IS KEY ACCOUNT MANAGMENT ON YOUR STRATEGY MAP?

 

A Key Customer Account  are those select  customers who a represent a disproportionate percentage of your revenue. 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. Every marketing company needs to segment its portfolio and from time to time categorize some as key customers or strategic customers and on its side win the status of a strategic supplier. 

However there are some tricks and traps in getting started. Our firm Synergy Management Associates (since 1993) has help many clients to launch and execute key account management campaigns. Here are a few points from our experience: 

A COMPREHENSIVE DEFINITION OF KEY ACCOUNTS

Key Customer Account   are valuable for more than one reason. However, the word "valuable" is subjective based on your organization’s values.  The criterion should be rightly fixed: Amount or share of recurring revenue they bring in; The level of profitability you have with them (revenue taking into account cost);Customer lifetime value; Level of alignment between shared objectives  and process which in turn increase the marketeers influence and/or authority with the customers’ organisation; 

 

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? In other words, Number of referrals the customers’ organisation  would make/or serve as a testimonial.

 

Your organization needs an explicit, strict definition of key accounts. The more detailed and specific the criteria, the better — The better the fitment   the better the deployment of the marketing company's time, energy, and resources, so you want to make sure they're the right ones. While it's tempting to label many customers as "key accounts" at once to alter your company’s trajectory significantly, it’s better to be conservative. You can't tell a key account they've been demoted, but you can tell a traditional buyer you're promoting them.

 

FITMENT WITH YOUR BUSINESS PROCESSES

Despite the potential benefits of key account management to your bottom line, it's not a good fit for every organization.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 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.

You need to ask if  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.)The long term potential  would lead to a  goal of  "land and expand"… 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.

 

 

OUTLINING A KEY CUSTOMER ACCOUNT PLAN

A key account plan helps you identify the most significant 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 THE CUSTOMER JOURNEY /RELATIONSHIPS

The crux is about building key relationships and nurturing them that cannot be automated. It’s not enough to have a good relationship with just one key person but across the touch points of the customer XP journey; which need to be mapped to identify  where the influencers and detractors lie .This may imply interacting with enterprise-level organizations and key buyers at the top level. This requires a CXO-level management involvement in any client and a top-down approach to Strategic Account

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.

PROFILE 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.

SET ACCOUNT GOALS

This section should cover how much this account is currently worth, which opportunities you've lost, 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 to transform the entire department into paying users.

ACCOUNT STRATEGY

This section is 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 a 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 continuously adapt your strategy down the line if something changes.

 

EXECUTING THE PLAN

Even when the organization has made a policy decision ; often the short-term wins as it is more achievable and managers often feel a quick sense of accomplishment. That’s exactly where the challenge lies; to choose the long-term over the short term when the situation so demands. It isn’t enough for managers to hit short-term goals and give themselves the pat on the back, it is integral to concentrate on strategic account plan goals like maximization of customer lifetime value too! Hence planning must dovetail with the execution not just relying onsoftware tools flooding the market. 

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. A key account manager (KAM) typically provides dedicated resources, unique offers, and periodic meetings to turn buyers into business partners. Since the conversion in a Strategic Account happens over a period, the scheme of  incentive planning and compensation for Strategic Account Managers cannot be the same as your Salesforce.  yet needs to be fair. Proper metrics need to be defined and implemented, which is a major HR challenge. It will keep evolving over time and will vary from organization to organization.

 

 CONCLUDING: NEED FOR A NEW SALES LEADERSHIP PARADIGM

Strategic Account Plans will remain stillborn  unless they’re put into action by a motivated Strategic Account Manager. Management. 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. It is not devoid of challenges. Once the managers start practicing it, they realize the real-world problems or rather, challenges that they must face while creating strategic account plans.

 

With compliments

Dr Wilfred Monteiro