Insights

Growth Is A Project

Recently, we asked a procurement executive within a large communications equipment company to describe a supplier success story.  He responded, “You’ve focused on how I define my job – providing the blueprint for supplier success stories”.  While many strategic account managers find that procurement managers are rarely focused on supplier success, some of our most important guidelines about growing strategic account relationships have emerged from those customers who can offer insights from supplier success stories.

In essentially every case, the success stories told by the strategic account were accompanied by a success story told by the supplier – namely, that the end results involved growth in the business with the strategic account.  We have learned from the request to “describe a supplier success story” that supplier innovations are frequently the foundation for these success stories.[1] We frequently hear stories of supplier innovations that solved a perplexing technical challenge or that helped in merchandizing the strategic account’s product or that resulted in significant improvements in efficiency or productivity.  We have also learned that supplier success stories are prominent in virtually every type of supplier relationship.  Our query has produced success stories associated with subcontractors, major and minor ingredients suppliers, packaging suppliers, service providers, engineering firms, and business system suppliers.

The procurement executive cited above believed that his job was to draw the blueprint for success stories and growth, and the supplier’s job was to follow it.  The blueprint metaphor is a good one. Blueprints are typically associated with construction or engineering projects and our research clearly suggests that the most successful strategic account managers recognize that growth is a project.

Our research with strategic account relationships has identified four Tiers of such relationships, which we have labeled Supplier, Preferred Supplier, Extended Enterprise Member, and Partner[2].  We have found consistently that the fastest growth and the most stable relationships are associated with the higher Tier strategic accounts.  The three examples of growth projects described below reflect the nature of the challenges that exist at the various Tiers of strategic account relationships.

The Supplier Tier

The Supplier Tier involves traditional supplier->customer relationships – which are a major step up from NOT being a supplier.  At this Tier, the relationship is centered on price, product ‘specs,’ and service ‘specs’.  Standard processes and linkages between the supplier and the strategic account are evident at this Tier.  Formal contracts, with terms and conditions, define the transactions.  The supplier must re-win the business periodically at this Tier.

One case study involves a newly appointed strategic account manager who went through a careful assessment, along with others from her firm, of her firm’s relationship with a major customer.  Her goal was to assess how well her firm was doing in serving this customer.  What quickly became clear to her and her team was that they didn’t know the answer to this question.  In fact, they concluded that they didn’t even really know the right metrics to examine.

The growth project undertaken as a result of these insights focused on the relationship between the two organizations.  Significant efforts were made to build communications links between the two firms, to create involvement across additional functional organizations within the two firms, to establish clarity as to mutual goals and expectations, and to share information about plans and ideas.  This growth project uncovered some important issues that had not been addressed – issues that would have cost the supplier the relationship when the contract came up for renewal had they not been identified and resolved.

This case study involved a relationship at the Supplier Tier.  Such relationships are neither strong nor do they involve effective touch points between the two organizations.  The critical growth project at the Supplier Tier is therefore centered on building key relationship competencies[3].  The project that the strategic account manager faces at this stage of the relationship involves developing key dimensions of the relationship competency such as familiarity and knowledge.  In the case study described above, the growth project kept the supplier in the game, allowing the relationship to evolve and a positive history to be written.  While the growth project successfully avoided the disruption of a lost account, there was further project work required before this strategic account would become an engine of growth for this supplier.

We have found that the vast majority of business-to-business major customer relationships are at the Supplier Tier.  Two industry-leading suppliers in quite distinct markets, for example, determined that 64% and 72% of their major customers, respectively, were at the Supplier Tier.  Both firms found, in addition, that growth among customers at this Tier was somewhat below industry averages, with the occasional “lost customer” a major drag on growth averages among Supplier Tier customers.

The Preferred Supplier Tier

The Preferred Supplier Tier involves stable and consistent supplier relationships – reflecting a history of success in serving the strategic account.  At this Tier, the relationship is still centered on the supplier’s products and services and still involves standard processes and linkages.  There is, however, a high level of familiarity and trust between the supplier and the customer.  The customer counts on special treatment.  The supplier must re-win the business periodically at this level, but a ‘last look’ gives the supplier the opportunity to do so.

