Strategic account management processes at corporate, relationship and annual level

by Jukka Ojasalo

Abstract

This paper, based on literature analysis, aims to map and develop a framework of the processes central to strategic account management (SAM). So far, the literature on various SAM processes is fragmented and the big picture is lacking, so there is a clear need to structure this area further. This paper responds to this need by identifying three levels of SAM processes – corporate-, relationship- and annual-level SAM – by structuring the processes central to SAM at these levels into a framework and by discussing the nature of these processes. The theoretical implications are first, it identifies three relevant management levels of SAM as well as the main processes of these levels. Second its three-level framework contributes by showing how the different SAM processes are hierarchically subordinated to each other. Third, the framework shows the time spans of process cycles for different processes: some of them are longer and one-time processes, others are shorter and frequently repeated.

The practical implications emerging from the study are first, the proposed framework shows the hierarchical order in which these processes have to be tackled if the company is interested in introducing a systematic SAM approach in its organization. Second, as the framework maps the relevant SAM processes at different management levels and shows their hierarchical organization, it also shows how critical the commitment and effort of the whole organization are to the success of SAM.

Introduction

Systematic account management has its origins in the 1970s (Pegram 1972). The literature on management of important business-to-business customer relationships uses several terms, which have the same or very similar meaning: key account management, national account management, strategic account management, major account management, global account management, large account management, etc. This paper uses the term strategic account management but is based on any relevant literature dealing with account management.

A business process is a collection of activities that takes one or more kinds of inputs and creates an output that is of value to the customer (Hammer 1990). It is defined as structured, measured sets of activities designed to produce a specified output for a particular customer or market (Davenport 1993), and refers to a set of related tasks performed to achieve a defined business outcome (Davenport and Short 1990). It is a network of activities and buffers through which the flow units have to pass in order to be transformed from inputs to outputs (Laguna and Marklund 2005). Account management processes are those activities, mechanisms and procedures which facilitate the effective management of accounts (Millman and Wilson 1999).

As the definitions of ‘business process’ and ‘account management process’ have a rather broad scope, a great many activities are covered by them. Thus there is need to structure the large and somewhat scattered area of account management and its various processes and activities. As a result, this paper identifies three main levels of SAM and explains the main process at these levels. The levels are corporate-, relationship- and annual-level SAM. Corporate-level SAM processes set the general framework for SAM in the company, and they have the longest time horizon. Relationship-level SAM includes more detailed and concrete processes, and their time horizon is long or short, depending on the relationship length. The time horizon of annual-level SAM processes is limited to one year. This classification is intended to structure the large variety of SAM processes and illustrate their hierarchy and the big picture. The paper is based on literature analysis.

The rest of this article is organized in three sections: first, it reviews the earlier literature on account management processes and then it proposes a framework of three levels of SAM processes, maps the central processes at these levels and briefly explains their nature. Lastly, it discusses research implications and draws conclusions.

Review of earlier literature on SAM processes

The existing research literature dealing with SAM process or SAM is discussed next and summarized in Table 1. The literature includes a vast amount of material dealing with customer relationship management in general; however, the present review addresses the literature with a focus on ‘account management’.

Table 1: Account management processes, findings from literature

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Millman and Wilson (1995) introduced a six-stage model of key account relational development. In this model, different key account selling and management strategies and practices are applied as the relationship evolves through a number of phases:

Pre-KAM: the purpose is to identify those accounts which have the potential for moving towards key account status and to avoid wasteful investment in those accounts which do not hold that potential.
Early KAM: this phase is about exploring opportunities for closer collaboration by identifying the motives, culture and concerns of the account. It involves targeting competitor strengths and weaknesses and persuading customers of the potential benefits they might enjoy as ‘preferred’ customers.
Mid-KAM: trust, range of issues the relationship addresses and cross-boundary contacts increase.
Partnership KAM: the supplier is often viewed as an external resource of the customer. Sensitive information is shared and joint problem solving is common.
Synergistic KAM: relationship parties see one another not as two separate organizations but as parts of a larger entity, creating joint value (synergy) in the marketplace.
Uncoupling KAM: this phase represents relationship termination, when a planned uncoupling process and contingency planning may be needed.

Millman and Wilson (1996) argue that key account management must be driven strategically and collectively by the top team in the selling company. This means developing competencies in the three areas:

  • Evaluation of the strategic importance of a portfolio of current and potential key accounts.
  • Formulation/implementation of strategies for each key account which are consistent with those of the many other customers that are not designated key accounts and are also consistent with achieving overall business objectives.
  • Allocation of resources to the relational mix appropriate to the stage in the relational development model outlined earlier.

Newbourne (1997) examined a global transportation company's corporate account management process and how, in this context, the company applied Lambert et al.'s (1996) partnership model, consisting of drivers, facilitators, components and outcomes. Drivers are compelling reasons to partner, while facilitators are supportive corporate environmental factors that enhance partnership growth and development. Components are joint activities and processes that build and sustain the partnership, and outcomes reflect the performance of the partnership and the extent to which performance meets expectations. Newbourne's (1997) model of corporate account management process consists of seven phases:

1. Account targeting. The account management process starts here, since effective targeting greatly increases the likelihood of success. The following questions are integral. Which industry segments are growing and financially stable? Which industry segments have a need for some combination of our core services? What type of products/services does the industry segment require? Who are the customers leading the industry segment in terms of product or service innovation, share of growth and financial stability? Perhaps the most important question is: which of the leading industry segment customers are driving changes in historic segment paradigms?
2. Corporate account management analysis. Information and insights into the target account companies that were identified in the first step are developed to help better understand the account, their business and needs. It also helps to develop an informed opinion on the account's willingness to form a partnership or strategic alliance. If the account seems to be likely to do so, then the process moves to the next step.
3. Partnership evaluation. This phase consists of an initial meeting to exchange business philosophy, an agreement to pursue a partnership evaluation, and a then joint partnership evaluation session. The second partnership evaluation session should include the following actions: reviewing the current situation and a ‘reality’ check; evaluating the drivers and facilitators of partnership; establishing the preliminary partnership type; and reviewing the management components of the partnership. Further actions include performing partnership-type gap analysis, finalizing the initial partnership type and establishing an action plan and time lines.
4. Account management plan. Based on the results of the second and third phases, an account management plan can be developed to ensure execution of the strategy, action plans and partnership development. It is intended to clearly communicate important information regarding the plans for the account's business and relationship, as well as being a reference source about the account.
5. Measuring results and benefits. Two sets of metrics are involved: one for the account and one for our own company. The account metrics generally include savings in dollars, increased sales and non-price productivity improvements, such as changes in processes that result in cost savings. The selling company's metrics typically include their volume, revenue, margin growth and productivity improvements. Naturally, the selling company's metrics are partly driven by the account metrics.
6. Validation of the value exchange. The validation is made by the account, primarily using jointly developed account metrics. It is done several times a year, and written summaries are shared with the senior managers of both companies.
7. Expanding the field of play. This refers to the selling company's ever increasing involvement with the account. To ensure an ever expanding role with the account, it is necessary to return to the second phase of the process, the corporate account management analysis, so the result is an ongoing modified use of the process.

Wong (1998) examined the formulation and implementation of key account management strategies in China and other Asian countries. He proposed the guanxi (relationships) model for key account management. This model includes four major elements – positioning, interaction, outcome and routing – which are influenced by the corporate key account strategy, marketing objectives for long-term partnership, guanxi construct and performance indicators. The account positioning phase is based on a framework used to categorize accounts into four categories, based on two dimensions: first, the level of adaptation and commitment to the relationship, and second, whether the relationship is an ‘insider’ or ‘outsider’ type of relationship. Outsider relationships imply the interaction of parties outside any mutually defined group or network, and information is inhibited in outsider relationships. In contrast, ‘insider’ relationships imply the understanding of both parties involved that they share a common network, group or party of some kind, often resulting in open information exchange.

