Subscribe Did a colleague forward this newsletter? Sign up to receive your own copy You can order Marketplace Masters from Barnes & Noble, Amazon, or your favorite online bookseller. For bulk sales please contact CEO-READ. News & Events CMO Magazine article Perception is Reality, June 2005 National Society for Professional Engineers Annual Convention Marketplace Masters: Competing to Win July 8, 2005, Chicago  details Institute of Management and Administration (IOMA) Principal's Report, Data Mining CEO Refresher article Beauty is Only Skin Deep: Does Your Firm Truly Embrace Differentiation? Recent Issues Investing in Account Management (May 2005) Harness Your Firm's Personality to Compete More Effectively (Apr 2005) What is Your Firm's Cultural DNA? (Mar 2005)

The Marketplace Master^TM is a monthly email publication on professional service marketing from Expertise Marketing, LLC.

Welcome

In May we discussed our research on account management in professional service firms (PSFs). This month we’re following it up with a second part on some of the account management initiatives that innovative firms are using to drive revenues, profitability and competitive advantage.

We’re pleased to offer additional insight from Sallie Sherman, an expert on strategic customer management, on how her consulting firm applies its strategic account management methodologies to achieve its own growth goals. Sallie is the president of S4 Consulting and co-author of The Seven Keys to Managing Strategic Accounts.

If you'd like to take a detour and revisit the topic of client perception research, see my article in the June 2005 CMO Magazine, Perception is Reality.

Suzanne Lowe
Author, Marketplace Masters: How Professional Service Firms Compete to Win
President, Expertise Marketing, LLC

Mastering Professional Service Firm Account Management

Often misunderstood, account management is an activity that, when done right, can be integral part of the way you market, manage – and grow – your firm.

The May issue of The Marketplace Master gives several examples of how firms misunderstand account management. These firms aren’t necessarily doing anything wrong; it’s just that they aren’t doing enough that is right. And they may be labeling activities “account management,” when in fact they are not.

Because account management is destined to become increasingly integral to the way a firm manages and markets itself, it’s important to understand not only what it means, but how doing it right can make a difference in a professional service firm’s success in retaining clients and growing value-added relationships.

Sallie Sherman, co-author of The Seven Keys to Managing Strategic Accounts (McGraw- Hill, 2003) defines account management as “a systematic process for managing key interactions and relationships with critical accounts.” Account management is more than one or two personal relationships; it’s about the whole account. “Most people think it’s about smoothing,” says Sherman. “Actually, account management is about aligning the people and the structure of each organization so that you can create value.”

The structure, or infrastructure, includes how an account plan is done, how the group is organized, how people are compensated, how profits are developed to make sure the information gets deep within the organization, and how you set up measurements.

Sherman points out that there is much confusion between strategic account management and key account selling. While key account selling may be part of strategic account management, they are not the same thing. Key account selling programs are not as likely as account management programs to involve of a broad, cross-functional team. Other major differences are that key account selling programs have shorter planning horizons, measure success by revenue rather than profits, and focus more on competition than the account’s business challenges. The Seven Keys to Managing Strategic Accounts includes a detailed comparison chart of the two kinds of programs.

Taking Account Management Farther

After conducting research with hundreds of professional service firms, we’ve identified several focus areas that can help firms take account management farther.

Think deep thoughts – No, we’re not suggesting meditation, not that it would hurt! We’re talking about thinking more strategically about account planning and client relationship management.

Unbelievably, there are many firms that have no idea who their best clients are. Just last week I heard about a law firm that, to this day, has never compiled a firm-wide list of its highest revenue clients. Although “revenue” may be an overly simplistic measure to evaluate the value of these clients to the firm (sometimes the biggest clients are not the best clients!), this law firm does its equity owners a disservice by not thinking astutely enough about the relative importance of its client relationships. Too many firms rush to serve clients equally, without first mapping out the criteria for identifying their ideal clients. Instead, they should plan and invest in clients that support the strategic goals of the firm. .

Strike a balance –Think about both the internal and external perspectives of account planning and client relationship management. The best account planning occurs when considering the external context of the marketplace. For example, how are your firm’s chosen market segments growing and how does that affect your firm? How does your competition influence your firm, and how will decisions your firm makes influence the competition?

Balance this external focus with an internal account planning perspective: by asking how your firm’s culture will influence its account management. Will your people take the steps needed in order to manage accounts effectively (and beyond lip service)? Will you reward them properly to attend to client relationships successfully (and utilizing the firm’s processes and protocols in order to do so)? Should there be training? Internal processes that support account management?

Inform – By doing an account planning exercise first, your firm will be better informed about managing its relationship with clients. It’s not simply a matter of communicating between your firm’s team members and the client’s key team members; it’s having a more sophisticated understanding and mapping of the client’s business issues, opportunities and goals, and the relative value your firm brings in addressing those issues.

Use technology wisely – there is no shortage of software applications to help firms manage their client relationships. But no application is a substitute for a relationship management strategy – only human brains can do that. Let the software illuminate your strategy, not drive it.

To maximize a well-designed, well-executed strategic account management program, Sherman also recommends that firms:

• Create a plan with a cross-functional team. Use the ideas of others on the team to co-create greater value for the client.
  
  
• Clearly communicate the plan both internally and externally.
  
  
• Be able to quantify and articulate the value you create and provide. Naturally, as Sherman points out, it’s easier to quantify value if the work is tangible. Some clients don’t have the accounting infrastructure to allow you to capture the value, so you need to explore different ways to quantify it.

Use Account Management for a Competitive Advantage

Effective account management requires a more competitively astute “deep dive” into the inner workings of a client. Professional service firms will find that it requires organizational collaboration, visionary leadership, planning, resource investment, communication and measurement. The potential payoff – being more competitive and realizing your firm’s own strategic goals –makes it a must-do toward achieving marketplace mastery.

Take the confidential, web-based Marketplace Masters professional service firm differentiation assessment test for instant feedback on whether your firm is doing differentiation right.

Your feedback is important to us. Please contact us with your comments and questions.

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