National Accounts — How Do You Create a Program That Really Works?
This article is intended to help everyone gain a better understanding of National Accounts Programs, including the motivation for creating one and the steps toward a successful process. While it is not intended to definitively answer every question regarding national accounts, it serves as a set of guiding principles for those in the company who are responsible for the success of the program. It is written for salespeople, branch managers and national account representatives, not the company’s executive management team. However, keep in mind that executive management needs to be committed to the program and would benefit by understanding the process and concepts.
Regain Power by Offering Competitive Advantage
National accounts, by definition, have significant size and buying power which provide leverage in demanding lower prices. In addition, because of their complexity and demographics, they are often more difficult and expensive to service. Consequently, most national accounts are the least profitable.
In response, you need to make a concentrated effort to effectively rebalance the shift of power by offering significant competitive advantages that make your products and services more critical to your national accounts. Without creating competitive advantage, you will be tied to the downward price spiral that eats margin and effectively negates any understanding by your customers that “price is not the same as cost.” A structured national accounts program with definitive guidelines is the first step toward gaining competitive advantage.
There are four basic broad categories of added value that create competitive advantage:
1. Processes that streamline your customers’ productivity, improve quality, take transaction costs out of the supply chain and provide measurable savings (unrelated to price).
2. Administrative and technical support that can reduce your customers’ internal costs enough to affect bottom line operating costs.
3. Sales and marketing support that can increase your customers’ top line.
4. Technology that is core to your customers’ business results, yet is beyond their internal capabilities.
Your national accounts program should refocus your efforts on all of these issues.
Four Fundamentals
The ultimate success of a national accounts program depends on the hard work and team participation of all company employees involved in the process.
There are four basic fundamentals of success in any national accounts program:
1. Knowledge – Study the internal processes of your company and/or the internal workings of your national accounts program if you already have one in place.
2. Understanding – Research the business environment in which your company operates and the resulting defined objectives for a national accounts program.
3. Clarity – Identify the big picture of market and customer demand and direction. This should be a true understanding of what your corporation is trying to accomplish in total.
4. Commitment – Secure the commitment of your entire company.
Knowledge
It is essential to outline the objectives of your program, the process involved, and the direction to take in order to receive help and support when necessary. If you have no program in effect, it is critical to develop this process.
Second, activity measurement and open communication (both up and down the chain of command) are absolutely critical for success. Accountability is an absolute necessity and it must be clearly defined. Support from your company’s information management system can provide the fundamental elements of success for the national accounts program. A weak information system could leave dangerous voids or even misrepresent the true picture of the national accounts program.
Understanding
Understanding brings the field view (external view) closer to corporate headquarters. An internal company survey may provide the necessary clarity as to how a national accounts program is perceived. Input from local account representatives and branch managers is very important. Your company needs to explore how things are being done and how an existing program is perceived. Most importantly, input from the field with recommendations is essential. If you currently have no program, the survey is even more critical to the initial development stage of a new program.
Understanding actual needs of the national account is also critical to the success of your program. To get a better understanding, ask the following questions:
o What do national account types really value?
o What motivates our suppliers to negotiate special terms for these accounts?
o Do these accounts view our company as partners?
o What do we know about their business?
o Are we truly the primary source of supply?
o Can we create a win-win situation?
Clarity
Everyone must have a clear understanding of exactly what you are trying to accomplish. Recognizing the volatility of the environment is a valuable piece of the puzzle. Your company needs to catch up to the pace of change within the distribution industry to maintain competitive advantage. Remember, “Perceived value drives expectations” and “Performance value drives customer satisfaction.”
Raise your customers’ perceived value high enough and you create “competitive advantage” which is the first step towards rebalancing the shift of power inherent in any national accounts program.
While the knowledge aspect of the national accounts program is heavily weighted toward internal perspective, clarity needs to be weighted toward your external environment. You must be clearly aware of market dynamics, including technology and other external forces shaping your particular industry and driving behavior of the national accounts customers. You must evaluate events and trends using an anticipatory perspective in relationship to your competition. You need to ask yourself these questions:
o How is the industry different today regarding what is expected from a national accounts program?
o What will be considered by 2007?
o What are our competitors doing in serving national accounts?
o What technologies offer the most potential, both as products and tools?
o What actions are our competitors taking to gain advantage?
o How will our suppliers react to our strategy?
Commitment
A National Accounts Program cannot be treated like a member of the “flavor of the month” club. Everyone needs to take it seriously. Commitment is required by everyone. This is not something you dabble in. That is why it is important to put the time and attention into the planning process before getting wet. Understand your objectives.
The only reason a company should embark on a national accounts program is to obtain sales and market share that in total is profitable for the company and meets the criteria of corporate strategic objectives.
The corporate objectives of the national accounts program may be outlined as follows:
o Develop a national presence in the marketplace
o Enhance the company image and credibility
o Develop impressive client references
o Support growth with preferred vendors
o Create synergy with the corporate mission statement
o Rebalance the shift of power and profitability in the national account program
One of the core problems facing many national accounts programs is the need to overlay a centralized sales function on an established decentralized sales force. In the past, your processes and systems may not have enabled customers, prospects, or even your own field sales representatives to make informed, favorable decisions.
How Do We Get Started?
Step 1: Define the Players
Clearly define independent responsibilities of each player contributing to the success of the national accounts program.
Director of National Accounts
o Serves as liaison with national account at corporate level.
o Approves and helps establish “Rules of Engagement.”
o Provides support to local management.
o Monitors the activity between national account representatives and local branches.
o Determines qualification criteria. Reviews qualification process.
