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:
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.
According to the Harvard
Business Review, customer satisfaction increases 20%
within a few years of starting a key account management program. Profits and
revenue, meanwhile, can increase by 15%.
And
programs that have been around for five-plus years can see results twice that.
Key Account Management Strategy
1.
How transactional your current sales process is.
2.
If your product has upsell and cross-sell potential.
3.
Your ability to ‘land and expand’.
4.
The competitive landscape you’re facing.
5.
Company capacity and resources.
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 your current sales process is.
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. If your product has 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. Your ability to '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. The competitive landscape you're facing.
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. Company capacity and resources.
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
·
Solvency
·
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
1.
Get to know the customer.
2.
Cross-functional collaboration to benefit the customer.
3.
Effective leadership of key account team.
4.
Coordination and planning of activities for complex accounts.
5.
Strong business acumen.
6.
Ability to use analytical skills to support a variety of clients.
7.
Clear written and verbal communication 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. Get to know the customer.
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.
2. Cross-functional collaboration to benefit the customer.
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.
3. Effective leadership of key account team.
A
KAM needs leadership abilities to guide her team members (which might include a
salesperson, marketer, technical support, implementation and/or onboarding
specialist).
4. Coordination and planning of activities for complex accounts.
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. Strong 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."
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. Ability to use analytical skills to support a variety of
clients.
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:
1.
Your relationships within the account
2.
The customer's current business plan, objectives, and financial
health
3.
Your targets for the account
4.
Your strategy for hitting those targets
Let's
delve into each of those in more detail.
Relationships
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.
Customer's Business
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.
Account Goals
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.
Account Strategy
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:
1.
Strengthen relationship with VP of Engineering
2.
Develop compelling value proposition for meeting with CTO
3.
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.
Key Account Management Best
Practices
1.
Select the right accounts.
2.
Build a dedicated team.
3.
Consistently measure account performance.
4.
Invest in the right tools.
Wondering
how to get the optimal results? Follow these best practices.
1. Select the right accounts.
A
winning strategy hinges on being selective. Make sure you're picking the right
key accounts and applying the same criteria to each one.
Regularly
review your key accounts to verify they still require additional time, energy,
and resources. If they are performing as expected to justify the resource
allocation, then continue on. If for some reason they are under-performing or
the account no longer feels like a good use of additional resources, you may
want to consider scaling back.
Additionally,
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.
2. Build a dedicated team.
Even
the best KAMs get the job done alone. Ideally, the KAM role is not performed by
someone who has sales rep duties on their plate simultaneously, and each
account manager should have a cross-functional support team to support the
proper execution of deliverables related to the client’s account. To serve your
clients well, these teams should include 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.
3. Consistently measure account performance.
What
gets measured, gets done, so staying on top of account performance is critical
for success. 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. From here,
you should also schedule recurring check-ins with the client to get their
feedback, address any issues, and find areas for improvement.
4. Invest in the right tools.
Having
the right tools in place can make the job of a KAM a lot easier and more effective.
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, and to
minimize duplication of effort across the team.
If
you are having a hard time getting responses to your emails, implementing an
email tracking and notification tool can help. This type of tool will let you
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.
Eliminate
back and forth emails about meeting scheduling by using a meetings tool to
make the process seamless for the attendees.
You
can also try investing in a video platform such as Loom 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 12, 2020 3:00:00 PM, updated March 13 2020
https://blog.hubspot.com/sales/key-account-management?utm_campaign=Sales%20Blog%20-%20Daily%20Manual%20Emails&utm_source=hs_email&utm_medium=email&utm_content=84646322
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