An account is positioned as fencer, fiancé, new friend or old friend. In the fencer category, both parties are testing the intentions or reactions of the other, regarding the other as an outsider. In the fiancé category, during the affirmative stage of the adaptation process, both parties bargain with their power, which depends on how each party evaluates their dependence on the other party. The continuation of the relationship depends on the exercise of power, dependence and trust on the other party. If the two parties mutually accept each other as insider friends, they are in a new friend situation. Furthermore, if a strong guanxi relationship has been established after parties enter the new friend quadrant, they may go to a higher stage and enter an old friend phase with substantial relationship-specific investment.

Account outcome positioning has the following options. The outcome of the fencer category is characterized by being aware of each other and ‘dating’, while the fiancé category brings benefits. New friends are in a de facto relationship, which is informal and does not involve total trust, and parties are still concerned about the potential impact of relationship termination costs. The relationship is characterized by belongingness, while old friends are characterized by ‘marriage’. Routing development refers to the evolution of the relationship in terms of the four relationship categories. For example, parties may evolve from fencer to new friend, from new friend to fiancé, and from fiancé to old friend. The relationship may evolve through other routes as well (Wong 1998).

Millman and Wilson (1999) found that preconditions which are required to be in place in order to facilitate the implementation of KAM processes include commitment from senior management, focus on customer problem resolution, strong product and process capabilities, collaborative culture and flexibility. They (ibid.) brought forward eight KAM process elements:

  • Active participation of senior management.
  • Definition and selection of key accounts.
  • Forging wide and deep networks of relationships within the customer organization.
  • Support of strong technical or product capacity.
  • Problem identification and resolution.
  • Development of both generic and bespoken interaction processes.
  • Selective systems and process alignment.
  • Performance of non-core management tasks by the supplier for the customer.

McDonald and Woodburn (2011) explain planning for key accounts and measuring profitability in their book Key Account Management: The definitive guide. Their account management process is in line with the ten steps of the general strategic marketing planning process: mission, corporate objectives, marketing audit, SWOT analyses, assumptions, marketing objectives and strategies, estimation of expected results, identification of alternative plans and mixes, budget, and first-year detailed implementation programme. According to them, KAM involves positioning of key account planning in a corporate's strategic planning, setting key account objectives and strategies, developing a strategic marketing plan for each key account, and measuring key account retention and profitability.

Positioning of key account planning in a corporate's strategic planning within the hierarchy of the development of internal plans in the selling company. The corporate plan is developed first, then the marketing plan, next segment plans, and after that account plans for individual key customers.
Setting key account objectives and strategies is based on prioritizing and selecting segments in terms of the strategic attractiveness of accounts as well as the supplier's relative competitiveness.
Developing a strategic marketing plan for a key account includes an account-specific mission and purpose statement, financial summary, key account overview, client's critical success factor analysis, applications portfolio summary, assumptions, objectives and strategies, and budget.
Measuring key account retention and profitability is based on customer profit contribution over time which shows the account-specific accumulation of various costs and revenues over the time of the relationship.

Ojasalo (2001, 2002) developed a four-phase process model for elements of KAM (see Figure 1):

1. Identifying key accounts.
2. Analysing key accounts.
3. Selecting suitable strategies for key accounts.
4. Developing operational-level capabilities to build, grow and maintain profitable and long-lasting relationships with key accounts (including implementation and control).

Figure 1 Elements of key account management
Source: adapted from Ojasalo (2001, p. 202)

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Identifying key accounts. This phase requires answers to the following questions: Which existing or potential accounts are of strategic importance to us now and in the future? To answer this question one first needs to answer the question: What are the criteria that determine which customers are strategically important? Such account-specific criteria typically include sales volume, profitability, reference value, potential for growth in the future, share of wallet, age of the relationship, R&D cooperation, customer's buying process, customer's location, match of strategies, match of operations, replaceability, supplier's own learning and increase in competence.

Analysing key accounts. The relevant economic and activity aspects of the accounts' internal and external environment are assessed, covering the account's internal value chain, inputs, markets, suppliers, products and economic situation. This phase also includes analysing the relevant economic and activity aspects of the relationship history, addressing sales volume, profitability, key account's objectives, buying behaviour, information exchange, special needs, buying frequency and complaints. Estimating relationship value plays a particularly important role here, since the revenues from each key account should exceed the costs of establishing and maintaining the relationship within a certain time span. Furthermore, the level and development of commitment to the relationship, goal congruence of the parties, and switching costs (Sengupta et al. 1997) should be analysed.

Selecting suitable strategies for key accounts. Strategies depend, for example, on the supplier's competitiveness and attractiveness of the customer, power positions of the parties, and the degree of goal congruence. The strategy with the particular account may be, for example, heavy investment for deep collaboration, selective or careful investment, maintenance, avoidance, short-term dealings with cash payments, domination, submission, or dissolution of the relationship. In open and competitive markets, win–win strategies are recommended to build up long-term and mutually beneficial relationships.

Developing operational-level capabilities to build, grow and maintain profitable and long-lasting relationships with key accounts. This phase involves customization and development of capabilities related to products and services, organizational structure, information exchange and individuals. Joint R&D projects are typical between a selling company and a key account in industrial and high-tech markets. In addition, information technology applied in just-in-time production and distribution channels increases the possibilities of customizing the offering. Improving capabilities for providing services to key accounts is extremely important, because even when the core product is a tangible object, it is often the related services that differentiate the selling company from its competitors and provide competitive advantage.

The selling company's organizational ability to meet the key account's needs can be developed, for example, by adjusting the organizational structure to correspond to the key account's global and local needs, and by increasing the number of interfaces between the selling company and the account and thus also the number of interacting people. Organizational capabilities can also be developed by organizing key account teams, consisting of people with the necessary competencies and authority, to take care of key accounts. Information exchange between the selling company and a key account is a particularly important, relationship-specific task: both partners need to search, filter, judge and store information about the organizations, strategies, goals, potentials and problems of the partners. Ojasalo (2004) expanded these ideas of KAM from the dyadic relationship context into the business networks context.

Wilson and Weilbaker (2004) introduced a process model for global account management (GAM) which includes 11 elements:

  • Drivers of the GAM process include economic factors, market structure, customer power and technology.
  • Supplier analysis covers global capability, culture, logistics, linking systems, structure, networks and product offering.
  • Buyer analysis relates to global capability, culture, logistics, linking systems, structure, networks, and received product offering.
  • Global account definition is affected by global players, global transitions, global aspirants, issues of competency and culture.
  • Global account selection is based in qualitative and quantitative measures, strategic fit, culture and long-term profitability.
  • GAM strategy development includes strategic intent, strategic focus (economic, innovative or entrepreneurial), strategic means (problem resolution) and strategic-level decisions (partners, relationships, learning).
  • GAM operations cover implementation issues, the GAM decision-making process and operational competencies.
  • Organizational issues relate to structure, complexity, teamwork, culture, turf issues, information systems, connecting systems, compensation and executive support.
  • Global account manager roles include political entrepreneur, communicator, team leadership, relationship, management, strategic planning, vision, problem solving and internal selling.
  • Challenges to effective GAM entail blockers and systems: blockers may be political, organizational and cultural.
  • Outcomes cover metrics and success factors, which involve knowledge, value, profits and customer satisfaction.

According to Backer and Linden (2005), building strategic KAM includes three steps: (1) the implementation of KAM strategy requires a clear commitment from top and their active and strong support; (2) strategic segmentation refers to the identification of key accounts, using both a priori (who the customers are) and ad hoc segmentation (how customers behave); (3) new resources for KAM include pools of knowledge, development of the skills of the sales force for selling to big buying groups, new compensation strategy, and evaluation of the channel and communication strategy.

