Designing an effective strategic account management organization

This article was first published in the fall of 2022 in SAMA’s Velocity Magazine. It’s based on a panel discussion from the 2021 SAMA Annual Conference. The session was moderated by Mike Moorman, SAMA board member and SAM practice area leader, ZS. The panelists were Hajo Rapp, SVP Strategic Account Management & Sales Excellence, TÜV SÜD AG, and Teresa Cook, Vice President Strategy & Transformation, Integrated Accounts, IBM. Panelists’ remarks have been lightly edited for clarity and length.

To determine the best design for your strategic account man­agement (SAM) program, leaders must consider an ever-widening set of organizational design decisions. When focusing on the SAM role itself, there are several considerations when deciding how the SAM is expected to represent the company and engage with the customer. At the same time, it is best to think of designing your organization like the way you would build a sports franchise. Rather than focus solely on the individual SAM role, you must comprehensively consider the other customer-facing roles and cross-functional teams that surround the SAM or key account management (KAM) program. This article will offer a general framework for designing an organizational model tailored to the company’s needs and objectives, as well as examples of how two dramatically different companies, TÜV SÜD AG and IBM, have applied these principles.

There are five key elements of a SAM program design that need to be considered. These elements include the SAM leadership board(s), extended strategic account team members, the SAM program office or center of excellence, the cross-functional support teams and, of course, the SAM role itself. It is important to remember that whereas the strategic account manager plays an important role within organizations, strategic account management is more than just a role. As Mike Moorman has stated: “SAM is a cross-functional, organization-wide business strategy.”

As you consider how to design your organization, the first question to ask is how you are defining the SAM role. Mike Moorman said: “There is no universal naming convention for SAMs, and a multitude of role design options are possible. Form must follow function.”

You’ll hear an array of SAM-related titles used from one organization to the next, including strategic account manager, key account manager, global account manager, client director, enterprise account manager and many others, with varying role descrip­tions for any one title. There is no one model that is right for all organizations. In general, SAM roles can be specialized by account type, portfolio responsibility, engagement activities or geography. This leads to a diverse range of possible models: SAMs that are specialized by industry or by “tier” of strategic accounts, SAMs that represent the full enterprise versus select lines of business, SAMs that own the full sales process versus opportunity identification and then hand-off to specialists, SAMs that have global versus regional responsibility, and many other permutations, including the possibility of multiple types within a single company. The SAM role design then affects other elements of organization design.

When you consider your customer-facing account team, it’s often cross-functional and composed of different roles and responsibilities depending on the organization. Account team members may include sales reps, technical specialists, market­ing, R&D, finance, customer service or others. Account team members can be fully dedicated to a single strategic account, assigned to multiple strategic accounts or generally deployed across a broad spectrum of strategic and non-strategic accounts. Another consideration is whether to include an executive spon­sor, and, if so, for which accounts. The executive sponsor serves as a deeply embedded team member with real commitments, not just a sounding board or steering committee member.

The SAM program office (or center of excellence) plays a central role in ensuring the company brings the best practices to strategic account management across the organization and that internal functions provide the necessary support required for high levels of SAM impact. Composition is cross-functional, with representation from every internal function critical to SAM success. Design varies from fully centralized to centrally orches­trated with sub-teams sitting in individual business units or geographies.

You should also consider the design of your cross-functional support teams and whether you need to reorganize or change roles and responsibilities across important functions. You may ask: Do we need strategic account-focused marketing roles, such as segment marketers or account-based marketers? Does human resources or training department need to change its organizational construct to better support SAM competency and learning and development? Does sales operations need to create analytics or reporting roles focused specifically on strategic accounts? Should the customer-service function have teams dedicated specifically to strategic accounts?

Some organizations also establish leadership boards, which comprise a group of senior executives who collectively own the strategy and accountability for organizational SAM success. This ensures strong executive engagement to drive the organization-wide alignment, commitment and resources necessary for SAM to succeed.

Finally, it’s critical to consider the underlying specifics of your customer-facing team and internal cross-functional operating model when designing the above five elements of your SAM organization. Role clarity and internal alignment are two of the most important success factors with SAM. You can ask the following questions to help clarify:

• What are the specific roles, responsibilities and authorities of each member of the customer-facing account team at each stage of the customer engagement process?
• Who is the primary point of contact for each type of decision maker, and what are the coordination expectations?
• What are the internal touch points, requirements and expecta­tions between account teams and internal functions?
• Who internally has which roles and responsibilities for sup­porting SAM?

Returning to the SAM role as part of the SAM team and organi­zation design, there are four dimensions around which you may design the role.

1. Account type. Specializing the SAM role based on industry is a common form of account type specialization. You may also consider other account type dimensions, including global versus regional, existing relationship versus prospect, ultra-high potential versus high potential and other account type variations specific to your situation.
2. Portfolio scope. You may also choose to differentiate SAMs according to their product responsibilities. This may be the enterprise-wide portfolio, the portfolio of a specific business unit (BU) or line of business or other variations. In larger companies, organizations may have one SAM role with enterprise-wide responsibility for the full portfolio working in combination with other SAM roles that focus on particular BUs or lines of business.
3. Engagement activity. You can design the SAM role around the activity or stages of the customer engagement process. For instance, in some organizations SAMs are responsible for every aspect of the customer engagement process, while in others they are responsible for opportunity identification before handing off to sales specialists who co-lead or lead the selling process from that point forward.
4. Geography. Geographic scope for SAMs may be global, regional, country-based or local, with the potential for combinations of SAMs with different geographic scopes sometimes collaborating on the same accounts.

These four dimensions lead to a multitude of ways to design the SAM role or roles within your organization. Your design decisions should be based on customer considerations including needs, buying processes and preferences, partnering orientation, and potential, as well as your company’s broader organization structure and strategic objectives.

To give some flavor to the diversity in strategic account management organization constructs, here are four examples of different organizational models in the marketplace.

SAM generalist. In this model, the SAM acts as a generalist. This model is common, especially in smaller organizations that do not have diverse product portfolios. In this model, SAMs own the sales process from end to end. For their assigned strategic accounts, they may have some form of a dotted-line coordination responsibility for, or oversight of, territory salespeople who are covering local entities of the account that may be geographically distant.

SAM specializing in select engagement phases. In this model, the SAM is a specialist rather than a generalist. The SAM focuses on the front end of the customer engagement process, around strategic planning and working with more senior execu­tives and stakeholders on opportunity identification. As the SAM identifies opportunities, the SAM brings in various teams of sales specialists to help further build out opportunities and solutions.

Hybrid SAM. In this organizational model, the SAM owns selling responsibility for select products but brings in specialists to drive the selling process for other products. This is a hybrid of the first two models. SAMs have a dual responsibility. Like generalists, they have end-to-end sales responsibility for at least one of the company’s major product categories. Like engagement process specialists, they engage and coordinate with sales specialists who lead the sales process for other products.

Enterprise and BU-specialized SAMs. This is also a hybrid model. Many large organizations are structured in this way, hav­ing an enterprise SAM function working in concert with BU-level SAM functions.

Hajo Rapp describes TÜV SÜD as a “service company with a strong footprint in product business.” TÜV SÜD operates in several regional markets, with SAMs responsible for organizing business across different countries with highly country-specific regulations. Most of TÜV SÜD’s top customers buy from more than one division and coordinate their buying behavior. Based on that, TÜV SÜD sees clear economic advantages in having SAMs who can organize business with customers across BUs.

From 2012 to 2018, TÜV SÜD grew from 11 strategic accounts to more than 80. The company started with loosely connected account management approaches within single divisions and regions. From 2012 until 2017, headquarters defined new roles and responsibilities for its first 11 accounts and account teams. Accounts focused on cross-divisional service offerings, and setup was unified on a corporate level. Sixty account managers looked after these 80 accounts, some of whom were full-time and some semi-dedicated.

“Very often people think, ‘Okay, you’ve started an account management program, and three years later it’s done,’ ” Rapp said, reflecting on the need for program evaluation. “That’s not the case.”

Rapp emphasizes that to have an effective sales organization, you need to have consistent and transparent roles across divi­sions. At TÜV SÜD, these roles include:

• SAMs, who represent the organization in all sales and strategic activities. Responsibilities include analyzing and developing accounts, leading and motivating account teams and manag­ing executive relationships. The SAM is responsible for grow­ing sales and improving customer satisfaction while avoiding becoming a “bottleneck.”

Rapp described it like this: “You often hear, especially from the C-level, that the strategic account manager should know everything about the customer. I don’t think so. The strategic account manager should know the crucial things about the account.”

• Key account managers, who are either divisional or regional. They may be members of the SAM team depending on the setup and buying behavior of the customer. They work hand in hand on the same account as the SAMs but as a team member at a more local level.
• Executive sponsors, who are responsible for escalating con­tact with the customer and working internally to help the team understand the relevance of the customer, coach the SAM and use connections to eliminate internal hurdles.
• SAM VPs, who act as a supporting structure. At TÜV SÜD, the original 11 SAMs became the VPs and now coach the rest of their cohort on processes, structures and incentives. While each SAM VP owns a region, they are responsible for bringing inbound and outbound business to each other’s regions.

At TÜV SÜD, account segmentation is based on customer structure and buying behavior. It comprises three segments, which dictate the combination of TÜV SÜD resources assigned to it. These segments are:

• Small customers and flow business served by salespeople, some of whom are also in SAM teams.
• Regional and divisional accounts where KAMs work for one region or division. These accounts are served by cross-divisional managers and regional account teams. Each SAM manages, at most, five accounts.
• Strategic accounts managed by SAMs and executive sponsors. Executive sponsors globally steer the team, drive strategies and have contact with senior management at the customer. These strategic account managers represent all five divisions at TÜV SÜD.

Rapp said: “We believe that if an account manager has more than five accounts then they cannot know their customers or be a strategic developer of the business.”

Strategic accounts at TÜV SÜD are selected based on four key criteria. The company sources information on these criteria from existing relationships, information available on the internet for public companies and benchmarking. Then, on a regular basis, the program office reviews existing accounts to determine if its roster needs to be adjusted.

Key criteria:

Total relevant customer potential

- What is the size potential of the customer?

Probability of success

- Are there synergies based on the customer’s buying behavior?

- Is there a cultural fit?

- Do we have a relevant value proposition?

Fit with service portfolio in respective geographies

- Does the current service portfolio and regional setup fit the customer setup?

- Is there cross-selling potential across divisions and regions?

Attractiveness of customer industry and fit within the TÜV SÜD strategy

- How closely are customers connected to competitors?

- Is there a threat of substitutes?

- What is future market growth?

- Is there a fit with the overall strategic direction of the organization?

Teresa Cook describes IBM as being in the business of “strategic technology.” At its core, IBM’s go-to-market strategy centers around its clients’ and partners’ success. This evolved naturally and aligns with IBM’s open hybrid cloud platform and AI strategy.

Clients are at the center of the strategic account management model design at IBM. Cook explains that “the amount of revenue does not make an account strategic. Instead, the synergy between the vendor and the client makes the account strategic.” She emphasizes the importance of five critical factors that have influenced the design of IBM’s model.

1. The relationship is vital to long-term business relations.

• Understand your client’s broader set of decision-makers and influencers.
• Know your client’s culture.
• Know your client inside and out and understand pain points.

“All customers are valuable,” Cook noted, “but not all customers can be a key account. As you decide which clients you really want to support and align your account management strategy to, you’ve got to think about the relationships.”

2. Leverage the ecosystem and make sure you match your clients’ partners.

• Embrace and understand all different partner communities, including independent software vendors, global system integrators and strategic alliances.

3. Wallet size and wallet share are important.

• Understand percentage of spend.
• Understand the sales cycle.
• Determine how much your client is prepared to invest in the relationship.

4. Perform comprehensive buying center analysis.

• Understand decision-making units within your client and who owns business buying decisions.

5. Keep the management system simple.

• If you don’t, you will become too internally focused and lose the connection to your client.

