How to Recover Strategic Account Relationships
by Joe Sperry, S4 Consulting
Firm-to-Firm Relationships
In our experience, almost every business-to-business supplier has co-destiny accounts, those firms that, if they decided to move elsewhere, would create gnashing of teeth, moaning, and suicidal thoughts on the executive levels. I’d like to offer a ten-step approach to recovering those account relationship—an approach that has been pretty successful for us. Along with the steps, I will provide some explanations, examples, and warnings. And I would love hear from people about any more detailed approaches or steps left out that you have used that do not appear on the steps or more detailed approaches. This is a rich area that can help many business-to-business firms.
Step One: Establish the Recovery team with a leader in position to commit the organization.
Your worst nightmare is suddenly made flesh: your single largest customer has sent you an ultimatum regarding your product/service/whatever. “Unless you improve X immediately, we will be picking out another supplier…” Our experience has been that huge customers seldom just leave a supplier. They understand that the two firms have developed ways of working together that will have to be redeveloped—at a cost of time and money--with another supplier. Besides, before this problem (whatever it is) things may have been going pretty well—and there’s a good chance that there are still many good relationships between the two firms.
I can’t stress enough that your recovery team needs a leader who can commit for your firm to the customer organization. The several times we have failed with this recovery process occurred when there was no team leader able to commit his/her organization to end the logjam between the two firms. And if you are conscientious, that moment will come. But if it comes and you—the supplier--are without a decision maker, you may be placed in the unenviable position of having to say, “We’ll have to take this back to the executive committee.” The message sent to the customer is that they didn’t merit having a decision maker on the recovery team. We have seen this absence of a leader torpedo the entire recovery effort, in one case ending the relationship.
Step Two: Construct a chronology of the relationship including key positive and negative impact events.
First, gather the story of how the relationship went belly up. In our experience, the incidents in this chronology can come from customer service people, salespeople, marketing—even R&D and delivery people, all of whom may have interacted with the customer. Send a blanket email out so you can start to put the history of the failing relationship together. And do it very carefully—the incident you miss may be the one with the customer decision maker being treated shabbily, which drove the final ultimatum. The difficulty you may have is that no one wants to share a bad relationship incident because he/she feels that they will be blamed. Make very clear that they will not be punished—that you need to have all their stories. One firm we know even made up and submitted a poor service story from a customer service person so as to prime the pump for stories.
During this phase, you will learn how difficult it is to be a historian, gathering the facts. But once you have put this jigsaw puzzle together, you will have a story—or the beginning of a story--about why the customer feels as it does. And it usually is not a pretty story. But if you don’t see the problem for what it is, you’ll have a very difficult time making it better. Is it a case of a cranky customer service person, a system out of alignment with the customer’s expectation, or processes that keep you from being responsive enough? Before you meet with the customer, you have to know the problems and you have to know them fairly quickly. If you haven’t captured the problem or incident, you may be blindsided at the first joint meeting with the customer. You still might be blindsided because what was presented as a poor service story may be seen as a horrendous problem by the customer.
Also: Don’t forget to capture the good incidents. They may point to a possible champion at the suppliers that you can use in the discussions to follow.
Step Three: Identify key participants and assess their concerns and needs.
In this step you graph the relationship problems. Map out the relationship problem: who on the customer side has been negatively impacted and what person/department on the supplier side has created that negative impact? Then you need to determine the needs and concerns of those customer contacts you have mapped out. Ideally, your strategic/key account manager will know how those contacts are compensated, or at the very least, what their goals and objectives are for that year. With that knowledge, you can start to put together a response that might win them back. If your strategic/key account manager lacks this sort of information, you may have a developmental opportunity on your hands.
Step Four: Develop relationship goals and a strategy to strengthen the relationship.
Once you have determined the customer’s critical players’ concerns and needs, you need to work with others in your organization to develop an overall relationship strategy that will contain solutions with individual relationship strategies. Keep in mind that there may be account contacts that you have wounded so badly that they will have nothing to do with you. If that is the case, you either have to work around them (not recommended) or determine a reason they might come back to the relationship. Is there something that you could do to make the account contact whole—whatever the problem was?
