Improve your financial performance
This morning while having breakfast, I was contemplating the Color Accounting workshop I ran yesterday for an important client of our strategic business partner Bennelong Group International.
Bennelong specialize in Strategic Account Management (SAM) and have been implementing SAM with the Sales Team (and other divisions) of this client. Even though it’s only very early days, the client team has already had significant success and increased financial performance which has been documented in a recently published book by Bennelong gurus, Peter Browne and Gary Peacock, Managing B2B customers you can’t afford to lose – how to create joint value with your strategic accounts. (Full disclosure: we are mentioned favourably in the book).
Is SAM for us? That’s for you to decide. If your results (revenue, margins and your perceived value) are trending ‘south’ year-on-year and your relationships with your key accounts tend to be transactional, price-driven and antagonistic, then that is unlikely to be a sustainable business model.
The single biggest problem in business is, staying with your previously successful business model … one year too long.
- Lew Platt (CEO Hewlett Packard)
So let’s meet this SAM. In Peter and Gary’s own words, it is... the process of selecting a portfolio of strategic customers and developing those customers, over the long-term, to drive financial performance and shape strategy. SAM helps build strategic relationships, understand customers deeply and align your capabilities with customer needs to create long-term joint value.
SAM is not for the faint-hearted and certainly not a quick-fix for companies being beaten up on price by their major accounts. It requires a seismic shift in thinking, for the sales team AND for everyone from the CEO down. It requires a rethink of current strategy and practices and the ongoing direct involvement of the executive. Internal silos will need to be broken down and resources from many disciplines brought to bear to engage at this level. But the results can be astonishing with higher revenue and margins.
As part of the SAM implementation, we run a financial fluency workshop for the SAM team, which will include the CEO, the CFO, the Sales Director and team and the other divisions that are part of the value-adding process (for example, finance and after sales support). The success of the SAM process is measured in financial terms for both the company and their key account. Consequently, the SAM team needs to be financially literate and so they can communicate in a language that is compelling to the senior decision makers and influencers - financial language. Being one of the most common areas of weakness in Account Managers and the broader SAM teams, this is where we come in with our unique Color Accounting tools and educational technology, to help you improve your financial performance.
If you are seriously thinking about differentiating yourself from your competitors, in the eyes of your key accounts, I implore you to research SAM (see links below). It might be just what you’ve been looking for.
Apart from the Bennelong book already mentioned, there is also a truly excellent Harvard Business Review article called Three rules for Making a Company Truly Great by Michael. E Raynor and Mumtaz Ahmed. In this article, the authors provide statistically validated ‘rules’ for exceptional corporate results over the long term. In their words, “With few exceptions, the best companies behave as though these principles guide them through all their important decisions, from acquisitions to diversification to resource allocation to pricing… When Income is declining, for example, it can be tempting to make the company’s results look better by slashing assets and investment to reduce costs. But great companies typically accept higher costs as the price of excellence, putting significant resources, over long periods of time, into creating non-price value and generating higher revenue.”
Their first rule: Better before cheaper (it’s best to compete on differentiators other than price).
Raynor and Ahmed used the single ratio of Return On Assets (ROA) for their financial performance measure – a metric that, in their words, ‘reflects strong, stable performance’. It also goes to one of the fundamental truisms of business: the business acquires assets for the purpose of generating profits, so the best measure of success is how efficient and effective that business is in using its assets for this purpose over time.
In an upcoming blog, I will focus on ROA as a performance measure.
- Mark Robilliard, Color Accounting International
ps. the workshop went great.
References and recommendations:
Strategic Account Management with Bennelong Group International:
Book: Managing B2B customers you can’t afford to lose:
Harvard Business Review (Apr 2013) Three rules for Making a Company Truly Great:
Link: This article shows how combining capabilities and opportunities create growth. SAM is a great vehicle to do this: