Feature - How to be a SUPERSELLER

Try this riddle: what's the difference between a one-off customer and selling. a strategic customer? The answer's not funny, just profitable. It's this: look at a one-off customer and you're looking at this year's sales target; look at a strategic customer and you're looking at this year's, next year's and the year after that.

It's as simple as this: strategic customers are the future. That's why the most successful IT companies seek to build long-term relationships.

But there's a problem. Although many IT companies win as much as 70% of their revenues from strategic customers - some more - only a minority are really successful at building long-term strategic customer relationships.

Two frightening statistics tell the story. Only one out of every six IT companies (16%) makes as much profit as it could from its strategic customers. Only one in seven (13%) reaps good all-round strategic customer benefits, such as increasing market share, generating growth and improving customer satisfaction.

These figures come from a new study of 194 companies published in a management report called Developing Strategic Customers & Key Accounts ... the Critical Success Factors. In each of the companies, researchers led by management consultant John Hurcomb looked at 108 factors that could play some part in developing and managing strategic customers.

The research shows that a high-performance breed of 'supersellers' are vastly more effective at tackling a whole agenda of business activities and issues than their less successful competitors, 'the laggards'.

It seems supersellers are more effective at:

- choosing strategic customers

- growing key account business

- harnessing the full power of the management team in dealing with strategic customers

- locking out the competition

- using new technologies to develop key account relationships

- harvesting a wider range of benefits from their strategic accounts

All this needs to be seen in the light of a key change in the rules of engagement between suppliers and customers. Hurcomb says: "Today, the customer makes the rules. The challenge for suppliers is to moderate the customer's power by constantly adding value to its business and earning the right to influence buying in the long term."

The picture that emerges is one that should set alarm bells ringing in IT companies. Quite simply, the supersellers outstrip not only the laggards but also average performing companies by wide margins in almost every activity.

Develop the relationship

Take management involvement with strategic customers and key accounts. When it comes to forging profitable links with customers, some marketing people argue that personal relationships are far less important than they used to be. But the research shows that supersellers are three times more likely to involve their managing directors in developing strategic customers than the laggards.

Even with the full energy of the management team harnessed and pulling in the same direction, the research suggests it is still critical to select strategic customers and key accounts carefully. For example, reasons for developing strategic customers could include penetrating new or existing markets, enhancing capabilities or reducing cost of sales.

The report shows how supersellers score across a whole range of customer selection issues, then moves on to look at how the best also grow strategic customer business.

Hurcomb says: "This produced one of the most fascinating insights of the study. We found that supersellers concentrate far more on the specifics of successful relationships, while the least effective are still thinking in terms of generalisations."

A good example of this is the concept of 'partnering'. Hurcomb explains: "Most supersellers hardly mention it.

They are past the talk and into operating successful partnerships already.

Least successful companies still theorise about how partnerships could be more successful than their present mode of operation."

Lock out the competition

One area where supersellers score particularly heavily over both average and laggard companies is on 'locking out' the competition. Researchers investigated the effectiveness of each company at 17 critical competitive lockout activities.

These included familiar issues such as structuring and renewal of the contract, as well as more subtle concepts such as providing value-added services or adopting a pricing strategy with a customer lifetime view.

Researchers divided the 194 companies into octiles based on best-to-worst performance, then analysed the average number of competitive lockout activities the companies in each octile performed 'very effectively'. The supersellers averaged 11 'very effective' activities while the worst - in the bottom octile - managed none.

Hurcomb says: "It is no exaggeration to say that every contact you make and every transaction you process for your strategic customers, directly or indirectly affects your ability to keep the customer in and lock out competitors."

Use CRM to reshape sales

But how can all this work in practice? IBM's customer relationship management strategy (CRM) is one of the case studies explored in detail in the report. According to an internal IBM white paper: 'The purpose of CRM is to reshape the sales, service and support processes executed by IBM's customer contact personnel (employees and business partners) and the staffs that support them.'

IBM looks on CRM as a 'pipeline' with opportunities coming in one end and business results - such as revenue, profits and increased customer satisfaction - pouring out the other. There are four linked activities in the pipeline:

- Selecting markets and acquiring or building solutions to offer to those markets

- Planning and delivering messages about what IBM has to offer to existing or prospective groups of customers

- Selecting promising opportunities to bid for new business

- Bidding for business and - if it's won - delivering the solution

CRM focuses on engaging customers through the 'right relationship' - one that meets both the customers' and IBM's needs. For example, even within a single customer company, there may be people who have different needs. It may be necessary to communicate with some through direct marketing techniques, some face-to-face and others by e-commerce through the Internet. Not surprisingly, face-to-face resources are focused on those customers who provide the best return.

IBM generates a large amount of revenue from lots of individual, relatively small customers - small enterprises or departments of big customers. Treating these smaller customers as 'sets' makes it cost effective to develop and provide support - common tools to support customers with common needs.

This all becomes easier to do because CRM's framework, processes and underlying principles are the same, whatever the size or significance of the customer. The difference is in how each process is used with each customer.

As Ken Withers, UK CRM deployment manager, explains: "It's complicated, difficult to do and totally dependent upon us having common processes, tools and data architectures. Having those in place and getting them implemented is the basis.

"Once you've got that, you can build measurement systems, and then the management systems that use information from the measurement systems - and make better decisions."

Looking to the future, Hurcomb says that a whole agenda of new issues could impact on the way IT companies develop strategic customers. Key issues explored in Hurcomb's report include the growth in partnering, the spread of e-commerce, the development of strategic alliances and the impact of the euro.

Hurcomb adds: "There are few companies that can't improve the business benefits they win from strategic customers. Most need to understand the key issues that can make a difference, then focus on them with laser-beam precision."

More information and a brochure, entitled Developing Strategic Customers & Key Accounts ...the Critical Success Factors (price £3.95), is available from:

Policy Publications

4 The Crescent, Bedford MK40 2RU

Contact: 01234 328448

Email: policypubs@kbnet.co.uk

TOP 10 IT SUPERSELLER TIPS

- Offer value-added services. Use your knowledge of the customer to develop specific services that match needs competitors can't know about.

- Improve product/service quality. Constantly raise the bar over which competitors must jump

- Build and nurture working relationships. Supersellers build peer-to-peer relationships at every level between themselves and the key account

- Be easy to do business with. Make it easy for the customer to place an order, ask a question, change a delivery time

- Treat the customer as a partner. Break down the traditional customer versus supplier thinking that fosters confrontational attitudes

- Provide fast-track complaint resolution. When something goes wrong, put it right - fast

- Anticipate special requirements. Supersellers often know what their strategic customers are going to need even before they know themselves

- Integrate management activity with customers. Provide access to your databases, use electronic commerce to exchange information

- Carry out joint planning/promotion activities. Help your customer sell to its customers - and boost your own business

- Structure and renew contracts. Don't forget that strategic customers need contracts, too. Take a lifetime view of the value you gain from the customer when you draw up contracts.

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