade, we have seen the growth of a new form of partnership that often is described as a strategic selling alliance.
The goal of a strategic selling alliance is to achieve a marketplace advantage by teaming up with another company whose products or services fit well with its own.27 A strategic selling alliance, also called strategic account management, is usually led by a Strategic Account Manager (SAM). The SAM’s job description is to execute an enterprise-wide sales strategy for growth, profitability, customer loyalty, and customer-driven innovation. A key element of strategic account management is involving senior level management on the sales and buying teams in relationship development, product configuration, and service after the sale. Technical sales-support personnel are also an important part of the strategic account management team.
In varying degrees of account management, additional titles are used to describe the process of aligning and partnering with today’s customers and clients. As described in Chapter 1, the use of the title “account manager” has become commonplace in describing this process. For example:
The Regional Account Manager (RAM) is a part of a larger sales team and acts as the direct client contact and manager of a number of business accounts. These accounts usually encompass a certain territory. For example, one who works in the United States may have all the accounts she manages based in California (for more information on personal-selling opportunities and activities in this career area, see Appendix 2: The NewNet Systems Regional Accounts Management Case Study).
The Key Account Manager (KAM) is responsible for the coordination and management of a company’s prioritized accounts. These customers may be given special treatment due to their long-term growth potential, current size of business, global presence, or strategic fit, among other factors.
The National Account Manager (NAM) is responsible for recruiting and negotiating various business transactions and signing on new regional and national retailers. They coordinate activities providing support to the Channel which includes market and account launches, key metrics, and communications with matrixes in departments like Operations, Field Sales, Marketing, and Supply Chain.
The Global Account Manager (GAM) is a key account manager who is specialized on a specific product portfolio and not on a given customer or geography. They are housed in a specific business unit, yet they span the globe. They are required to speak multiple languages and understand the intricacies of many different cultures.
These account manager positions are generally not considered entry-level sales positions. They represent senior sales positions in most firms that entry-level salespeople aspire to attain by mastering the strategic/consultative skills presented in this book.
Corning, a maker of glass products, has formed strategic account partnerships with several companies that need innovative glass technology. For example, Corning formed a partnership with Samsung, a Korean manufacturer of television screens. RadioShack has formed strategic partnerships with several leading consumer electronics manufacturers. This move helped the company avoid the costs of starting new divisions.28
The first step in building a strategic account relationship is for the SAM to learn as much as possible about the proposed partner. This study takes place long before face-to-face contact. Alliances that are formed between companies that vary greatly in such areas as customer focus, financial stability, or ethical values will likely fail.29 The second step is to meet with the proposed partner and explore mutual benefits of the alliance. At this point, the strategic account manager or salesperson is selling advice, assistance, and counsel, not specific products. Building win-win strategic partnerships requires the highest form of partnership selling. Very often, the strategic account manager is working with a company team made up of persons from such areas as research and development (R&D), finance, and distribution. Presentations and proposals usually focus on profit impact and other strategic alliance benefits.30 Due to the low-cost threat from emerging nations, many Western-based companies have had to develop strategic account management. Its crucial importance will vastly continue to grow.31