By clearly defining its mission and strategy, IBM was able to launch a simplified, modern go-to-market model. The model developed in response to customers’ needs. Cook said, reflecting, “They wanted the agile, collaborative, innovative, fun, teaming experiences, but with deep technical expertise.” The new IBM model offers:

• A single, consistent segmentation for all clients across software, cloud, systems and services
• More technical, hands-on and responsive service across all phases of the client journey
• A “garage” concept that brings the best of IBM and the client together in an orchestrated way to work through key problems
• Coverage for both integrated and global accounts and more local and geography-based accounts

Cook said the model is designed to bring more technical expertise closer to the client. “It’s really technology focused and industry led,” she said. “It allows our clients to experience us in a highly engaging and experiential way, both digitally and through our IBM technology garage sessions.”

SAMs have to be able to partner and team with others or risk opening the company up to a lot of competition and not providing the client with what they really want. “We need far more savvy strategic account managers,” Cook noted. “It’s no longer just about product knowledge. You have to have account managers who can really orchestrate the capabilities.”

Managing director is a very strategic role that manages inte­grated accounts. They are senior business and sales leaders with incredible industry insight and leadership and problem-solving ability. They are focused on transformational relationships.

Senior vice president partnership executives are assigned to integrated accounts because of the time and subject matter expertise that may be needed.

Industry academy advisor is a deep industry expert in the specific field who understands the architectural models, the behaviors and the market trends.

When designing their organizations, Cook and Rapp shared their lessons learned.

Beware of selecting accounts based on size. Rapp said: “The big accounts are not necessarily the most strategic. We select the ones that are interesting, growing and profitable.”

Keep it simple. Cook said: “Simplifying has helped us a lot, not just with a management system, but with a go-to-market model. Previously at IBM, we’ve had 50 different customer groupings. Now we have a single, consistent segmentation for all our IBM clients across software, cloud, systems and service. When you simplify, not only do you have happier clients, but you have a happier workforce, too.”

Designing your SAM organization takes time and patience. Rapp said: “At TÜV SÜD, everybody knows and understands the SAM role and has an idea of what to expect from the SAMs, and the SAMs know what to expect from the organization. It takes some time though for the strategic account manager to know what to expect from the organization.”

The ecosystem is critical when working with your clients. Cook said: “We have one ecosystem mission. It’s a part of our go-to-market model, which ensures that SAMs can deliver the value your client is wanting and choosing.”

Leadership should motivate and inspire. Cook said: “We know that change doesn’t always happen from the top, but it has to be supported. Changing IBM’s go-to-market model was no small feat. It was really important that we grounded people in the true business values that for one hundred-plus years we have been known for.”

Invest in your program office. Rapp said: “The unified account setup at TÜV SÜD is really about the program office that brought it all together with one set of methodologies and tools, and the 11 original account managers who coach the new account managers.”

Empathy is critical. Cook said: “During the pandemic, we all had a tremendous amount of churn and change. Everybody around the world was impacted. It taught us the importance of empathy. You have to understand how people are feeling, how you might engage and maintain a relationship. You have to ask for feedback, be curious, ask questions and always have empathy because, at the end of the day, we’re all going to have good days and bad days.”

Nothing is static, so look forward. Cook said: “The one thing we can be sure of is change. There will always be areas to improve, to progress, to evolve. Stay innovative, stay curious, stay agile and, most importantly, stay engaged.”

Coaching is key. Rapp said: “TÜV SÜD went from 11 to 80 accounts, scaling up very rapidly. We used the original 11 strategic account managers as coaches for the additional ones. So, we then had a global network of coaches, each of them spending about 80% of their time coaching roughly 10 to 15 of the others, just based on their experiences and learnings from the years before.”

Relationship mapping is critical. Cook said: “No longer do you have a small group of leaders who’ve made all of the historical buying decisions within a company. You have to identify and understand that there are a broader set of decision-makers and influencers. If you don’t understand those key decision makers, you will miss your buying opportunity.”

Once you have developed an organizational model that makes sense, you can get to work on developing and putting in place good program management best practices including:

• Leading, lagging and voice-of-customer metrics and reporting
• Account planning, management and collaboration, processes and tools
• Account-based marketing processes, tools and enablers
• Compensation plans and administration systems
• Competency models and people selection and hiring
• Training, coaching and apprenticeship learning journeys

When it all comes together, the real test will be how your new agile, resilient and successful SAM organization can adapt to the ever-changing market and position your company to be seen as a trusted advisor by your strategic accounts.