Step Five: Arrange an initial account meeting to create an effective atmosphere for strengthening the relationship.
Invite the key customer players whom you have negatively impacted. It’s important to get a decision maker or two there. Some of the senior people may not come to the initial meetings but if you persevere, and things go well, they might well show up later. Also salt the mine: invite some of your friends inside the customer organization. You will need all the help you can get. Schedule the customer meeting (at the customer’s convenience) and also schedule a meeting of your recovery team directly after the customer meeting. The goal of this initial meeting is step six.
Step Six: Gain agreement on a process to work through outstanding conflicts, misunderstandings, and/or misperceptions.
First, for every customer meeting, have someone whose sole responsibility is to take notes and someone else (who is very good at reading people) whose job it is to note and jot down customer reactions to points you raise. Your goal in this initial meeting is not to solve the problems. If you go in thinking that this approach is a fast way to solve a poor relationship, you will be disappointed. When a key account relationship has been festering, there is no magic pill. All you can do is offer the customer a high-level problem map (try to present the problems in terms of a system or process—“I know there have been some problems with late shipments…). Then ask what other problems need to be addressed. I’d like to say that all suppliers in this situation capture all the customer problems prior to this meeting but prepared to be surprised by other problems cropping up. When these new problems are presented, DO NOT GET DEFENSIVE. Simply ask for as many specifics as you can regarding the problem(s) and have your note taker capture everything and ready yourself to do more research back at your company.
Your goal in this meeting is to set up some process by which the conflicts/problems might be solved. One step we suggest is to have the account prioritize the problems from their point of view. You do this to ensure that you are investing in those areas that will give you the biggest payback with this customer
One thing you have to do in this meeting is to name the customer contact person (or persons) who will be the main contact in this account recovery project. The higher the person the better but usually this person is a middle manager who runs changes past supplier executives. When decisions have to be made at a meeting, your decision maker needs to be there but, in many cases, the middle manager can chair the problem-solving meetings where no decision is required.
Step Seven: Prepare for/execute/debrief a series of work-out meetings—adjust strategy as needed.
At the end of the first customer meeting, go back to your company and immediately debrief it. Who seemed friendly? Who didn’t? Who was quiet? Too quiet? What were the negative reactions your contact noticed when problems were described? Debrief and then plan for the next meeting. At the same time send your meeting notes to the customer contact for their approval. Do not send the customer reactions you’ve captured. Change your record of the meeting if the customer contradicts your version of what happened (these are almost always small points anyway). You need to be very careful that you are working to fix the processes that have negatively impacted the account. When you get notes approval from the customer, you have something you can work from to plan the next meeting.
Some firms wait to have the debriefing meeting until the notes are agreed to. We’ve done it both ways and we prefer the meeting and then the notes—even if the notes signal a change in the next meeting’s strategy. It’s far too easy to forget critical parts of the meeting if the notes approval process takes too long. If you’ve missed something, refine your next meeting strategy.
This step is the meat of the account recovery process. For each account meeting after the first, you use the customer-agreed-upon notes to develop a strategy for dealing with each of the conflict areas. Are there some low-hanging fruit? Are there big problems (from the account side) where a simple change can make a huge difference? If there are (and this usually—and blissfully--happens with a few problems) do whatever it takes and make sure that you let the customer know what you’ve done to rectify the situation so you both can acknowledge a victory, however small. It’s critical that the supplier blow its own horn here.
The key to successful preparation and debriefing account recovery meetings is the quality of feedback and facilitation provided at the debriefing sessions. Those who provide feedback need to be objective observers, clear communicators, and excellent listeners with meeting facilitation skills. Otherwise the discussion can turn circular.
Issues that can come up in these meetings: Are there still account people resistant to your offered solution for one problem? Can you determine why? Can you develop a strategy to improve that relationship? In one case we know, the account recognized that their purchasing person was at the heart of one problem and they phased him out of the supplier relationship.