A second case study involves a strategic account relationship that was several years old.  The strategic account manager working with this customer eventually noted that the vast majority of his interactions were around shortages and delivery problems – and he had established a reputation for problem solving that was well known in both firms.  While this firm had a significant share of this customer’s business, this account manager was told by his counterpart within the customer’s strategic procurement organization that a deliberate decision had been made to maintain a second source of supply because of his firm’s delivery problems.

The growth project undertaken by this supplier involved solving this problem.  The first step of the project involved gaining a commitment from the strategic account to collaborate on the project.  The cross-functional project team that was assembled faced a tough task, requiring them to develop improved forecasting systems and ways to share information across multiple sites.  Over time, these efforts resulted in substantial reductions in the frequency of crisis situations involving shortages and delivery.  In the course of this growth project, the project teams from the two firms that were working together also identified several “better ways to do things” that yielded some meaningful cost savings once they were implemented.

In this second case study, the strategic account relationship was at the Preferred Supplier Tier.  The relationship was strong, and the supplier gained considerable insight from the messages provided by people in the customer’s organization.  When the supplier offered to step up to challenges defined by the strategic account, they found that the strategic account was a willing collaborator.  And, when the teams identified opportunities for improvement through new business systems or different ways of doing things, the team from the strategic account was willing to address these gains, knowing that their relationship with this supplier was not a transient one.

The critical growth project undertaken by the supplier in this second case study involved the implementation competency[4].  The supplier needed to prove that its business systems and processes were reliable, and that the strategic account could be confident that the supplier would help produce success stories and take their business to a higher level.

Our experience with business-to-business suppliers suggests that the Preferred Supplier Tier is attainable, but that it typically takes a multi-year growth project to reach that level.  The two suppliers mentioned earlier determined that 28% and 24% of their major customers were at the Preferred Supplier Tier.  All of the customer relationships at this Tier were at least three years old, and many had been in place for far longer.  Growth rates at this Tier were above industry averages for both of these suppliers, and there were a few spectacular successes realized as strategic account relationships doubled in size in short periods of time.

The Extended Enterprise Member and Partner Tiers

These two higher Tiers reflect the strongest strategic account relationships.  At the Extended Enterprise Member Tier, the supplier->customer relationship is complex and multi-dimensional.  The relationship typically involves a breadth of products and services and usually crosses numerous sites.  The relationship involves many collaborative dimensions – product design, inventory management, sales force training, etc.  Supplier and customer processes become quite intertwined at this level.  There is often implicit outsourcing of process responsibilities to the supplier.  The supplier is viewed as best in class in important areas by the customer, who counts upon the supplier to keep the team on top through active collaboration.  The business relationship is more typically reviewed than competed at this Tier.

At the Partner Tier, the supplier->customer relationship becomes an explicit long-term relationship.  More and more of the relationship is strategic in nature, with business plans and investment decisions discussed and linked.  The supplier is often viewed as key to the ongoing competitive position of the customer, who expects that the supplier will keep the team ahead of the competition.  The business relationship is rarely challenged at this level, as both the supplier and the customer treat it as something that is exclusive along some dimensions, critical along other dimensions, and, in general, special.

Our third growth project involves a strategic account considered to be the supplier’s “very best customer”.  The relationship was over a decade old and both firms had great confidence in the other.  This remarkable relationship was also one of the supplier’s fastest growing accounts.  The growth project that these two firms managed was growth planning.  Formally, the two firms collaborated to decide “what’s next” and to put action plans into place to take their businesses to a higher level.  Some of these plans were long-term plans, others were more short-term or opportunistic.  All of them were deliberate, emerging from a joint investment in understanding how the two firms could engineer new market successes.  The strategic account manager working with this customer reported his exciting challenge to keep on top of all the dimensions of this relationship.

In this third case study, the strategic account relationship was well on its way to the Partner Tier.  Processes and interactions between the two organizations were well established and accepted as natural.  The firms focus on the long term and the boundaries between the two firms are blurred, especially when they join together to address external opportunities and challenges.  The growth projects undertaken by firms at the higher Tiers are focused on ways to raise the bar, with innovation competencies[5] typically strong among suppliers who reach this Tier with their strategic account relationships.

