What is Key Account Management?
Key Account Management (KAM) is making your company customer-centric and committed to successful customer outcomes. The most critical element here is the relationship. How well do you know the customer stakeholders? Do you understand their buying and decision-making dynamics? Can you identify the personal goals and motivations of various team members?
Key Account Management (KAM) is the process of identifying, efficiently managing and growing a company’s strategically important clients. The main motive of this KAM process is to build long lasting mutually important relationships which would help revenue growth. Key Account Management model is built on the philosophy that a minority of your clients (about 20% of clients) provide majority of a company’s revenue and hence profit (about 80% of profit).
Why DO Key Account Management?
Key Account Management strategy is a prominent way to a company’s growth. Not all of the clients devote equally to a company’s growth and hence treating them equally would not be the right approach. Only by shifting your resources and focus towards your most important accounts, can you truly grow revenue and build long lasting business relationships. Your focus on these key accounts gives way to up-selling and cross-selling along with ensuring account retention. Not only this, an organization can achieve industry recognition and referral by efficient implementation of Key Account Management.
Difference between KAM and Sales
While ‘Sales’ is an overarching process across industries, KAM is specific to existing customers in B2B companies with complex solutions, multiple offerings and long term repetitive engagements. KAM requires a deep understanding of customer domain, situation, challenges and then stitching a solution. In Sales, one would be offering a suite of products already available.
In Sales you ‘sell’, in KAM you help customer ‘buy’.
Key Account Management v/s Normal Account Management
For any organization, managing their key clients is a very complex activity. It involves more time, additional resources, deeper insights, and stronger analysis than that is required for managing the normal accounts. This is because the Key Accounts may be smaller in number, but they contribute to a larger portion of a company’s sales, (remember the 80-20 Pareto principle – which says 80% of your profit comes from 20% of your accounts!)
To understand better, we can equate Key Account Management (KAM) with priority banking. It would require more experienced professionals in handling the key accounts, primarily because of the strategic significance when compared to the normal accounts. This would mean that they require more personal touch and special attention to details.
Precisely, KAM defines the relationship between the organization and its customers. The Key Account Managers need to develop strategic and long-term relationships with their customers, as it is trust, loyalty and engaged relationship building that keeps getting them business. While the regular accounts are transaction-centric, Key Accounts can only be managed with customer centric approach.
It is by learning the difference in both, and handling Key Accounts effectively, that their ultimate potential can be harnessed!
Key Account Management Strategy
KAM is a complex strategic process and involves the entire organization; hence it is imperative that there are pre-calculated objectives and dynamic strategies in place, ensuring its success.
Without understanding the objectives of their clients, the organizations will not be able to help them to attain success.The objectives must be crystal clear and should include personal as well as measurable goals.
From the perspective of long-term planning, it is important to articulate the long-term vision of the company and identify where the client needs help. It is also important to define specific goals like increasing profit margins and percent increase in sales etc. Then, the personal requirements of the client like, whether a hands-on Key Account Manager is needed or not, should also be addressed.
Simultaneously, from a more dynamic perspective, step by step implementation strategy must be in place to ensure continuous progress. Means of communication with the client need to be identified. The client must be educated about every development at each step.
It is important that there should be a constant balance between the long-term and dynamic approach. Only then can a mutually beneficial relationship be established between two companies.
Identifying, Managing and Growing Key Accounts
To achieve growth, an organization needs to have growing customers. That is what makes Key Account identification so significant. An organization needs to identify its Key Accounts much earlier than its competitors; else the effort is of no use.
To identify Key Accounts, it is imperative to understand the client’s business, and it is various aspects like profitability, priorities, and innovations, their industry growth projections, market share, and management, etc.
Once the Key Accounts are identified, an organization must take up only as many Key Accounts as can be handled together. It is often up to the Key Account Managers to ensure that the organization knows the specific needs of a Key Account.
Key Accounts have to be given a five-star treatment. The organization must be an enabler for their Key Accounts so that they look good to their customers. Key Accounts can grow effectively if they are made to respond at a fast pace to their clients and to take care of their customer’s issues. They should be made to stand out from their competition, and new opportunities be created for them.
Time, energy and resources must be effectively invested to grow the account. They must be made to move ahead of their competitors in every way whether it is strategy or innovation. Here, building trust is the key!
KAM implementations take years, not months. By proactively and dedicatedly keeping them engaged and making them constantly move ahead of competitors, Key Account Managers can keep them interested in working with your company for years to come!
Key Account Management Business Impact
The correct adoption of Key Account Management by an organization can help in providing long lasting benefits. Following are some of them
Key Account Retention
Losing a client is never good, but losing a Key Account can put a dent in those revenue figures. Not to mention all the cost and effort added for acquiring a new client to make up for the loss of revenue. Key Account Management helps you identify and nurture your most important clients hence ensuring their retention.
Increased revenue
As explained earlier Key Account Management leads to increased revenue. By upselling you help increase customer retainer or subscription cost. By cross-selling you grow revenue from Key Accounts.