Senn (2006) described Siemens' four-step Top Executive Relationship Process, in which account managers are required to plan executive engagements linked to their account plans, normally with the account manager in attendance and prepared with formatted documentation for both pre- and post-meeting reporting.

Contact phase. The objective is to orchestrate contact between the customer and the selling company's executives. Once a year customer objectives are formulated, sponsors and their roles are proposed, contacts in both buying and selling companies are identified and a specific contact plan is developed. This results in an overall plan for engaging top executives in the relationship and a specific contact plan.

Sponsor nomination. The purpose is to obtain executive support for the relationship process and contact plan, repeated once a year. Sponsors and key executives are evaluated, nominated and agreed. An account review is conducted, including the situation, customer, executives and sponsors' roles, and the plan for engaging top executives is updated.

Executive engagement phase. Here the purpose is to establish a consistent process for executive meetings (maybe 8–10 meetings per year) and actions, covering the scheduling of executive visits, pre-briefing, calling, post-briefing and follow-up. This phase results in complete briefing sheets and customer-specific action plans.

Measurement and review phase. The objective is to manage the information gained from executive engagement. This annual review includes looking at overall activities and results with relationship sponsors, reviewing impact with account managers and defining target achievements.

Zupancic (2008) discussed KAM at two levels: operational and corporate. Operational KAM refers to the activities of the key account manager and their team serving a specific account. In contrast, corporate KAM covers the entire KAM programme for all strategic accounts of the selling company. At both levels, the KAM process is realized through the dimensions of strategy, solutions, people, management and screening.

Operational KAM. The strategy dimension refers to how the company should serve the key account, while solutions means customizing products and services that will be offered to the account to add value and realize the chosen account strategy. It also refers to the degree to which innovations are developed in close cooperation with the key account. The people dimension represents the nomination of members and forming the KAM team, and management refers to processes that are necessary to service the account as well as coordination of interfaces and resources within the supplier company. Lastly, the screening dimension means measuring KAM success by various criteria, and also includes safeguarding knowledge management and corporate learning based on KAM experiences.

Corporate KAM. Here the strategy dimension refers to top-management support for KAM; the solutions dimension means willingness of the entire company to fulfil special needs of key accounts; people implies recognition of the importance of excellent staff in the success of KAM. The management dimension means support of KAM by the corporate culture as well as a formal KAM organization, while screening refers to corporate reporting and controlling systems for determining KAM success.

Storbacka (2012) developed a framework for strategic account management programmes, consisting of four inter-organizational and four intra-organizational elements (ibid).

Inter-organizational elements

Account portfolio definition relates to selecting the right customers for the strategic account portfolio.

Account business planning includes a mechanism for enhancing organizational or network learning through information acquisition, information dissemination and shared interpretation activities. It also constitutes a tool to get commitment from the firm's management to assign the resources needed to develop the account in such a way that the potential identified can be realized, and it promotes inter- and intra-organizational alignment.

Account-specific value proposition is based on the idea that developing a value proposition for the selected strategic customers is ‘special’, in other words, specific to the account and different from what other customers are being offered, based on solutions achievable through the integration and adaptation of firm processes to create a better fit with the customer's processes.

Account management process has four elements: (1) generating knowledge and disseminating a shared interpretation of this knowledge as a foundation for value creation; (2) the sales process, whereby value propositions are turned into orders; (3) securing the delivery of the agreed value proposition; (4) enhancement of the relationship strength and longevity, by attaining goal congruence and systematically constructing bonds consisting of mutual resource dependencies, with relationship-specific resource allocations or investments.

Intra-organizational elements

Account team profile and skills implies selection of the key account manager and members of the account team. The team can be formal or informal, and sometimes involve representatives from the customer organization as well.

Support capabilities are support systems needed in account management programmes to facilitate the account manager's work. They include information systems, administration, field and technical service, logistics, manufacturing/operations management, application engineering, development and product engineering, finance, legal, control and marketing. Two of the necessary capabilities usually reside outside the account team, i.e. value quantification and account performance monitoring from business controllers, and contract management from legal departments.

Account performance management relates to the total value formed during the interaction between the company and its customer over time. According to Storbacka and Nenonen (2009), an important aspect is definition of how the value is shared between the firm (value capture) and its customers (value creation). They say that value capture can be measured by the discounted present value of all future economic profit that the customer relationship generates, and this can be used as a proxy for shareholder value creation. The key components of economic profit on a dyad level consist of revenue from the relationship, total cost incurred by the relationship, and the capital invested in the relationship.

Organizational integration helps account managers to build value by understanding and responding to concerns and opportunities that customers encounter. The account manager has the main responsibility for interpreting the customer's situation, making value propositions and ensuring that the promised value is delivered. The account management function should not be confined to the sales function but rather it should cross the boundaries between several functions, product areas, geographical areas and hierarchical levels.

Table 1 summarizes the principal findings from the literature on SAM processes.

SAM processes at the corporate, relationship and annual level

Based on the above literature review, a framework of SAM processes at three different levels is suggested (Figure 2). Processes at corporate-level SAM relate to making the corporate-wide grounding for SAM in the company. The time span of the management horizon at this level is the lifetime of the SAM programme in the corporation. Processes at relationship-level SAM relate to relationship management with a certain strategic account. The time horizon of the management at this level is the lifetime of the particular customer relationship, and the key processes at this level are about adjusting SAM in different phases of customer relationship. Processes at annual-level SAM involve operational and everyday serving of the account, with a maximum time span of the management horizon at this level of one year. The central processes of each of these levels are shown in Table 2.

Figure 2 SAM processes at the corporate, relationship and annual level

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Table 2: Central processes of SAM

Corporate-level SAM processesRelationship-level SAM processesAnnual-level SAM processes
Decision-making on possible adoption of a SAM philosophy
Top-level support and sponsorship of the SAM programme
Decision-making on the nature of the SAM programme
Development of company-wide general principles of SAM maintenance and improvement of the SAM programme
Possible abandonment of the SAM programme		Development of value proposition
Selection of account manager
Establishment and management of account team
Boundary spanning
Communication management
Conflict management
Dissolving relationship		Annual planning of account-specific action plan including objectives, activities, timetable, person(s) responsible and performance metrics
Annual account-specific budgeting
Execution of action plan
Consideration of both company- and individual-level customer benefits
Control
Learning and knowledge transfer

Corporate-level SAM

Corporate-level SAM includes three eras: adopting SAM philosophy, maintaining and improving general principles of SAM, and possible abandonment of the SAM programme. It refers to account management principles in general within the whole selling company. In other words, it covers the entire KAM programme for all the strategic accounts of the selling company. The time span of the management horizon at this level is the lifetime of the SAM programme in the corporation, which is typically decades.

Adopting SAM philosophy

Should we adopt SAM philosophy in our corporation?

Even though the company has strategic accounts, it may not have any systematic approach for managing them (Kempeners and Van der Hart 1999; Shapiro and Moriarty 1984). Thus, the very first SAM management decision at corporate level is to answer the question: ‘Account management system or no account management system?’ Some companies are reluctant to adopt account management systems, since they think that there is no strong reason for it. Some companies may even consider an account management system to be disadvantageous, because customers may exploit their power position to get discounts and extra services (Peck 1997; Rottenberger-Murtha 1992; Shapiro and Moriarty 1984). Caution against adopting systematic account management systems may also include concentration of resources on few customers, insufficient benefits to the supplier firm or accounts, limited opportunities with customers other than those who are presently strategic accounts, additional cost and bureaucracy, and significant effort in organizational change required by the account management programme due to sales force resistance and unclear responsibilities and authorities (Capon 2001).

