Quantify 20-80 Costs

Every firm has what we call 20-80 costs, where 20 areas provide 80% of its cost base.  If a supplier can create a solution for one of its account’s 20-80 costs and can quantify the value added over and above price, it can then justify a premium price and create higher barriers to competition.

Customers can say to low-ball competitors. “Sure, you can give me a better price on X, but can you provide me with Y, which saves me some $750,000 a year?”  One of the Strategic Account Manager’s jobs is to understand, create, quantify, and deliver the value-added initiatives that, we argue, are the hallmark of strategic account management.