The hidden risks in strategic account management strategy

Abstract

Purpose

To provide a critical perspective on the robustness of strategic account management (sometimes called key account management) strategies as an approach to managing relationships with large and very large customers.

Design/methodology/approach

The paper is based on exploratory interviews and management workshop discussions and the observation of the operation of strategic account management approaches in practice, and is illustrated with cases drawn from secondary sources.

Findings

Suggests that SAM may amount to investment in strategic weakness that enhances dependencies and limits the scope for superior supplier performance; a customer portfolio analysis of all accounts identifies where the best prospects for long‐term profit exist; many strategic account relationships are based on exaggerated estimates of customer relationship requirements and customer loyalty. We conclude that strategy analysts should be concerned with developing new business models that avoid the trap of dependence on powerful, major customers, rather than pursuing business strategies like SAM that reinforce dependencies.

Research limitations/implications

There are a number of research opportunities in examining the long‐term impact of formalizing strategic account management systems in supplier organizations.

Practical implications

We aim to provide managers and analysts with a different perspective on strategic account management strategy that considers the potential weaknesses and vulnerabilities created through the strategy, to be compared to the attractions of this strategy.

Originality/value

Our goal is to add to understanding of strategic relationships between buyers and sellers. We do not believe that the downside to strategic account management strategy has received adequate recognition in existing treatments of the topic.

Citation

Piercy, N.F. and Lane, N. (2006), "The hidden risks in strategic account management strategy", Journal of Business Strategy, Vol. 27 No. 1, pp. 18-26. https://doi.org/10.1108/02756660610640146