At some point, most company leaders have looked at their list of best clients and thought, "It would be really bad if we lost any of these accounts." These customers represent a disproportionate percentage of your revenue, refer new prospects to your company, give you credibility in their space -- or all of the above.
But how do you protect those customers from the competitors who are no doubt courting them?
The answer: Key account management.
In this comprehensive guide to key account management, you'll learn:
- The definition of key account management
- The benefits
- How to know whether your company needs a key account management strategy
- The difference between key account management and selling
- How to identify key accounts
- Which skills your key account managers need
- How to hire key account managers (including a job description template)
- How to write a key account management plan
- Some final thoughts on making your key account management strategy a success
Let's dig in.
Key Account Management
Key account management is the process of building long-term relationships with your company's most valuable accounts. These accounts make up the majority of the business' income. To turn buyers into business partners, a key account manager (KAM) typically provides dedicated resources, unique offers, and periodic meetings.
As professional services firm BTS points out, key account programs often lead to increased costs and lower margins. That's the inevitable outcome of giving a customer greater resources and often your best discounts.
But if you use the right key account strategy, you'll reap greater sales volume and long-lasting strategic relationships.
The Benefits of Key Account Management
Why should you start a key account management program? Key accounts are 60 to 70% likelier to close than new ones, plus spend 33% more on average.
And programs that have been around for five-plus years can see results twice that.
Key Account Management Strategy
- How transactional is your sales process?
- Does your product have upsell and cross-sell potential?
- Can you "land and expand"?
- What are your competitors doing?
- Do you have the capacity?
Despite the potential benefits of key account management to your bottom line, it's not a good fit for every organization.
Before you go all-in on a key account strategy, consider the following points.
1. How transactional is your sales process?
If your sales cycle is relatively short and your sales reps have minimal interactions with prospects, key account management probably isn't the right choice. Key accounts require consultative selling techniques -- and it will be hard to teach your salespeople to adopt completely new processes for just a few clients.
2. Does your product have upsell and cross-sell potential?
There's little point in continuing a relationship with the customer after the sale if they're not going to buy more. (Obviously, you still want to provide excellent customer service and support to promote word-of-mouth marketing and high retention rates.)
3. Can you "land and expand"?
The above rule has an exception: If you can get your foot in the door of the prospect's company and then grow the account by selling to other departments, offices, subsidiaries, etc., a key account strategy may be a good investment.
4. What are your competitors doing?
A key account program can serve as a competitive advantage. Imagine your customer has narrowed down their choice of vendor to you and one another company. If you can promise to make them a key account -- and your competition can't do the same -- you're likelier to win the deal.
5. Do you have the capacity?
Successful key account management depends on company-wide support, executive buy-in, and a dedicated key account team. You'll also need enough runway for an investment that might take 12, 24, or 36 months to recoup.
The Difference Between Key Account Management and Selling
Key account management and selling are very different. While a salesperson focuses on the short term -- by necessity -- a key account manager (KAM) prioritizes the future.
Sales reps also zero in on specific opportunities, while KAMs have broader goals, including collaborating with the customer on mutually beneficial projects, helping the customer meet their objectives, and making sure the customer is getting the necessary support.
How to Identify Key Accounts
Your organization needs an explicit, strict definition of key accounts. The more detailed and specific the criteria, the better -- these customers are going to receive a great deal of your company's time, energy, and resources, so you want to make sure they're the right ones.
Don't choose solely based on revenue. Instead, review your current customers and their historical ratio of revenue to costs. Calculate how much potential there is to expand each account. You should also ask yourself whether they're a strategic partner, e.g. do they have the connections, resources, and/or industry reputation to significantly alter your company's trajectory?
SBI recommends choosing three to five selection criteria. Here's a list of examples:
- Product fit
- Existing relationships
- Possibility of becoming a channel partner
- Cultural fit
- Geographic alignment
- Purchasing process
- Revenue potential
It's tempting to label many customers as "key accounts" at one time, but be conservative. You can't tell a key account they've been demoted, but you can tell a traditional buyer you're promoting them.
In addition, you don't want to overcommit yourself. Starting a KAM program requires organization-wide change, support from the C-suite, hiring and training employees, and implementing new processes. Starting small lets you focus your efforts.
Key Account Management Skills
- Understand the Company
- Orchestrate and Execute
- Analytic Skills
Some companies assign their reps as key account managers to one or two customers. Because selling and account management require different mindsets, skills, and objectives, this set-up isn't ideal. Unless your team is prohibitively small, separate the sales and account manager roles.
A key account manager is focused on becoming critical to her customer's operations -- not winning a deal.
BTS identifies several unique skills critical to a key account manager's success:
1. Understand the Company
A key account manager must have an intimate, sophisticated understanding of her account's strategy, market position, finances, products, and organizational structure. They'll use this knowledge to make business cases showing how price changes, customization, and add-ons will add value.
Key accounts don't usually buy off-the-shelf: They want a custom blend of products and services tailored to their needs. With that in mind, it's crucial a KAM can work across the organization to develop these offerings.
A KAM needs leadership abilities to guide her team members (which might include a salesperson, marketer, technical support, implementation and/or onboarding specialist).
4. Orchestrate and Execute
Key account programs have a lot of moving parts. To be successful, KAMs should be capable of planning short-term and long-term plays, carrying them out, analyzing the outcomes, and applying those takeaways to their future strategies.
5. Dynamic Business Acumen
What's business acumen? It's the understanding of how a company makes
money. A KAM should develop dynamic business acumen. According to BTS, this is the "knowledge of how the drivers of customer growth, profitability, and cash flow are changing, of how the customer’s markets are changing, and of how the interrelationships within the customer’s business are changing."
With this knowledge, they'll be able to solidify their position as a trusted resource and advisor for their clients.
6. Analytic Skills
In addition to having business acumen, key account managers should have an analytical mindset. Their analytic skills will help them create and present business cases. They need to be able to think quickly and apply their knowledge to a variety of different clients and markets and be confident when presenting the information.
Key Account Manager
The core role of a key account manager (KAM) is to handle the most valuable clients. They manage the account, build strong relationships with the client, identify challenges or opportunities, and find ways to assist with these challenges and opportunities.
A key account manager (KAM) is responsible for managing and building a strong relationship with large clients that make up the majority of the business' income. Not only do KAMs find ways to address the client's challenges and opportunities, but they also create and present reports about the client's progress to key stakeholders.
Key Account Manager Job Description
Use this Key Account Manager job description to find and attract the most qualified candidates.
[Company name] is looking for a key account manager.
This role is important because it helps us keep our most important customers and ideally, find even more opportunities for working together. As our key account manager, you'll play a critical role in client retention and revenue growth.
The position involves:
- Working with your named accounts to identify their biggest challenges and opportunities
- Looking for ways [company name] can help with those challenges and opportunities
- Using both traditional and creative techniques to develop relationships with customer stakeholders (including [going to events and trade shows, networking on social media, getting warm introductions, etc.])
- Keeping track of your accounts' satisfaction and reporting on their status to the organization
- Serving as the internal representatives for your accounts
To perform in this role, you'll need a combination of these skills and qualifications:
- Collaborative, fast-moving, and comfortable with change
- Excited to go above and beyond for customers
- Ability to assess account needs and identify gaps
- Leadership experience (bonus points if you have led a cross-functional team)
- Excellent verbal and written communication skills
- Able to build rapport and establish credibility with account stakeholders
- Basic management and financial knowledge
Key Account Management Plan Template
According to RAIN Group, the biggest difference between high performing companies and everyone else is an effective account planning tool.
A key account plan helps you identify the greatest possibilities for growth, potential roadblocks, threats from the competition, and more.
You can tailor an existing framework to your own needs or create a customized plan.
Whatever option you take, your account plan should include:
- Your relationships within the account
- The customer's current business plan, objectives, and financial health
- Your targets for the account
- Your strategy for hitting those targets
Let's delve into each of those in more detail.
Map out every customer stakeholder. This information will help you figure out which relationships you need to build and maintain -- as well as anyone who could potentially derail your plans.
Note each person's title, role in the decision-making process, how much contact you've had within them, and how "friendly" they are.
To provide value to the account and find mutually beneficial opportunities, you need an in-depth, sophisticated understanding of their business.
Stay up-to-date on their key business goals, financial health, and current initiatives. You should also regularly run a SWOT (Strengths, Weaknesses, external Opportunities, external Threats) analysis.
This section should cover how much this account is currently worth, which opportunities you've lost, which opportunities you've won, where you see potential revenue growth and your projected value for those opportunities.
It should also outline your short-, mid-term, and long-term goals and the owner of each. For example, maybe your sales engineering team is responsible for getting a meeting with the CTO by January. A less immediate goal might be getting 60% of a new department using the free version of your tool. Your ultimate objective is transforming the entire department into paying users.
This section is arguably the most important. It takes your goals (in other words, your account wishlist) and breaks down the actions you need to take to reach them.
Use the same structure you used for your objectives: Short-term, mid-term, and long-term.
To give you an idea, the key steps you'll take for your January meeting with the CTO might be:
- Strengthen relationship with VP of Engineering
- Develop compelling value proposition for meeting with CTO
- Ask VP to request meeting with CTO on your behalf
The more specific and actionable these actions are, the better. Strategic account management involves juggling several initiatives, priorities, and campaigns at one time. Without clear direction, your team will go off in a thousand directions. Plus, you can always adapt your strategy down the line if something changes.
Strategic Account Management Best Practices
Wondering how to get the optimal results? Follow these best practices.
A winning strategy hinges on being selective. Make sure you're picking the right key accounts -- and you're applying the same criteria to each one.
- Regularly review your key accounts to verify they still require the additional time, energy, and resources.
- Keep track of non-key accounts. If a customer is about to experience significant growth, they may qualify as a strategic account. Courting them now will earn you their loyalty before any other company in the space.
- Periodically assess your selection criteria. Are your current key accounts generating as much ROI as you anticipated? If not, it could be a sign you're using the wrong measures.
- Assign dedicated strategic account managers (or KAMs). These employees should be separate from Sales, if possible.
- Build cross-functional teams around each account manager. To serve your clients well, you'll need a range of skills, disciplines, and expertise.
- If possible, name an executive sponsor to each account. They can play a major role in getting the necessary resources, connecting with the C-suite at the target account, and providing high-level guidance.
- Set a cadence for internal account reviews. Depending on the size of the team, the value of the account, and the dynamic of the relationship, these might be weekly, monthly, or quarterly.
- Consistently measure the account's engagement and loyalty. Both should trend upward.
- Schedule recurring check-ins with the account to get their feedback, address any issues, and find areas for improvement.
- Use a CRM to keep track of your communication with the account stakeholders and give everyone on the account team visibility into what's happening.
- Implement an email tracking and notifications tool to know exactly when your recipients open your emails and click any links.
- Use LinkedIn (either the free version or LinkedIn Navigator) to monitor changes in your account's market and industry, strategic shifts, hiring and firing decisions, and more.
- Set up calls and appointments with a meetings tool to make the process seamless for the attendees.
- Invest in a video platform so you can create personalized videos for prospecting and relationship-building.
A well-planned, comprehensive key account management strategy won't just keep your best customers satisfied -- it will also provide opportunities to exponentially grow the relationship. Your retention rates and bottom line will both benefit.
Originally published Mar 18, 2019 7:30:00 AM, updated March 18 2019