Caveat Venditor — Let the Seller Beware

For centuries, buyers have been wary of sellers. However, something has changed in the last few decades. In every industry, power is shifting from sellers to buyers. This is partly due, among other factors, to buyers having superior access to information, more choice due to globalization and access to improved technology. In this new world, sellers are having difficulty adjusting. This difficulty in transition isn’t exclusive to the sales process as sellers grapple with strong purchasing agents, it also challenges suppliers in the account management process.

Many Suppliers Are Waking Up

Having a key account management program enables suppliers to focus their attention on accounts they feel they must win or retain.

As your competitors shift their resources to these programs and begin to offer more innovative and comprehensive solutions to your customers, retaining your accounts will be increasingly difficult. Your customers will readily detect and discern organizations that are unable to sustain the discipline required to provide innovative value on an ongoing basis.

Is it Worth it?

Conversely, as competition heats up, you must be in a position to objectively assess the health of your key account relationships and allocate scarce resources accordingly. Not every account merits your focused attention. Just as sellers can act opportunistically, so can buyers. It’s not just sellers who are trying to optimize profits, buyers are as well. One of the easiest ways for buyers to increase profitability is to just cut costs. It’s much easier to beat up suppliers than it is to beat up employees — although some organizations do both!

Opportunistic Buyers

When buyers act opportunistically, your account managers may retaliate by restricting access to key resources.

This can be devastating as it might trigger retaliatory action from the buyer, such as denying your firm opportunities to bid on upcoming projects, denying your firm access to valuable information or downgrading your status from strategic ally or trusted advisor.

Account managers should not unilaterally make decisions to withdraw or reduce access to resources. Equally, account managers should not unilaterally make decisions to increase the allocation of resources to an account. These decisions should be made by a team and based on a combination of the account strategy, the customer’s responsiveness to that strategy and the overall classification of the account.

Customer accounts should be classified according to their willingness to partner with you, willingness to be transparent with you and their growth potential. These attributes are mutual. You should be equally willing to partner with them, to be transparent with them and your involvement with them should result in them realizing their growth potential. Gaining and maintaining partner status is difficult and not always in your best interest.

Key Account Management Doesn’t Equal Large Account Management

With a large account management program, your focus is on making the relationship efficient for both parties. With a key account management program, you’ve identified the target account as strategic to your business and you work closely with the account to co-create value. This often means making structural changes to support the innovation process. Key account relationships need to be continually monitored. While they bring great benefits, they can also bring unreasonable and undesirable demands.

Use a Customer Scorecard

Implementing a dynamic customer scorecard, such as ARPEDIO, that objectively monitors progressive customer responsiveness is the key. Integrating such a scorecard with the action plans that your account team must execute to continue to create value ensures you are watching both sides of the equation — the buyer and the seller. (To find out more about ARPEDIO, request a free 30-minute consultation with me.)

When both buyer and seller are seeking profitability, the relationship will either be adversarial or symbiotic (as I speak about at length in my new book, Human-to-Human Selling). By setting clear goals for your account team, objectively assessing your progress and the customer’s behaviour and regularly communicating transparently with your key accounts, you will set yourself up to increase your profitability while you increase the profitability of those customers that merit your focused attention.