I have opined on this topic before, but I frequently come back to it in my current role as VP Professional Services and that is what constitutes a strategic vendor/customer relationship. This topic is on my mind today based on feedback from one of my customers whom we asked how they defined a strategic relationship. They stated that a strategic relationship is one where the vendor understands all of the customer’s business issues and proactively develops action plans around those issues either using the vendor product or not. To do this requires a deeply skilled resource who understands the customer’s industry and supply chain as well as someone well versed in our product and best practices. The customer’s point is that to maintain an ongoing strategic relationship our company should provide this feedback regularly and for no additional charge.
In theory I do not disagree with them. I think about the companies or businesses that I work with on a daily basis and I would certainly prefer to work with a company that provides this guidance vs. one that does not. However, making this cost effective is difficult. Some companies invest in the Account Management model to perform this function. But in order to do it right the Account Manager would only be able to handle a minimal number of accounts as they would be very deep into each account. The Account Manager would also have to be very skilled in many areas. One software company I worked at tried this model and the customer’s loved it for a while.
It worked fairly effectively until the model could no longer scale. Many customers became very reliant on their Account Manager and most times that customer was not generating any additional revenue for the software company. So, as the number of customers increased the number of non-billable heads had to increase until such time when it did not make financial sense to keep increasing the non-billable headcount. Then the Account Manager role went away and the relationship with customer went back to being more tactical. Customers had to pay for services if they wanted this kind of help. This led to some customer dissatisfaction but not loss of too many customers At my current organization the best resources to provide this type of guidance to customers are typically billable consultants or pre-sales consultants. Both roles are expected to be revenue generating.
In my role, I view my organization as performing a customer service role. I think it would be ideal to have resources on my team with deep expertise who can manage a handful of accounts (4-6) and could build the type of relationship where they understand the customer needs very well and can provide proactive guidance on how to solve those problems. The challenge is of course scalability and I would say that my team has this relationship with some customers but not all. However, if billable or revenue generating work should arise that would take first priority over non-revenue generating work. It therefore becomes very difficult to maintain on-going strategic relationships with customers who don’t generate any incremental revenue. That is the dilemma.
I am constantly trying to figure out a way to maintain strong, strategic relationships with my customers even if they are not generating incremental revenue. If you are a customer, what do you expect of a software vendor in terms of what it means to have a strategic relationship? If you are a from a software vendor, have you cracked the code on how to provide cost effective advice and guidance as suggested above? I am always open to new opinions and best practices. Please pass on your feedback and perhaps I can find a way to be able to strategically support all customers.