Some main reasons for adopting a systematic account management approach in the corporation can be identified – for example, when the accounts are no longer willing to do business with several salespeople, and they demand from their suppliers one person who has the final responsibility for the relationship. Also, accounts may want to have larger national or global contracts to harmonize the purchase and delivery process, as well as other conditions. The selling company may want such contracts as well. For this reason, it becomes necessary to coordinate between several involved units and offer ‘one face’ to the customer (Kempeners and Van der Hart 1999; Verra 1994). When several levels, departments and decision-makers in both buying and selling companies, often located in dispersed locations, are involved, this all calls for single-point contact in relationship management (Rottenberger-Murtha 1992).

According to McDonald et al. (1994, in McDonald and Woodburn 2011), the need for account management systems stems from the need to respond to rapid change: companies must refine their processes to compete in mature and global markets with increasing customer power. They have to deal with more complex customer relationships. For example, buyers become smarter by defining the total value of the relationship, by looking for tactics to optimize this relationship, and by evaluating their suppliers to improve their own buying behaviour (De Backer and Van der Linden 2005). Large customers often rationalize their supply base to cooperate more closely with a limited number of preferred suppliers and they demand special value-adding activities, such as product development, financing services or consulting (Homburg et al. 2002). According to Wengler et al. (2006), the two most important reasons for implementing KAM are the increase in customer orientation of the supplier and increasing internationalization of customers. In addition, reasons for adopting KAM programmes entail a hope to improve internal coordination, customer segmentation, increased customer requirements, customer-induced relationship intensity, desire to improve efficiency of internal decision-making; internationalization of markets, differentiation and minimizing market risk.

What kind of corporate SAM programme should we adopt?

If the company decides to adopt SAM philosophy, it needs to decide the nature of its SAM system. Four alternatives are available (Shapiro and Moriarty 1984, in Kempeners and Van der Hart 1999):

Part-time programme. This is an account management system in which people with other responsibilities also accept the responsibility of looking after major accounts. This system is chosen, for example, when the selling company is small or has few accounts. Sometimes it is used in companies that are going from none to a full-time account management system (De Roos et al. 1990; Shapiro and Moriarty 1984).
Full-time programme at operating unit level – division or group. A full-time account management system in which the account management system is decentralized at business unit or division level (related business units).
Corporate-level programme. A centralized account management system.
Account division. A separate and fully integrated operating unit serves accounts and their needs.

In the case of the latter three alternatives, the question is whether the system will be integrated in the organization or will be separated as an account division. A separate account division is chosen more frequently when the accounts are very large, or differ from other customers and buy different products, or coordination between production and sales is very important, or production scale is not important (Shapiro and Moriarty 1984). Storbacka's (2012) research finds that SAM is, to a large extent, an organizational challenge. Most organizations have product or geographical organization, and adding the account viewpoint raises questions relating to efficiency, complexity and flexibility. However, successful SAM requires designing organizational structures and management processes to be responsive to strategic customers. Strategic account management cannot be confined to the sales functions, but rather it crosses the boundaries between several functions, product areas, geographical areas and hierarchical levels (Storbacka et al. 2009). Companies use several ways to position the account managers and their teams in the organization, usually at the highest level of the organization, in business units, product divisions or regional units (Kempeners and Van der Hart 1999).

A company's scope and commitment to the account management programme may vary and evolve over the years. To be successful in account management, the company should be clear about the desired scope of the programme. When both the scope and commitment to the account management approach are limited, account management has a pilot nature with certain selected accounts. Such an ice-breaker phase may function as a starting point for further expansion of the programme scope in the corporation. If the scope of the programme is broad but the commitment is limited, this results in a dead end due to insufficient resources. When the scope of the account management programme is limited but commitment is deep, this functions like a springboard and enables efficient development of appropriate systems, processes and human resources for strategic account management in the corporation. If the firm has successfully developed and tested its account management programme, it can expand its scope substantially, even to be corporate-wide. In cases where the scope of the account management programme is broad and commitment is deep, the programme has an embedded nature and is here to stay (cf. Capon and Senn 2010).

How to adopt a corporate SAM approach.

Adopting a SAM approach in the corporation requires defining certain corporate-level general principles of SAM, which are applied at a concrete level. According to Homburg et al. (2002), the key questions the corporate needs to answer while adopting a SAM approach are: What is done? (activities), Who does it? (actors), With whom is it done? (resources) and How formal is it? (formalization). This includes various alignment and integration activities, which relate to company strategy, solutions offered to customers, people in the organization, management methods and screening (Zupancic 2008).

When it concerns the company strategy, top management's commitment is very important (De Backer and Van der Linden 2005). Top management's support for adopting a SAM philosophy is needed by word and action. The importance of the SAM initiative has to be clearly prioritized alongside the other initiatives the organization is working on (Woodburn 2004): it has to be integrated in the corporate strategy, and the criteria for strategic accounts as well as the systematic method of identifying them should be defined. Related to solutions offered to customers, the willingness of the entire company to fulfil special needs of strategic accounts should be enhanced. The strategic accounts' influence on the company's product and service portfolio should be increased, including development of new products and services initiated by them. Also, corporate-level practices should be developed that help in including products and services developed specifically for certain strategic accounts into the company's general product line. Indeed, special pricing, customization of products and services, joint coordination of the workflow, information sharing and taking over business processes that the customer outsources take place with strategic accounts. Thus, the selling company needs to define its principles in terms of the intensity of special attention given to strategic accounts. In other words, how should the servicing of strategic accounts differ from that of average customers (Homburg et al. 2002; Shapiro and Moriarty 1980)?

In terms of people, systematic methods for analysing staff's competencies and match with SAM requirements should be developed with corporate-level guidelines for recruitment of account managers and account team members, as well as their professional development and principles of remuneration. When it concerns management issues, SAM should be included as one aspect of the corporate culture programme. Principles concerning the formal organization for SAM are also needed, and acceptance of SAM processes by the whole organization should be ensured. Screening includes developing corporate and controlling systems that easily show the results of SAM and integrate SAM-specific controlling measures in the corporate's IT systems (Zupancic 2008).

Maintaining and improving corporate principles of SAM

Once the company has adopted a SAM approach, there is a natural need to maintain and improve it over time. This can happen in terms of a structured method of examining the validity of the national account organization within a specific company environment. For this purpose, Boles et al. (1994) introduced a specific audit method for critically evaluating the company's current account management programme and identifying which areas should be improved. Their audit process consists of five phases:

Environmental assessment: internal and external viability of the account management concept. This first phase addresses both the external industry conditions and senior management and inter-departmental support for the concept of account management. It focuses on the profile of the market, which includes, for example, characteristics of client companies and competitive activities. Moreover, this examines whether the company's own culture is appropriate for successful operation of an account management programme.
Compatibility of the account management concept with the corporate mission. This phase tests not only the validity of the original purpose of the account management programme but also whether there is sufficient integration of the programme into current corporate strategy. The programme mission is reviewed as well as testing the depth of management understanding of that mission. Both quantitative and qualitative macro-objectives of the programme are addressed.
Operational and organizational assessment. Managing and motivating the national account organization is considered, alongside questioning the efficiency of the corporation's current account management programme. Organization and procedures are usually established at the inception of the account man­agement programme, but over time, as the market and organization change, they become outdated. The assessment focuses on the structure of the marketing coverage for strategic accounts in the programme, and also addresses the positioning of the account management unit within the current company hierarchy. The characteristics of the individual account managers, their training, compensation, motivation and methods of support are exposed and analysed in light of current conditions. All these analyses result in identification of areas requiring improvement.
Analysis of individual strategic accounts. Effective account management is based on the assumption that the selling company has enough knowledge of the account. Such an assumption may be false, possibly due to the fact that account organizations change rapidly and customer knowledge loses its validity. In this fourth phase a solid and refreshed understanding of the strategic accounts is established in order to determine whether the company is able to fulfil their needs.
Evaluation of the account management programme in quantified monetary terms. In other words, the effectiveness of the current account management programme is assessed in dollars and percentages. Often the contribution of the account management programme is blurred and obscured in the consolidated financial analyses. Thus additional effort is required to isolate the contribution of the existing account management programme in quantitative measures. A periodic analysis should reveal inconsistencies or confirm adherence not only to corporate financial goals but also to the original goals which established the corporate account management programme.

Results of the account management audit should lead to improvements in the existing corporate-level account management programme. In some cases, the company may discover that strategic account management is not a feasible approach for it at this time given its level of resources, key personnel and established base of customers (Boles et al. 1994).

Abratt and Kelly (2002) give the following recommendations for improving existing account management programmes. There should be ongoing training programmes for the key account managers and for the internal personnel of both the supplier and the key account customer companies to ensure an alignment of goals, objectives and strategies. The key account manager should have a limited number of accounts to ensure focus within particular accounts. Also, strategic accounts should be correctly identified, and this is determined not only by the size or volume of the customer but also by their strategic importance. Moreover, it is important to understand strategic accounts and their main concerns, problems and strategic issues, and focus on what they see as important and what creates value for them. In addition, it is important to develop a culture of commitment to the strategic accounts, which requires all employees to understand what strategic accounts expect from their suppliers.

Possible abandonment of the SAM programme

In some cases the company may choose to abandon its SAM programme. Even though the account management concept itself receives little criticism, its implementation in the company may produce unsatisfactory results (Boles et al. 1994; Business Marketing 1988). Stevenson (1981) gives the following reasons for dropping out of the account management programme. The corporate-level organization does not allow for account organization or the existing sales force organization precludes effective implementation of the programme. It may turn out that the customer profile does not lend itself to account management or, in the search for higher levels of productivity, some companies find that the revenue and margin levels from national accounts do not warrant the added expense levels of the programme (Rottenberger-Murtha 1992). Also, firms unwilling or unable to devote sufficient resources to their national accounts are not successful in implementing the programme (Boles et al. 1994).

Piercy and Lane (2006) argue that existing SAM programmes, in practice, tend to lead to situations where a company's resources are heavily invested in that part of the business in which the customers have the lowest margins and the highest business risk. Customers who are attractive to our company are usually attractive to our competitors as well. Thus, the most attractive customers for SAM strategy are also likely to be those where competitive intensity is highest and consequently where the ability of the customer to substitute one supplier for another is highest. Moreover, customers are identified as strategic accounts often just because they are large customers. In other words, strategic accounts are not distinguished from large accounts. This should not happen with proper selection of strategic accounts with several relevant criteria, but the apparent reality tends to be that companies choose as strategic accounts those customers to which they sell most, or they respond to the demands of large customers for special treatment. In other words, their argument is that the weakness of existing SAM programmes is that the strategic account selection functions in theory but not in practice.

To deal with this problem, new business models should be developed with the help of the following advice. Alternative routes to market should be developed to reduce critical dependencies and risk, and alternative product offerings should be developed to rebuild brand strength as a counter to the power of the largest customers. Suppliers should emphasize the need for high returns to justify taking on high-risk business, not the other way around. Strategic vulnerabilities created by excessive levels of dependence on a small number of customers or distributors should be reduced. The difference between large accounts and strategic accounts should be clarified and appropriate ways of managing these different types of customers profitably should be developed. The company should also actively reject business from some sources because the customer is unattractive in terms of profitability and risk, even if the business on offer is large (Piercy and Lane 2006).

Relationship-level SAM

The implementation of the corporate-level SAM programme takes place in each strategic account relationship. The time span of the management horizon at this level is the lifetime of the particular customer relationship, which is typically several years or decades. Several integral processes of relationship-level SAM are discussed below.

Adjusting SAM in different evolutionary phases of relationship

Relationship-level SAM requires understanding the evolution of the customer relationship. The relationship marketing literature has suggested several ways in which a customer relationship may evolve over time. Ojasalo (2000) classified relationship evolution models into three different categories: episodic, phase and state approaches.

Episodic approach holds single episodes as central elements through which the relationship evolves. An episode can also be called a purchase, transaction, assignment or encounter, depending on the context: it is effectively the basic element of the relationship in which the value adding and interaction primarily take place. Episodic models do not distinguish phases or states of a relationship. Episodic orientation approaches relationships on two levels: on the episode level and on the relationship level. In other words, these models include both episode- and relationship-level elements, with episode-level elements describing what happens within a single episode, while relationship-level elements have a cumulative function which means that they ‘remember’ and ‘sum’ what has happened in previous episodes during the history of the relationship. Relationship-level elements, in some sense, represent the balance sheet of the incidents and perceptions in the relationship.

Phase approach suggests that a customer relationship develops through certain successive phases, so that one phase leads to another. The models in this approach understand the relationship as a life cycle. They typically explain what kinds of activities and incidents take place in different phases, and possibly systematically describe how certain relationship-related dimensions change in different phases. Such dimensions are sometimes called longitudinal dimensions.

State approach to relationship evolution focuses on distinguishing and characterizing different possible states which a relationship may experience. Yet state models do not suggest which of the states a relationship actually does experience and in what order, except the state of beginning. This also means that the relationship may experience the same state several times during its history. An integral part of this approach is to understand what forces drive the relationship from one state to another or what makes the relationship remain in one of them.

Different management methods are required at different evolutionary phases or states of the relationship. McDonald and Woodburn (1999) developed KAM relationship stages adapted from Millman and Wilson's (1995) model, which in Ojasalo's categorization (2000) above is an example of a phase approach. McDonald et al. (2000) describe the characteristics of the different stages or phases as follows:

Exploratory KAM
  • Pre-trading.
  • Customer must potentially qualify as a key account.
  • Both sides are exploring.
  • Signalling is important.
  • Reputation is critical.
  • The seller must be patient and prepared to invest.
Basic KAM
  • Transactional and operational view.
  • Emphasis on efficiency.
  • Often low common interest.
  • Buyer is multi-sourcing.
  • Exit from relationship is easy.
  • Driven by price.
  • Little information sharing.
  • Based on single-point contact.
  • Reactive rather than proactive.
  • Uses the standard organization of selling company.
Cooperative KAM
  • Assumption of experience of performance.
  • Supplier possibly has preferred status.
  • Relationship is mainly with the buyer.
  • Contacts are multi-functional.
  • Organization is standard.
  • Selling company adds value to the relationship.
  • Exit from the relationship is not difficult.
  • Seller is not wholly trusted by the customer.
  • Visits to the customer are limited.
  • Information sharing is limited.
  • Based on forecasting rather than joint strategic planning.
Interdependent KAM
  • Both acknowledge importance to each other.
  • The selling company is the principal or sole supplier.
  • Exit is more difficult.
  • High level of information exchange.
  • Range of joint and innovation activities is wider.
  • Larger range of multi-functional contacts.
  • Processes are streamlined.
  • Parties are prepared to invest in the relationship.
  • High volume of dialogue.
  • Better understanding of the customer.
  • Social relationship and trust are developed.
  • Cost savings are achieved.
  • Cooperation is proactive rather than reactive.
  • Parties do joint strategic planning and focus on the future.
  • Opportunity to grow the business.
Integrated KAM
  • Real partnership, complementary and mutual dependence.
  • Dedicated and cross-boundary functional or project teams established.
  • Exit barriers are high and possible exit is traumatic.
  • Open information sharing takes place on sensitive subjects.
  • The selling company is often the sole supplier.
  • Costing systems are transparent.
  • Assumption of mutual trustworthiness exists at all levels.
  • Opportunism does not exist, and thus protection against that is lowered.
  • Joint long-term strategic planning takes place.
  • Profits for both sides increase.


Finally, the relationship may disintegrate at any of the previous phases, for reasons described below. The person who was responsible for building up the relationship is not the right person to terminate it.

Disintegrating KAM
  • Rarely caused by price problems.
  • Often caused by changes in key personnel.
  • Account manager's approach or lack of skills.
  • Failure to establish multi-level links.
  • Breach of trust.
  • Prolonged poor performance against agreed programme.
  • Changing market positions, culture, organization or ownership.
  • Complacency (McDonald et al. 2000).

Developing value proposition

Each strategic account needs its own specific value proposition which is different from what other customers are being offered (Storbacka 2012). Value proposition refers to the firm's suggestion to the customer on how its resources and capabilities, expressed as artefacts (goods, services, information and experiences), can enable the customer to create value (Flint and Mentzer 2006). Frow and Payne (2011) proposed a planning framework for value propositions that consists of five steps:

1. Identify stakeholders.
2. Determine core values.
3. Facilitate dialogue and knowledge sharing.
4. Identify value co-creation opportunities.
5. Co-create stakeholders value propositions.

According to Anderson et al. (2006), a supplier's offering may have many technical, economic, service or social benefits that deliver value to customers, but so do competitors' offerings. The essential question is how the value elements compare with those of the next best alternative. To answer this question it is useful to sort value elements into three categories: points of parity, points of difference and points of contention:

  • Points of parity are those elements with essentially the same performance or functionality as those of the next best alternative.
  • Points of difference are elements which make the supplier's offering either superior or inferior to the next best alternative.
  • Points of contention are elements about which the supplier and its customers disagree regarding how their performance or functionality compare with those of the next best alternative.

Either the supplier regards a value element as a point of difference in its favour, while the customer regards that element as a point of parity with the next best alternative, or the supplier regards a value element as a point of parity, while the customer regards it as a point of difference in favour of the next best alternative. In developing the value offering, the company should identify all benefits customers receive from the offering, identify the favourable points of difference, and pinpoint the one or two points of difference whose improvement will deliver the greatest value to the customer.

Storbacka's (2012) research shows that in the development of an account-specific value proposition, often the firm has to do trade-offs on its strategy. A typical example of such a trade-off relates to standardization and customization, since an increased product variation increases the average unit cost if operating policies remain unchanged. Modularization of value elements is one option to combine the efficiency of standardization and effectiveness of tailoring.

Considering the above discussion on the evolution of a relationship, a big challenge is that customer-desired value changes over time. Thus, to retain strategic accounts, suppliers are forced to either anticipate what customers will value next or be ready to react faster than competitors to these changes (Flint et al. 2002). Different people in the buying company may also value different things. The focus of a value proposition should therefore meet the initiating person's criteria, but the focus is likely to shift as the needs and demands of the other people involved in the buying process are taken into account, and the final decision criteria evolve. The initial focus may also change during the sales process as a result of the communicative interactions and dialogue between buying and selling company. Where offerings are more extensive, it is important to maintain several customer interfaces at different organizational levels (Kowalkowski 2011).

Selecting account managers

An important relationship-level SAM measure is the appointment of an account manager to take care of the particular relationship. This involves several decisions. Is there just one or are there several accounts per account manager? Are account managers located at a new level or in the existing sales department? Is there one or are there several levels of account managers? If there are several levels of account managers, how are their hierarchies organized? For example, are the highest-level account managers selected based on the industry and the lowest-level account managers geographically (Kempeners and Van der Hart 1999)?

What are the responsibilities, skills and roles?

Account managers have several roles and responsibilities and they may vary between different accounts as well as between different phases of the relationship evolution. According to Shetcliffe (2003), the key account manager's role is to be the primary link from the account into the selling organization for all matters influencing the customer relationship, the account's decision-makers and influencers. The account manager also develops proactively a continual flow of business from the account by thoroughly understanding their business, market requirements and competitive environment. Moreover, they help the account's decision-makers to exploit market opportunities through selling products and servicing them. According to Shuman (2009), an account manager:

  • Builds relationships and influence with key customers.
  • Lives near the customer in an ideal case.
  • Provides an analysis of the account concerning market size, addressable market, mission trends, competitors and others.
  • Establishes strategic intent for the account.
  • Identifies growth-initiative opportunities within the account.
  • Leads activities in support of achieving account quota.
  • Leads the opportunity identification and qualification phases of the business-acquisition process.
  • Supports the bid/no bid and proposal development phases of the business-acquisition process.
  • Provides support to operations by serving as the feedback channel for performance.

Hutt and Walker (2006) emphasize the ability to build networks, and argue that by building a strong network of relationships both within their own company and within the customer organization, high-performing account managers, compared with their peers, are better able to diagnose customer requirements, mobilize internal experts and choreograph the activities that are required to out-manoeuvre rivals and create the desired customer solution.

Conflict management is a central activity of an account manager. Conflicts may be related to competition over resources, power differentials, work or role ambiguity, negative interdependence between groups, tendencies to differentiate from the group, and personal values and sensitivities (Deutsch 1973). Conflicts arise from mixed motives and goals of individuals within the account team, in other parts of the supplier organization, and in the account organization (Jones et al. 2005; Piercy 2010; Piercy and Lane 2006). Defining team members' goals and roles clearly, aligning team and corporate objectives (Atanasova and Senn 2011) and using cross-functional teams (Ryals and Bruce 2006) often help in conflict management. Account managers should also be able to adapt and use a combination of different management behaviours which can be modified throughout and across conflict episodes (Speakman and Ryals 2012).

In addition, managing communication internally and externally is one of the main responsibilities of an account manager, and customer knowledge transfer and facilitation of internal learning is one of the main aspects of internal communication management (Natti et al. 2006). External communication management involves establishing communication channels between all levels of management and across geographic boundaries with the account (Yip and Madsen 1996).

McDonald et al. (2000) bring forward five essential skills of an account manager: people skills, thinking skills, administration and project management skills, relevant knowledge and personal qualities. People skills cover communication skills, including listening and persuasion, leadership and credibility ‘from boardroom to postroom’. Thinking skills include analytical skills, creativity and flexibility, strategic thinking and boundary spanning, while administration and project management skills refer to managing and organizing the key account activity. Relevant knowledge entails technical knowledge of products and applications in the customer's business, as well as subject knowledge of the industry and market, financial issues, relevant information systems, culture and language, and legal issues. Personal qualities include integrity, selling and negotiation skills, resilience and persistence, as well as likeability.

Wilson and Millman (2003) explain the behaviour of global account managers. They refer to the ‘political entrepreneur’ and say that a global account manager, most importantly, has a boundary-spanning role. Boundary spanning means bringing the right people together, sharing information and functioning as the organization's ‘antenna’ in the external business environment. Boundary spanning takes place at both internal and external interfaces of the organization. An account manager combines both the political and entrepreneurial roles and, based on their behaviour, an account manager may be classified as a self-server, renegade, partisan or arbiter (Wilson and Millman 2003).

The political behaviour of a self-server is manifested in manipulation of both the buyer and seller for personal advantage and protection, while a self-server's entrepreneurial behaviour involves seeking business opportunities to achieve personal career aspirations and objectives. A renegade's political behaviour is characterized by manipulation of the supplier for the customer's advantage, while the entrepreneurial behaviour includes identification of commercial advantages for the customer with little consideration of the strategic or operational impact upon the seller. The partisan's political behaviour is manifested in the attempt to increase personal standing with the seller. A partisan's entrepreneurial behaviour becomes visible in the attempt to identify commercial advantage for the seller with little consideration of the strategic or operational impact upon the customer. Finally, the arbiter's political behaviour means that they facilitate achievement of relational and financial goals that benefit buyer, seller and themselves, and also build multi-cultural relationships and promote meritocracy. Their entrepreneurial role becomes visible in seeking business opportunities and synergistic potentials of value to buyer, seller and self. Renegades and partisans are more suitable at the earlier evolutionary stages of the customer relationship, while arbiters are better suited to the later stages when cooperation is closer and more integrated.

Establishing and managing account teams

Establishing and managing an account team is often necessary for effective relationship-level SAM. This team is often cross-functional, since successful servicing of the account requires several functions and activities other than sales (Spekman and Johnston 1986). Also, the team is needed because the individual salesperson does not cover all facets of firm resources and competences, and does not possess enough intra-firm influence to propose and implement value propositions that create competitive advantage (Weitz and Bradford 1999). The work of the team includes sales, marketing, operations, finance and control, and logistics. The members of the team have relationships with members of the same team, members of different teams within the firm: i.e. the selling team and the buying centre, the selling team and other groups in the selling firm, and the selling team and the firm's strategy (Jones et al. 2005). If cooperation in the relationship has developed to be deep enough, there may be several cross-boundary teams consisting of people from both the company and its account; for example, an operation focus team, a finance focus team, an R&D focus team, a market research focus team and an environment focus team (McDonald et al. 1997). Account teams often consist of a permanent core selling team and members of other functional groups that participate on an ad hoc basis (Moon and Gupta 1997).

Account managers may operate three different forms of account team (Kempeners and Van der Hart 1999; Shapiro and Moriarty 1984): own account team, shared account team and shared account team with own manager. In the case of own account team, the account manager has their own dedicated account team with dedicated people, and the members in the team report directly and only to the account manager. Members in the shared account team option are participating in several account teams, and account managers share the services of members on a predetermined basis, while the members report to the account managers for whom they work. In the case of a shared account team with own manager, members are a pooled force under the direction of their own manager who reports to the manager of the account managers. Then the team members work only for accounts but do not report directly to the account managers.

According to Atanasova and Senn (2011), the account team management includes three main elements: team design, organizational context and processes.

Team design

Goal and role clarity: aligning the team goals with individual and overall corporate goals, as well as with customer goals, enhances collaboration, lowers conflict levels and improves performance.
Customer coverage: this refers to the extent to which the team structure adequately corresponds to the customer's organization and its requirements. The team's ability to deal with the complexity marking the interface between the supplier and the customer depends on the extent to which it provides appropriate customer coverage across various dimensions, such as countries, divisions and functions. Structural fit between the team and the customer should be ensured.
Empowerment: empowerment of the team consists of two aspects, decision-making authority and resource availability. Providing the team with sufficient authority tells the customer that customer managers have the power and resources to get things done in a timely and effective manner.
Heterogeneity: sufficient diversity in skills and knowledge should be represented in the team.
Adequate skills: as opposed to skill heterogeneity, this refers to individual characteristics that combine, such that more is always better for a team.
Leadership: leaders who can create effective working environments and motivate team members also feature more collaborative processes, reduced conflicts and higher effectiveness.

Organizational context

Top-management support: this support enhances internal and external collaboration, reduces conflict and enforces a more proactive approach to customers.
Rewards and incentives: requires a system for measuring account-specific results as well as an incentive system that rewards all team members appropriately.
Training: team members, who come from different backgrounds and parts of the organization, need training to help them understand their tasks, processes, objectives and roles.

Processes

Communication and collaboration: refers to interactions both within the team and with external parties.
Conflict management: the existence of working mechanisms that help to resolve disputes in a timely and effective manner is important.
Proactiveness: a proactive account team will be successful if it actively seeks areas for continuous improvement, identifies opportunities and innovative solutions to problems, and addresses issues before they become major problems (Atanasova and Senn 2011).

Dissolving relationships

Effective relationship management includes management of declining and dissolving relationships. The dissolution of certain relationships may even be desirable, for example if the particular relationship is not profitable enough. By uncoupling the relationship the company is able to free its resources and re­allocate them to other existing or new relationships with higher profit potential (Campbell and Cunningham 1983; Fiocca 1982; Olsen and Ellram 1997; Turnbull and Zolkiewski 1997). A relationship is dissolved when all activity links are broken and no resource ties and actor bonds exist between the companies, and no mutual expectation of relationship continuity remains (Tähtinen and Halinen-Kaila 1997). A relationship may also change into a ‘sleeping relationship’, which is defined as preserving partners' relationships through the history of the commitment. In this case, prior commitment can be the basis for trust in the content of the relationship even in the absence of resource exchange (Cova and Salle 2000; Hadjikhani 1996; Skaates et al. 2002). It may take place at any phase of the relationship, and it may be sudden or a long process (McDonald and Woodburn 2011).

The dissolution of the relationship may be the buyer's, the seller's or a mutual decision (Hocutt 1998). Both parties may voluntarily want to end the relationship through a joint decision, but it is also possible that one may be a voluntary party to the decision while the other is involuntary, or both parties may be involuntary (Pressey and Mathews 2003).

When is careful management of relationship dissolution needed?

Alajoutsijärvi et al. (2000) introduced the concept of the ‘beautiful exit’ to understand what type of strategy can be applied in relationship dissolution, so that any negative consequences affecting both partners and the network can be avoided. The concept also helps in recognizing early signals of potential relationship dissolution and taking actions that might still save it. The quality of relationship dissolution management is emphasized under the following conditions.

First, when the selling company has few alternative existing or potential accounts in the market, it is important for the company to ensure that reactivation of the ex-relationship is possible, if the circumstances change. Second, when the account has an influential role in the marketplace and connected network, the ex-partner may create and circulate a negative and probably one-sided aftermath story which can damage the company's image. Third, when the relationship has been public, the negative publicity may damage both partners' network image. Fourth, when the relationship has developed strong personal bonds, since business relationships are performed by individuals, avoiding hurting them is as important as avoiding hurting the partner company. Fifth, when the connected network is tightly structured, the dissolution of one relationship in a connected network is likely to have effects on other relationships in the network. Sixth, when the companies in the marketplace appreciate committed, trustworthy and other-orientated behaviour, breaking the relational norms will damage the selling company's image.

What approaches are available for relationship dissolution management?

Alajoutsijärvi et al. (2000) suggested a framework for the management of relationship dissolution, based on two dimensions: directness/indirectness of communication and other/self-orientation. Indirect strategies are used when the company does not state the desire to terminate the relationship explicitly but tries to achieve the same result by different actions. Indirect communication offers the initiator a chance to respect the partner's ‘face’. Indirect relationship dissolution approaches include two options: disguised and silent exit. In disguised exit, the desire to dissolve the relationship is communicated in words, acts or other hints, but without conveying the real message. If this is done in an other-oriented way, then the company communicates to its account that it wishes to change the relationship, but not that it wishes to exit, possibly by communicating about a reduction in investments in the relationship in the future. In the self-oriented way of relationship dissolution, the other party's relational costs are increased up to the point that the partner itself starts to dissolve the relationship, for example by increasing the price of products and services.

In the case of silent exit, there is no intention or need for communicating exit wishes, meaning that there is an implicit understanding that the relationship has ended. Then both parties see that the relationship has ended, but they do not bring up the subject in order to save the partner's face or to avoid hurting the partner. In the other-oriented way, relationship dissolution happens implicitly by letting the relationship just fade away. In a self-oriented way, the dissolution intention is expressed through changed behaviour, for example in the openness and frequency of communication or vanishing relationship investments.

Direct communication strategies do not leave any doubt about the desire to dissolve the relationship. Three direct communication strategies are available: communicated exit, revocable exit and voice. In the case of communicated exit, if the relationship is terminated in the self-oriented way, then the other party is explicitly told that the relationship is over, without giving them any chance to change their behaviour to recover the relationship. If the strategy is used in the other-oriented way, then discussion about the relationship takes place. The discussions are not hostile and both parties come to the understanding that dissolving the relationship is the right thing to do. In the case of revocable exit, the desire to dissolve the relationship is told explicitly, but there is still the chance to recover the relationship. The disengager may look at the problematic situation just from their own perspective (self-orientation) or take into account the other party's perspective as well (other-orientation). In the voice alternative, dissatisfaction with the relationship is expressed directly to the other party. The purpose may be to change the relationship (other orientation) or change the other party (self-orientation) (Alajoutsijärvi et al. 2000).

Annual-level SAM

Effective management of each relationship requires an account-specific annual plan of the various operational-level activities for the coming year. The annual-level SAM plan is subordinated to the long-term relationship-level plan, which is subordinated to the general corporate-level principles of SAM and overall corporate strategy. The time span of the management horizon at this level is from a few days to one year.

The literature of account management includes some illustrative examples of activities included in annual account plans and proposes general annual account management templates (McDonald and Woodburn 2011). An important part of strategic account management is the development of an account-specific annual plan by the account manager and their team that responds to the circumstances of the coming year. Since the accounts as well as the operating environments differ significantly, annual plans should also be very different.

An annual account management plan includes the same basic elements as any short-term action plan, such as objectives, activities, timetable, person/people responsible, costs and performance metrics. Account-specific operational objectives typically relate to sales volume, margin, new products and services sold to the customer, share of customer's total purchases in certain product or service categories, new product and services developed for the customer, learning, becoming a preferred supplier and enhancement of the supplier's image for reference purposes (Ojasalo 2001). Moreover, the annual plan may include a systematic plan to engage executives of the selling company to meet personally representatives from the account organization. A programme that involves top executives in the account management process may have a significant impact on sales growth (Senn 2006). The annual account plan also includes the account-specific budget, but it is a larger concept than just the budget. Account planning is especially concerned with identifying what and to whom sales need to be made (McDonald and Woodburn 2011).

Operational-level actions of SAM can be classified into two categories: those resulting in company-level benefits to the account organization and those resulting in individual-level benefits to the key individual in the account organization (Ojasalo 2001). Company-level benefits refer to those benefits which contribute to the customer company's organizational goals and wellbeing in a holistic sense. Individual-level benefits refer to the benefits which the individual perceives will contribute to their own wellbeing. In the case of individual-level benefits, the focus is on the individual(s) in the customer company who is/are the key decision-makers in the relationship. The following aspects are relevant when planning operational-level SAM activities providing company-level benefits:

  • How could products/services be customized for the account?
  • How could information exchange with the account be improved?
  • How could relationship routines be improved?
  • How could the organizational structure be improved to better meet the account's requirements?
  • What factors make the selling company trustworthy in the eyes of the account and how could these factors be enhanced?
  • What are the effective mechanisms and measures for controlling and securing the achievement of relationship goals?

The following aspects are relevant for individual-level benefits:

  • How could the ease of the job and interaction with key individual(s) in the account organization be facilitated?
  • What kind of social interaction styles are appreciated by the key individual(s)?
  • What kind of informal social contacts and events would help in building and enhancing a friendship?
  • Is there something that the key individual(s) would appreciate and that could easily be offered in terms of normal and accepted business ethics?

Organizational fragmentation and insufficient communication channels within the company, its departments, experts and subgroups cause problems in relation to internal knowledge transfer (Natti et al. 2006). The annual-level plan should include review of the operational activity during the year, as well as measures for how to learn from it. Internal knowledge transfer is vital to transform account-specific learnings into improvement at corporate, relationship and annual-level SAM.

Conclusions and research implications

The theoretical implications of this paper relate to the identification of three relevant management levels of SAM as well as the main processes at these levels. So far, the research literature has discussed the various SAM processes, but the big picture has been very unorganized and fragmented. The three-level framework contributes by showing how the different SAM processes are hierarchically subordinated to each other and the time spans of process cycles of different processes: some of them are longer and one-time processes, others are shorter and frequently repeated. The practical implication of this paper is the proposed framework of SAM processes at three levels, which not only gives a list of SAM processes but also demonstrates the hierarchical order in which these processes have to be tackled if the company is interested in introducing a systematic SAM approach in its organization. Moreover, as it maps the relevant SAM processes at different management levels and illustrates their hierarchy, it also shows that successful SAM is the effort of the whole organization and all its levels. Instead of just saying ‘top management's support is required’ or ‘cross-functional cooperation is important’, it shows that the success of front-line operational processes at the customer interface is strongly dependent on the success of corporation-wide and general processes.

This paper proposed a framework of SAM processes at the corporate, relationship and annual level. Processes at corporate-level SAM relate to establishing the corporate-wide grounding for SAM in the company. The time span of the management horizon at this level is the lifetime of the SAM programme in the corporation, which is typically decades. The central processes of this level are: decision-making on possible adoption of a SAM philosophy, top-level support and sponsorship of the SAM programme, decision-making on the nature of the SAM programme, development of company-wide general principles of SAM, maintenance and improvement of the SAM programme, and possible abandonment of the SAM programme. Processes at relationship-level SAM relate to relationship management with a certain strategic account. The time span of the management horizon of this level is the lifetime of the particular customer relationship, which is typically several years or decades. The key processes of this level are: adjustment of SAM in different phases of the customer relationship, development of value propositions, selection of the account manager, establishment and management of the account team, boundary spanning, communication management, conflict management and dissolving the relationship. Processes at annual-level SAM involve operational and everyday serving of the account and the time span of the management horizon is from a few days to one year. The main processes of this level are: annual planning of account-specific action plans, including objectives, activities, timetable, person/people responsible, and performance metrics, annual account-specific budgeting, execution of the action plan, consideration of both company- and individual-level customer benefits, control, and learning and knowledge transfer.

The following suggestions for further research stem from this paper. First, the traditional BPM/BPE (business process management/business process engineering or re-engineering) approach is not enough for understanding and developing SAM processes. Examining SAM just in terms of the process engineering philosophy gives an over-mechanistic and technical view to SAM. This is because SAM requires lots of aspects related to people and strategic management, such as leadership, entrepreneurial, political and communications skills. However, combining SAM and BPM/BPE theories has the potential to function as a fruitful starting point in examining more efficient and effective SAM processes.

Second, a business process crossing departmental lines in the organization represents a greater challenge for process management. A process crossing hierarchical layers of the organization is also challenging to manage, particularly if the process owner, in other words the person in charge of the process, is at a lower hierarchical level. Indeed, more research is needed to explore how to improve the management of SAM processes crossing departmental and hierarchical levels.

Third, the use of social media is increasingly important in managing consumer and brand relationships, and this has been widely understood. Still, so far, hardly any knowledge exists of the role and application of social media in SAM, so more research is needed in this field. Fourth, the literature includes knowledge of both evolution of relationships and value propositions in business markets. So it would be an interesting starting point for further research to examine strategies and practices for dynamic shaping of value propositions during relationship evolution. Fifth, understanding customer needs is the basis for long-term and mutually beneficial account relationships, and this includes understanding existing and future needs as well as explicit and latent needs. Simple annual customer satisfaction surveys and project feedback meetings are not enough if the selling company wants to deliver world-class quality. Better methods are required for needs analysis of strategic accounts. The use and application of new co-creation approaches in the context of SAM also clearly requires more research.

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