Is your key account management strategy broken?

When a market tightens agencies quite rightly look to jump-start their new business strategies, but they would also be wise to take a hard look at their key account management team and check that it is still working.

Let’s get the dull academic definition of key account management out of the way first.

‘Key account management is the process of allocating and organising resources to achieve optimal business with a balanced portfolio of identified accounts whose business contributes or could contribute significantly or critically to the achievement of corporate objectives, present and future’.

Maybe a tad boring, but to back this statement up it is important to remember that:

• Existing customers are up to 70% more likely to use you than prospects.
• 80% of a company’s revenue comes from 20% of existing customers.

In other words, if you want to make money you need to spend more of your time and more of your resources on the clients with the most growth potential.

So how do you decide which clients to swipe left and which clients to swipe right?

You might think that your biggest accounts or your most complex accounts would be the place to go, but you’d be wrong. Key accounts can be big or small, they can be local or global, strategic or opportunistic. What makes a key account important or what makes a key account a key account is its future value. Not what they spend today, but what opportunities may become available tomorrow. So, keep a look out for clients with a combination of the following qualities:

Growth, what clients do you have with opportunities to expand revenue, improve margins, and reduce the cost to service.

Chemistry, these are the kinds of clients who are just a great fit for your offering, you know they love what you do and you meet their needs better than other agencies.

Value, clients who consider you a strategic partner and want joint success. They know that you give them an advantage that they couldn’t achieve alone, and they want you to succeed.

What should your key account managers be doing?

They partner with your most valuable clients to understand their challenges and needs and then they use those insights to come up with new ideas to create mutual benefit for you and for your customers by following a systematic approach to creating action plans.

Key account managers also identify opportunities for growth and for mutual benefit and they must be lowering the risk of clients leaving you.

Establishing influential business relationships with decision makers is the primary goal, that’s how budgets get approved and that’s how things get done. Key account managers also coordinate the internal resources that they need to achieve their plans but put simply:

‘Key account managers make it easier for your clients to do business with you’.

However, key account managers cannot do it all and you need to align everybody in your organisation to key account management and put supporting processes in place, otherwise, quite frankly, it’s not going to work.

Common key account management mistakes

 Incorrectly classified – Not all accounts are created equal, if you classify a client incorrectly, you’re not going to get the return on investment, and they may even cost you money as you divert resources to clients with no growth potential.

 Unclear expectations – When clients don’t know that they are a key account or why they’re a key account or what even the difference is, can lead to dissatisfaction. If there’s no context, then expectations can become way too high, or clients can end up not valuing the relationship at all.

Limited opportunities – Key account management may even limit opportunities. There are some clients that don’t like you working with their competitors. This happens often with global firms. For example, with Amazon as your client they will not like you working with Google.

Cost – Key account management is heavy on resources. And it’s not just people, there are processes, systems, technology, equipment, training and more that you need to achieve results.

Lack of regular review and alignment – Organisational changes are a factor as key account management evolves. You need to frequently review processes, teams, reporting lines compensation plans and a lot more and that can lead to disruption and severe consequences if some of those reviews are not thought out well.

Misconceptions

By now, you should have good understanding of what key account management is, its value as a business strategy but there are some things that key account management is not.

It’s not short term. Key account management needs a long-term investment of energy and resources. It takes time to see the benefits to the bottom line, so you must be patient.

Key account management grows revenue. It absolutely does, but it does so by linking opportunities with solutions that improve the client experience that comes first. Cross sell and upsell are tools, not targets.

Key account management is not for everybody. Keep the number of key accounts small. The greatest return on investment requires a portfolio of clients with significant opportunities for account growth and a key account manager that has time to convert them.

Key account management is not a single point of contact. Key account managers are not the sole face of the business to the customer. It’s impossible to deliver strategic outcomes when you’re distracted by day-to-day issues. Try to connect subject matter experts in both organisations to develop those sorts of institutional relationships.

The Final word

Key account management is a great strategy to build a long-term profitable business relationship with your most valued customers and turn clients into partners.

It requires greater resources and increased costs but if you do it right you will achieve greater revenue and retention in the long-term.

The time maybe right to check if your current key account set-up is fit for purpose.