Turning Lemons into Lemonade

September 14, 2021 | Written by Dave Duke & Joel Schaafsma

Five Ways to Reset on Customer Management Fundamentals in a Post-Pandemic World

Turning lemons into lemonade. It is one of the most optimistic cliches known to man—and with good reason. The phrase tells us to have a positive mindset and look for the good when faced with a dire, and potentially devastating, turn of events.

The pandemic has presented an opportunity to reflect on what matters most in our personal and professional lives. In business, it has created an opportunity to reflect on how companies are managing customers, and it has given customers a window of opportunity to re-evaluate their supplier relationships to determine which partnerships are truly valuable.

History has shown us that when companies invest in their customer relationships during major downturns, the recovery period is faster and, ultimately, buyer relationships end up stronger than before. When going through a challenging time, it is important to understand how the people behind their customer logos are impacted.

Here are five things you can do to get back to the fundamentals with your most strategic customers:

1. Normalize the new dynamics and establish new expectations.

Whether your customers are struggling or booming as a result of the pandemic, it's safe to say that their needs have evolved in some way — and will continue to evolve. SAMA and Boston Consulting Group partnered in May 2020 to conduct a study aimed at discovering the early changes to customer expectations for sales organizations as a result of the COVID pandemic. At that time, customers told us they were less focused on price in negotiations and more focused on keeping the business running, with expectations including:

  • Changes (increase or decrease) in supply chain deliveries
  • Delays in payment schedules
  • Changes in allocation of volume contracted

A follow-up study SAMA conducted a year later showed a shift in top customer expectations, including:

  • Thought leadership on real-time challenges
  • Pricing flexibility and creativity
  • Process automation
  • Longer payment terms and return policies
  • Effectiveness in hybrid working environments

Now more than ever, many customers are looking for suppliers that effectively offer strategic thought leadership. Indicators show that much of the sales process can — and should—be automated through technological advancements.

If you aren’t already, now is the time to start this transition by investing in strategic relationships with your customers. Ensure you are structured to capture customer expectations/needs, and deliver results through a shared success plan.

2. Reset your shared success plan.

A shared success plan is one of the most important tools in the strategic account management toolbox. Now is the time to revisit the success plans that are currently in place for your most strategic customers to level-set and ensure they accurately reflect the priorities of the customer, the vision for the relationship and the direction of both near- and long-term work.

Why is this important? The shared success plan is foundational to deep customer collaboration. One of the risks of continuing with business as usual in the post-pandemic world is to assume that customer goals—and your strategy to achieve them—have not changed. It is in your customers’ best interest to revisit the success planning exercise to ensure you understand their priorities and mindset towards your offerings and relationship. When you do this, make sure the plan is outcome-based and supports a data-sharing strategy that provides direct line-of-sight into the work that will deliver true business impact.

This is a perfect time to ask customers thought-provoking questions to fully understand how the last year has impacted their company dynamics and individual priorities. It’s an opportunity to re-evaluate the goals of the relationship to ensure that both sides are committed to the work necessary to produce a mutually valuable relationship for the foreseeable future.

Suggested questions for your customer:

  1. How has the pandemic impacted your business?
  2. Have your priorities changed in the past 3-6 months?
  3. If yes to #2, what are your top three current priorities?
  4. How has the pandemic impacted you personally?
  5. What can I do to help you achieve your personal goals?

3. Invest in strategic relationships.

All customers are important, but not all customers are created equal when it comes to their willingness to enter into a more strategic relationship. The key is to know which customers are willing, or seeking, to elevate the relationship so that you know which customer relationships to invest in — those that will not only produce better results today but will help you innovate your business sustainability into the future.

SAMA studies the practice of building strategic relationships, and, for years now, has consistently found that companies that establish a formal strategic accounts program produce twice the growth rate with their strategic accounts compared with their non-strategic accounts. Mature programs also experience 10 percent higher gross margins, on average, with their strategic accounts.

In fact, as we passed the one-year mark of the pandemic’s start, SAMA reported that 99% of responding companies said they had saved a customer relationship in the past year by practicing strategic account management with an at-risk customer.

Strategic Accounts programs produce twice the growth rate with their strategic accounts compared to their non-strategic accounts. - SAMA

So where do you start?

Most companies initially start with their largest customers and/or those that spend the most money currently. This can be a key criterion, but is NOT the only factor and can actually end up costing you valuable time and resources with little return. Big customers are clearly strategic to your company, but you must flip the perspective and ask:

“Can we be truly strategic to our customer?”

To accomplish become strategic to your customers, you need to have a well-rounded set of selection criteria that includes:

  • Opportunity: The financial opportunity that is represented today and/or in the future.
  • Fit: The customer’s willingness to strategically partner and align business strategies with it’s vendors.
  • Customer Perspective: What the customer thinks about your company and its ability to be a truly strategic partner.

Once you’ve established which customers have the highest likelihood of strategic success, you need to structure your organization around the needs of the customer and create a customer-centric organization that drives co-created innovation. But that’s a topic for a different day. It all starts with selecting the right accounts.

4. Focus on value.

Value is a thing. You are in business relationships for a reason — to deliver value to the people on the other side of the relationship. There has never been a better time to examine the ways you are delivering value and real business impact to customers.

As customers review their supplier relationships from this point forward, they will be asking tough questions. We’re seeing it first hand. Multimillion dollar agreements are being questioned and customer management teams are having to defend the work that they have done to deliver business impact.

Now is the time to review internal strategies, processes, and systems to determine if there is a true focus on putting the business and team members in the best possible position to deliver value to customers. Are you customer-centric? Are you value-centric?

Examine the methodologies and frameworks that are being used to guide customers down a path to value realization. If methodologies and frameworks are not being used, invest the time to determine how outcome-based selling and customer success strategies can be created and inserted into your customer management strategy to take conversations to a new level of sophistication and maturity.

Remember, there are four stages to effective value management:

  1. Value Definition: Define the concrete goals and desired outcomes of the relationship.
  2. Value Management: Outline the collaborative work necessary to put both sides of the relationship in a position to make progress, achieve outcomes, and realize value.
  3. Value Realization: This is where the rubber meets the road. Drive the adoption of the supplier’s products and services, alongside the project work, to ensure the customer receives value as a result of the relationship.
  4. Value Acknowledgement: In the end, the customer needs to acknowledge that value has been delivered to close the loop. Keep in mind that value can be consistently delivered over time — progress is the key.

A process for internal and external value co-creation

A key enabler for companies to drive superior outcomes is to formalize a process for internal and external value co-creation. Superior outcomes come in many shapes and sizes. Some common examples uncovered in SAMA research include:

  • superior growth
  • superior ROI or quantified value for both parties
  • innovative and scalable customer solutions
  • superior customer loyalty
  • risk management for both parties (customer and supplier)
  • greater sustainability and lower environmental impact

These superior business outcomes, and others, can be achieved through a rigorous co-value creation process.

The co-value creation process includes your organization's ability to engage internal stakeholders to sketch out a proposed co-value starting point that can be furthered with the customer early. The key to success is understanding your competitor's offerings and calculating the differential value you’ve helped create and then monetizing that with the customer's buy-in. Once a deal has been negotiated and closed, your organization must be aligned and agile enough to quickly execute the co-value plan. After implementation, the realized co-value should be calculated and validated by the customer.

Superior value co-creation begins with understanding where the customer wants to take their business, identifying how your company can help them get to where they want to go, brainstorming with the customer on how to improve and meet these goals, then prioritizing the refined ideas and strategy with the customer.

The importance of outlining the value co-creation process and recognizing it as an integral part of the organizational enablers is that, like in all business processes, it must be integrated into the entire organization, and the organization must be willing and able to enable the most efficient process.

The ecosystem: When creating value, think outside your own business

Suppliers are getting better at creating solutions and focusing on outcomes for their customers - and they have to, as the days of walking brochures and order takers through standard sales is making an exit with the help of technology. The focus should now be on customer needs and their desire for strategic thought leadership. To have the most impactful offerings, suppliers need to become savvy in thinking outside their own businesses and tap into an ecosystem of partners — and sometimes even competitors—to create and offer valuable solutions. The supplier that comes to the table with complex solutions that effectively tackle big problems will be seen as the trusted advisor and will earn a spot at the table for future early-stage strategic discussions.

Internal alignment can make it or break it

In order to be effective at executing created value, you need to create a culture of internal alignment. SAMA research consistently shows that a majority of companies feel that their account managers spend 70% of their time “selling” internally – at the expense of time spent in thoughtful discussions with customers. If you are in a strategic relationship with a customer, your entire organization needs to know what that means and how that customer gets serviced. Executives within the organization need to empower account managers through key internal stakeholders and step in to open doors when needed.

5. Invest in and support your people.

The bedrock of a healthy customer relationship is a confident, capable and fully supported employee base. One critical area of customer management is the development of the individuals who are managing customers day in and day out. It starts with an evaluation of the skill sets, processes, systems and training exercises that are being used by a company to support employees.

Putting strategic account managers out on the line to figure it out on their own is a recipe for disaster. The pandemic has created an opportunity for leaders to examine everything that is in place to support SAMs in service of customers. Now is the time to collect feedback from team members across all customer processes. SAM feedback should then be evaluated alongside customer feedback to determine the best path forward for investment opportunities.

There are two critical questions that can be used to guide the people investment work:

  1. Do we understand the needs of our customers?
  2. Are we putting our team in the best possible position to make our customers successful?

We recommend doubling down in the areas of strength and investing for the first time in areas that are roadblocks for putting SAMs in the best possible position to serve customers and deliver value. 

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