Top tips to help you protect and grow key accounts

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In the third of his short series of articles about components of marketing and business development strategy, CHRIS WHITE looks at Key Account Management.  

Most companies have a group of accounts that are considerably more important than others. They’re the ones that generate the lion’s share of revenue…and, hopefully, profit.

They need to be given special attention, have their risks managed and opportunities optimized – a proper dose of TLC. This means developing a Key Account Management programme.

According to a Strategic Account Management Association (SAMA) survey, companies with well-developed KAM programmes have a 43% higher customer satisfaction score than those without.   The research also showed that many KAM programmes are based around clients where the supplier’s share of wallet is as low as 10-25%, so there’s a lot to aim for.

It’s not surprising, therefore, that many companies are keen to, and do, implement KAM. However it is also true that many programmes fail or are abandoned. In other cases, companies find they have to make big changes to get them to function properly.

Here are a few things to consider that might help you to develop and implement a successful KAM programme.

  • Be clear about your objectives.  Remember we are talking about key existing accounts here, not potential ones.  This is about nurturing, protecting and growing major clients.
  • What resources can you commit to the accounts and what levels of support will you see a return on?  Scale your programme accordingly.
  • Despite the clients being existing accounts, what level of stretch do they contain? Do you know your ‘share of wallet’ and what should you expect it to grow to?
  • Is your key account list like a league table? Will accounts fall in and out of the list? And on what basis? How will this be decided? And how will it be seen to be an equitable process within the business?
  • What are the implications of the account programme on the account managers and directors? What are your desired behaviours and how will your strategy drive those behaviours?
  • What are the implications for everyone else in the business? A successful KAM strategy isn’t a sales strategy, it’s a business strategy with everyone playing their part.  All divisions, not just sales, have to treat the key accounts as a priority.
  • Sometimes the importance of the programme can be more widely understood when the CEO and other board members are seen as its sponsors.  An ‘Executive Engagement plan’ is often critical.
  • A critical part of the role of a KAM/Director is to sell the management programme internally and to evangelize about its concept. They will need to travel. They will not always be selling chargeable time. Marketing is part of their role.
  • What is the budget for the programme? What investment are you willing to make in marketing, travel, relationship building?  How will its effectiveness be measured… Improved client satisfaction or Net Promotor (NP) scores? Increased number of regions billing from X to Y? % up-shift in revenues or profits? New product lines sold in? Increased number of stakeholder relationships?
  • Appoint and train your key account managers.  Define and agree a detailed job role and ensure they receive support and training.  Incentivise the correct behaviours while having an eye on the law of unintended consequences.
  • Direct your business to support the KAM programme:
  1. Business development (BD) and marketing should be supporting a strategic communications campaign into the client. 
  2. The BD research function should be providing a constant intelligence stream about the client and opportunities.
  3. Support the KAM through soft skill training, technical product training or training about the use and exploitation of market research.

Structure your business to support the programme.  It’s no use only incentivizing geographical business unit growth (regardless of client) as they will ignore the KA programme in order to achieve short term revenue growth.

Typically there is a cost curve associated with the development of an account.  Year one with any major account is likely to be the least profitable and there are often economies that can be discovered with an account over time.  Familiarity can actually breed margin.   

There are plenty of positive indicators around the benefits of nurturing client relationships, not least that it’s eight times more profitable to generate new revenue from existing clients than new revenue from new clients!

I have had considerable experience in establishing both domestic and international key account programmes. I have also developed a Key Account Review service that can provide a quick assessment of your businesses practices in this area. The review will compare and contrast with commonly accepted best practice and furnish you with a brief report highlighting changes that you could make to strengthen your business’s approach to KAM.

So if you would like to discuss any issues that you might be facing relating to key accounts and their management, give me a call on 07970 710543 or email chris.white@emcltd.co.uk