On
the other hand, market intelligence obtained through other means can come handy
to enrich the account planning exercise, as a cross check for the account
plans, or to complement missing or unknown information.
Let
us investigate how this works.
How
exactly an account plan will look like depends on each specific situation, but
in general it will encompass following elements:
Client relationships
Contacts within each client, key decision takers and influencers, relationship gaps,
Client information
Turnover,
profit, number of employees, organization, strategic priorities, …
Sales
for past periods and projected sales
Bookings
and profits per product or service, bookings per channel, pipeline, …
Competitive
positioning
Share
of spending, main competitors, threats and opportunities, SWOT analysis, …
Go-to-market
strategy
Current
channels versus ideal situation, strengths and weaknesses of current
go-to-market model, dependency, …
Big
bets
Initiatives
that might considerably increase our sales with this clients, ‘must win’ deals,
…
Key
requirements
Marketing
budgets, sales initiatives, other resources needed and estimation of which
parts of the projected sales depend on them, …
Overall
strategy
Summary
of how to develop the client, resources needed and projected sales.
As said these elements can vary a lot
dependent on the specificities of each industry and company. But with the
elements listed above we can already develop very revealing insights.
Let
us take a concrete example. Say you are a manufacturer of a component used in
private cars. According to an external report, the total market for this
component is of 10 million this year, and will grow to 11,5 million next year.
The Addressable market grows from 900 million USD this year to 950 million next
year (you will notice that the market is subject to some price erosion).
Let’s
say the target clients consist of ten car manufacturers. You sell your
components to every one of them, but they don’t use it in each of their models.
So your market share is different with each car manufacturer.
You
now ask your account managers to produce account plans for the ten car
manufacturers. You ask them, among other
things, about their projected sales (in terms of units sold) and the current
versus future market share. After collecting all the account plans and
aggregating all your account managers’ data, you compare the result with what
external research companies have predicted. Basically you will end up with one
of these three scenarios:
(Note
that the orange bar is the account managers’ projected sales and the grey one
is the portion of the market going to competitors. The sum of both represents
the total market)
Scenario
1 is obviously the ideal one: the consolidated market view of your account
managers exactly matches the estimations of the external agency, so you can use
these figures for your planning purposes with full confidence.
In
scenario 2 your account managers estimate the total market much higher than the
external research report. This is not necessarily troublesome: if your account
managers assumed a growing market share based on their market assessment, they
will gain market share in the market estimations of the external agency as
well. Furthermore, this scenario is probably an indication of the fact that
your account managers have knowledge of specific plans or trends within their
customer base (in this case, for instance, the launch of new models or an
expansion of the market), which is sometimes hard for external agencies to know.
In this scenario the consolidated view of your account managers will likely be
more accurate than the external view –after all they have no specific interest
in overestimating the market. However, this scenario could also indicate an
overly optimistic sentiment of your account managers and, if their targets are
based on this view, this in itself might lead to unrealistic expectations (and subsequent
frustration if they are not met). You probably want to have a couple of
discussions with them to check the reasons of their optimistic views.
The
third scenario is a bit more problematic. If the external agency is right and
the market is indeed much bigger than the consolidated view of your account
managers, it would mean that your market share in reality is much lower than
what you estimate and, hence, that your account managers are not aware of the
presence of competitors in their accounts. Or, even worse, they might not be
aware of specific trends or projects in their accounts. At any rate you will
have to investigate this into much more depth and make sure the account managers
realize the full potential with their clients.
But
account plans offer many more ways to provide valuable insights.
You
can for instance benchmark the account plans in order to detect uncovered
potential or underperforming accounts (or account managers). Let us continue
with the example of the manufacturer of car components, and let us say that the
company offers 5 type of components that are complementary to each other, and
each of them have competitive products on the market. By simply putting the spread
of component sales for the top five clients on a chart, you could for instance
end up with such a view:
What
would be your conclusion from this chart? With most of our clients (the
constructors) we have a comparable spread of component sales, except with
constructor 4 where we have considerably less (relative) sales of component 1.
There could be multiple reasons for this. A competitor might be much stronger
in this category, or offer substantial discounts for that specific account and
component. Or your account manager or go-to-market channel might be ill
prepared to sell component 1 and needs some more training on it.
But
the situation at Constructor 4 could be a very positive indication as well.
Maybe the reason for the underperformance of component 1 in this client is to
be found in an over-performance of the other components, hence indicating a
potential best practice. It is important
to dig deeper into the causes of this discrepancy, since they might be an
indication of untapped opportunity that, sometimes, can be easily fixed.
Let
us continue with our example in order to demonstrate this. We need to know
whether component 1’s sales at constructor 4 is due to an underperformance of
this component, or an over-performance of the other components. To do this, we
need some kind of objective ‘key’ to measure our success on. In this case the
key is relatively easy to determine (in many cases it is not): our components
are directly linked to the cars in which they are used. And, luckily, we should
have a fairly accurate idea of the number of cars produced by each constructor.
With this, we can track our sales of the different components per car that is
produced, and for example produce this view:
Here
we can draw plenty of additional conclusions. We see for instance that our
overall level of sales (by car produced) is relatively high at Constructor 4,
so the under-performance of Component 1 in this account is most likely not due
to an underperforming account manager. On the other hand, we see that at Constructor
4, sales (by car produced) of Component 2 is relatively high, most probably at
the expense of Component 1. At least we now have some insights to discuss the
situation with our account manager and, if this situation proves to be
favorable, to leverage his best practice to other accounts.
But
we now also have the basis to construct quite a different type of market view.
Based on our sales of components by car produced we can determine the best
performing account for each component, and project this to the other accounts.
This provides us with a view of how much revenue we could generate if each
component was sold with the same level of success in all these accounts. Let’s
call it the ideal scenario. In our example, this would result in following view:
In
a way, this view reflects the untapped potential in each account. However, this
does not necessarily reflect the additional sales we could realize in the near
future. In our case, there might be some solid reasons why we leave so much
money on the table with Constructor 5, he might be locked by long-term
contracts with one of our competitors, for instance. Nevertheless, this view is
useful to determine where we need to put our focus in order to find additional
growth.
The
example above is obviously simplified, and there are many more things you can
do with account plans. But the point we tried to make is to organize account
planning in such a way that it can be used for numerous purposes. All too often
account plans are made in Powerpoint or even Word, which makes it very hard –if
not impossible- to consolidate the data in ways that enable the type of
analysis we performed in our example. Additionally, very often many of the
fields needed for such type of analysis are left blank. In many cases the reason
for this is that account managers are very poorly incentivized to take account
planning seriously. Either they don’t understand its purpose, or their
management does a poor job in using this document in a meaningful way. Using
the information contained in the account plans in ways we have shown in this
chapter, and have this as a basis for profound and meaningful discussions with
account managers, will ensure that the account managers take this exercise
seriously and fill in all the required information.
Using
account plans in such ways will turn them into a living and highly strategic document.
Did
this example debunk the myths about market intelligence?
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