National Account Manager
o Supports/initiates implementation of national account program.
o Calls on national account corporate purchasing.
o Responds to issues and requests from the customer and company personnel.
o Meets and interacts with your customers’ top decision makers.
o Helps customers, even in areas unrelated to company products and service.
o Communicates effectively with local branch management and local account representatives.
Branch Manager
o Manages activity of local account representatives.
o Supports both corporate and local national account sales efforts
o Monitors national account activity, service level, and provides guidance to local account representative
o Reports progress.
o Interacts with Director of National Accounts on any and all national account issues.
Local Account Manager
o Manages consigned inventory
o Grows sales of non-contract items
o Interacts with national account manager
o Services account according to contract rules of engagement
o Provides Branch Manager with monthly status report.
Step 2: “The Tiger Team”
A tiger team is a select group of top-level employees, selected by executive management, who are committed to the objective of refining the development of the national accounts program. This team consists of the following personnel:
o Director of National Accounts
o Several national account representatives
o A regional manager
o Several local sales representatives
The tiger team should be split into two groups:
Group 1: Director of National Accounts
Several national account representatives
Group 2: Regional manager
Several local account representatives
With a two-day retreat as the setting, each group will separately establish the following during the first day: (This is a brainstorming session designed to cover any and all ideas.)
o Measurement criteria for individuals and accounts
o Priorities
o Action items
o Accountability
o Objectives
o Rules and responsibilities of all players
On the second day, the groups will merge and compare notes to establish a united refinement plan to go forward. This documented plan will be submitted to executive management for approval. Upon approval, it is highly recommended that the intent and objectives of the program be properly communicated to all employees. (E-mail rick@ceostrategist.com to get a sample national accounts program communication message.)
Then, a six-month audit should be conducted to follow-up on progress and action items. This should ensure the program is progressing and that objectives are met. (E-mail rick@ceostrategist.com if you would like a suggested listing of qualification procedures.)
Step 3: Communication
Establish communication processes and trust-building techniques for existing and prospective national accounts. Tips include:
o The sharing of relevant information will begin the trust building process. The company should take the lead.
o The beginning dialogue should focus on the long-term strategic initiatives of the respective companies. Understanding each other’s drivers, challenges and strategies will build the foundation for future communications.
o The customer needs analysis and account planning process are excellent vehicles to build trust and open communication.
o Customer and supplier executive interaction fosters trust and will have a cascading effect, driving both organizations toward more effective communication.
o The data and information to be shared should be identified in a cooperative environment. The focus should be on information that will lead to improvement and efficiencies for both the customer and the company.
o The capture, storage, retrieval and communication of information to be shared must be considered when building the infrastructure systems.
o The customer and your company’s national and local representation must develop the rollout plan jointly.
o Internal champions/coordinators of the rollout process must be identified and positioned by both the customer and the company.
o The plan should be developed and implemented using a team “project” approach. The ongoing monitoring and controlling activities should then be transitioned to others within the respective organizations.
o The rollout plan should address cultural, functional and training issues for both organizations.
The infrastructure system should have the ability to report information that is crucial to monitoring and controlling the ongoing application of these services.
Track the Process on the Web
It greatly enhances the communication process if national accounts programs are tracked on the web. As Akarin Weatherford, Chief Technology Officer of CEO Strategist LLC points out, this creates great opportunities to increase effectiveness within the organization:
o Communication channels widen as web application is leveraged to support the account management process. Collaborative tools allow managers, sales persons and account representatives to adequately share information between themselves about accounts.
o Managers can track and view the progress of sales persons and account representatives from anywhere with near 24×7 availability using a standard web browser from any PC or laptop connected to the Internet.
o A centralized web site to track the milestones within this process means that managers can capture a real-time picture of what is going on with the entire account management process and each individual account in order to make appropriate critical business decisions.
o Accountability and traceability for each manager and sales representative are established since all actions performed on a customer’s account are recorded by the web site.
Because of the distributed nature of national and local accounts, the best way to manage this process is through a web-based application. This means the following:
o No Need to Buy Special Computers or Software – Most managers, sales persons, and account representatives will already have what they need to participate: laptop/PC, web browser, and local internet service, meaning no long distance access charges (through AOL, Road Runner, AT&T, etc.).
o Information Technology Overhead Can be Cut – Maintain one software application at one location (on the server) rather than many software applications in many branch locations (on individual computers). If there are any updates to the web site, it occurs in one place and is automatically distributed to managers, sales persons, and account representatives the next time they connect to the site. You can shrink the IT staffing because the necessary support coverage is less.
Summary
The motivation and process for developing a national account program have now been outlined. As you go forward, remember these elements that will be critical to the program’s success:
o Gather All Input – A national accounts program involves many participants. It is not something you do to get customers. It is something you do with major national chains. The most successful national accounts programs have included executive and corporate input in combination with branch and local input. Most importantly, however, is the input of the customers themselves in the planning, implementation and measurement stage.
o Focus on the Process and Communicate Well – In a national accounts program the old cliché, “the plan is the sale” and “the sale is the plan” is clearly applicable. What is presented and sold to the national accounts are not only the results, but the process used to accomplish those results. Products, services, results, measurement and follow-up are individual elements in the national accounts program that guide and direct the process of the transactions and the relationship.
o Involve the Team – National accounts planning must be a team project. The program and the transactions it encompasses have to become the product of the company and each individual national account, including local account managers, branch managers and the national accounts team. Involvement of the executive staff is also critical to success.
o Build Measurement and Accountability into the Process – The measured results become benchmarks that are established in the plan. A national accounts program without measurement and accountability is deficient. Of course, two primary measurements are (1) profitability and (2) success in selling non-contract products. Other milestones may include geographic penetration, growth and product replacement.
