One of the largest sources of confusion (and error) in analyzing clients with complex organizational structures is identification and reporting at the correct organizational level. Everyone working with client data has a story where there was a shocking discrepancy in expected sales results with customer only to later find that the offending report was showing correct results, but at an incorrect client level. Worse is to see political battles explode only because different managers are looking at incongruous results.
An effective strategy for client engagement has to ensure that the client entities that managers and salespeople are looking at are clearly structured, easy to identify visually, and unambiguous.
I want to make a distinction between relationship account hierarchy and legal entity account hierarchy. A relationship hierarchy has a goal to align the business and managers at the client with relationship managers, senior managers, and salespeople. This is what should drive a client strategy because those touch-points are where revenue is going to be generated. A legal entity hierarchy is geared towards financial reporting which may or may not overlap with structure of the business relationships. Managers need to be careful to make sure that the lens that they have of the client is correctly aligned.[more…]
The key characteristics of a strong relationship account hierarchy are:
– Multiple levels that accommodate large organizations, but…
– …limited so that the structure doesn’t become too complex, unwieldy, and useless
– Top-down, relationship focused so that key contacts can be identified at each level
– “Reportable”, meaning that financial and other metrics can be matched to each level
– Each level is unique, mutually exclusive, and collectively exhaustive at the top level
A critical component of creating the hierarchy is selecting a unique account identifier and identifier nomenclature that is applied to all accounts at every level. There’s considerable debate around the most “efficient” representation of an identifier, and one can argue that there isn’t a single approach that can satisfy the requirements of the variety of businesses out there. I agree that there is a lot on individual case nuance, but I’ll put forward a framework that I think provides a high degree of structure, but also flexibility. A simple alphanumeric identifier, applied smartly, usually does the trick. It would create clarity and flexibility in account identification and would also allow for clean mapping across different functions and systems.
The key characteristics of strong, unique alphanumeric client identifier are:
– An ability to easily identify what level is being viewed
– Short enough to be able to remember and identify by managers and salespeople
– Comprehensive enough to satisfy a large and/or growing organization’s purposes
– Flexible enough to create multiple ranges if needed
– Very important: non-organization specific except for top level, in order to permit transferability of lower level accounts from one top or mid-tier level to another.
– Unassociated with given institutional name
Why is this important? A clear client hierarchy and strong account identifier defines the language that your organization will use to talk about clients and client strategy. If everyone is speaking the same language, people will be more confident about the client strategy, relationships will be stronger, and systems and reporting costs will be significantly lower. It will feed into a real competitive advantage. I’ll give an example of a strong structure in the next post.