Few strategic account relationships reach the Extended Enterprise Member Tier, and even fewer reach the Partner Tier.  Neither of the two suppliers cited earlier classified even 10% of their major customers at these higher Tiers.  Only one strategic account relationship within these two portfolios was at the Partner Tier.  The growth record of these higher Tier strategic accounts was impressive, solidly above industry averages in both cases.  This growth record is even more impressive considering the extraordinary market shares enjoyed by the suppliers with their higher Tier strategic account relationships.  One of these suppliers realized dramatic growth from two higher Tier accounts when these customers made major acquisitions and subsequently migrated purchases from competitors to them.

Starting on the Growth Project

The case studies described in this paper have focused on the strategic account relationship management process and on payoffs that can result from reaching successive Tiers.  Implicit in each of these case studies has been the strategic foundations for growth[6].  Our experience clearly points to the fact that success with strategic accounts requires “doing the right things…right”.  Identifying the right things through strategy is always difficult, but it is far more possible when well-managed relationships are moving towards the higher Tiers.  And, getting the payoff from an effective, customer-written strategy almost always requires the competencies that are associated with effective relationship management.

The growth project associated with each strategic account relationships is as challenging as any other project that a firm can undertake, and it can reward shareholders as effectively as any other project.  The experiences of best-in-class firms has shown that strategic account growth projects can yield results that reach from the top line to the bottom line of the income statement.

The growth project is not easy, and it requires skills, insights, and a sustained commitment.  Nonetheless, there is no question about the importance of taking on these challenges, as there is a clear mandate that emerges from the success stories told by the executives in your strategic accounts:  Get Started on the Growth Project.


[1] George F. Brown, Jr. and Atlee Valentine Pope, Solving the Business-to-Business Services Paradox, The AFSMI Professional Journal, September 2000 (Part I) and October 2000 (Part II).

[2] Atlee Valentine Pope and George F. Brown, Jr., Whatever Happened to Growth?, Velocity, Third Quarter 2001.  This article also describes a new research project being sponsored by Blue Canyon Partners, Inc. and the Strategic Accounts Management Association.  The SAMA web site, www.strategicaccounts.org, provides a set of tools that have been developed by Blue Canyon Partners to assess specific strategic account relationships and define the action plans most likely to result in growth.  Further information on the four Tiers of strategic account relationships and on key competencies associated with higher Tier relationships is available on this site.  Strategic account managers and teams are invited to participate in this project and take advantage of the tools and benchmark information available to them by visiting the SAMA web site.

[3] Blue Canyon has identified five key dimensions of the Relationship Competency:  Familiarity, Partnership, Knowledge, Commitment, and Sales Interactions.  Each dimension reflects numerous components of a supplier’s relationship with its strategic account.  The assessment tools available to participants in the Whatever Happened to Growth? project can compare their organization’s performance against benchmarks associated with the various Tiers of strategic account relationships.

[4] Blue Canyon has identified four additional dimensions relevant to the Implementation Competency:  Processes, Cadence, Linkages, and Best Practices.  Each dimension reflects numerous components of a supplier’s relationship with a strategic account, along with the dimensions of the Relationship Competency.  Implementation Competency strengths have the greatest impact on growth in strategic account relationships in which there has already been solid progress along the dimensions of the Relationship Competency.  The assessment tools available to Whatever Happened to Growth? project participants allow strategic account managers to benchmark their firm’s performance along these dimensions against norms established for relationships at the various Tiers.

[5] Blue Canyon has identified four additional dimensions of the Innovation Competency:  Timeliness, Creativity, Energy, and Breadth.  Once again, each dimension is complex and unique to each particular strategic account relationship.  Research suggests that the payoff from Innovation Competency strengths is greatest in relationships that have already progressed to higher performance levels on the Relationship Competency and the Implementation Competency.  Simply stated, strategic accounts must first build confidence in their supplier before they are willing to strongly reward innovation.  Strategic account managers can assess their firm’s performance along the various dimensions of the Innovation Competency through the Whatever Happened to Growth? project web site.

[6] George F. Brown, Jr. and Atlee Valentine Pope, A Blueprint for Success with Major Customers, Evanston, IL:  Blue Canyon Partners, Inc., © 1999.

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