The series of meetings are to hammer out solutions. Some solutions may take a while—if you have to redesign a process or system, for example. The point is that you are taking action to deal with the account’s concerns—and that the customer knows you are taking action. If someone is in charge of redesigning the system you might want to have them speak directly at one of the meetings (but only after that person has been totally briefed on the entire project). But if you decide not to let them speak, the technical person should be able to give you project updates, which you can then share with the account. We have seen firms have fifteen meetings to hammer out everything.
Step Eight: Reach agreement on conflict issues—cement immediately with whatever agreements or next steps are necessary.
Starting with the account-prioritized list, move through the conflicts/problems at these meetings. Either assign a supplier person to attack those problems (with an account contact as a resource) or, if the fix is easy, the supplier might consider some performance agreements. We have seen dollar guarantees work very effectively here: if a shipment is more than X hours or X days late, the shipment is free. This guarantee, though, should only be offered if you are comfortable with your shipping (or whatever) process.
In most cases a contract will not be necessary but it could be if trust has been undermined. You will probably have to create performance measures for your internal processes and systems based from the account’s point of view. What is bothering them the most? At this point executives can sometimes shake their heads. If the process or system is going to take a great deal of work to redesign (and they usually do), a performance measurement system can track performance improvement (or lack thereof) and that information can be shared along with project updates.
Next steps might include moving some people—perhaps those who are not as customer focused as they need to be. If this includes the Head of Manufacturing, though, this move may not be possible. I have never known a supplier who didn’t already know which executives or line people should never speak to the customer. Create a system where those employees cannot be reached and make sure that someone else is the designated spokesperson in that area. If there are problems in customer service—and this is rare—you can replace those people with more customer-focused employees. It’s great if no heads roll in this process but you have to be ready.
Most important: If you arrive at performance agreements, make damn sure that the employees responsible for that system or process knows what is going on, as well as those actually working the system. We almost lost a recovered relationship because the decision maker on the team assumed that those inside his organization would somehow know what was going on—a kind of trickle-down information sharing. Do not take anything for granted here. One person can end this account relationship. One supplier we know had the President of the company give short presentations to 50 employees about what happened, what was committed to, and why it was critical that employees feel a great sense of urgency—especially with larger accounts. The employees got the message.
Step Nine: Develop and Execute Follow-up Contacts
As the systems and processes are redesigned and the performance measurement systems are up and running, visit some of the account people who felt most strongly about the problems. See if they are pleased at the team efforts that have been happened and make sure they have seen the new performance figures compared to the new figures (it isn’t just suppliers who have internal communication problems). It’s also important to have spoken to all the possible decision makers at the account who may have been impacted by the problem. If you miss one, there is the frightening possibility that one of those uncontacted executives may, without notice, hire another supplier. We’ve never had this happen but it could happen.
You might also have your key account manager spend more time at this account—perhaps removing a less critical account or even giving the key account manager some assistance. But for the first 12-18 months, it will be critical to speak to the people on the account relationship problem map and those identified through the account recovery effort.
Step Ten: Write what was learned and disseminate to others involved in managing account relationships.
Few suppliers take this step but we believe that writing the account relationship history—how much the account relationship was worth, what happened in the relationship, why it nearly failed, what was done to improve it—is a best practice in account recovery. When you have captured what happened (no easy task as everyone on your side and perhaps a few on the customer side need to agree with your account), write and publish the final history. What do you do with this sensitive document? One firm we know had it as part of their orientation process. At the very least the document serves as a reminder that when customers don’t contact you, it doesn’t necessarily mean that everything’s alright.
As George Santayana once said (and I paraphrase): Those who ignore history are condemned to repeat it. To avoid repeating what is an awful moment, we think there has to be an organizational memory of what happened. Few suppliers can afford to play account roulette with co-destiny accounts. Learning histories are well worth the time they take to write.
This is longer than I would like but I wanted to capture all the recovery steps we’ve used. I also want to ask anyone who has waded the whole white paper:
Do you have any suggestions from your own experience as to how to make these relationship recovery steps more effective?
© S4 Consulting
