Key account management involves developing strategic, long-term partnerships with important customers to ensure sustainable business growth. It aims to maximize sales, increase average deal sizes, improve customer loyalty and retention, and manage customers across business territories. Selecting the right strategic customers aligned with business goals and classifying accounts is important. Effective key account management requires relationship building, knowledge management, collaborative planning, and internal organizational alignment around key customers. Risks include overdependence on large customers and misreading their loyalty. Benefits include improved customer retention, new business opportunities, and internal consolidation across business units.
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Key account management
• Defines the full relationship between your business and the customers you are selling to.
It revolves around handling the customers who play a strategic role in the growth of a
supplier.
• Key account management is a strategic business approach with the objective of ensuring
long-term and sustainable business development through profitable partnerships with
strategically important customers Key account management is not an isolated business
process.
• It is an intégrative élément of the business strategy
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Key Account
• A person or a group of people with whom your business has built more than just a
standard business relationship, based on the trust level between you and the buyers
• Make sure you understand the difference between a real Key Account and a Standard
Account. Ideally, for a Key Account, the relationship has evolved from vendor-buyer to
partnership. The primary reason for evolving a partnership is that the better your buyer
(and other contacts at the company) succeed, the more your product or service is going to
succeed at that company.
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Objectives of Key Account Management
• Maximizing the sales velocity, this improves the utilization of the sales resources and
understanding the importance and nuances of managing account.
• Increasing average deal size or the wallet share,we achieve with each customer, while at
the same time minimize price erosion by developing specific process to build and manage
accounts
• Increasing customer loyalty and customer retention ,this in turn drives down overall cost
of sales.
• Thereby, be value partners to our customer.
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Why Key Account Management?
• Retention of customers in a competitive environment
• Growth through entry into new customers
• Growth with existing customers
• Managing customers with a cross territory perspective
• Going beyond product and benefit selling
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Account Types Classification
Based on this relationship you can cluster your accounts by account types and account
classification:
• Account Type – is a customer, be it a individual or company, that you are connected to:
for example a new customer, existing customer, partner etc.
• Account Classification (0, A, B, C, D) – enables you to classify your accounts from 0 (you
do not know this account at all) up to D (your Key Account - Partner)
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Org Chart
• By building an Org Chart for each of your accounts, you will always know to whom you
are talking, where they stand in the order of things, and who must still be convinced in
order to bring the sale to a close.
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Account Management Vs Strategic Account Management
• SAM is not account management (many organisations frequently think they are doing SAM
when it is in fact account management)
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Selecting and categorising customers
• The choice of strategic accounts is arguably one of the most important
• Strategic customers must be aligned to an organisations strategic vision
• Selection criteria should identify the customer’s attractiveness in terms of its potential for
the organisation
• Also necessary to have a good process for deselecting strategic customers
• Optimum number of strategic accounts is 20-30
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Developing relationships
Most important attributes are trust and integrity
• The main task is developing effective business relationships with senior customer
decision makers and influencers – Per IBM the most important aspect
• The stronger the relationship, the less threats will apply – Per IBM key to their success
during recession
• Relationship development can be achieved by mapping the people inside the customer
who matter, and deciding with whom you want to have a relationship with
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Driving Factors
• Marketing mix by Industry/Channel – An obvious lens to determine the proper
management mix is the industry/channel tactics you are delivering for your client.
Typically interactive will require more project management discipline than traditional.
• Strategic vs. Tactical – Depending on the agreed upon scope, the level of strategy vs.
output will play a large role on the management team you select. Large volume accounts
will require more process oriented management.
• Growth Opportunities – All client relationships need just that, relationships, in order to
survive and grow. Relationships take time and the right resources that will cultivate those
opportunities.
• The People – Most importantly, the key to successful engagements is the people. A
position that requires two people today, may only need one if you find the right person.
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Alignment in the organisation
Organisation Commitment
• Relationships outside of the organisation depend on the quality of relationships within it
• Many of the benefits result from crossing boundaries, whether they are internal or external
in the customer organisation
Role of the strategic account manager
• Strategic account manager entails the role of ‘orchestrating’ the firm’s resources
Transition to SAM
• Use metrics to measure the success of the SAM program.
• SAM is a marathon and not a sprint and firms should plan their SAM implementation
around the three important areas of change activity: 1. strategy and planning, 2.
organisation and culture, 3. process.
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Knowledge management
• Firms with the most effective SAM make information management at the customer level a
core competence
• Moving to a knowledge management approach has benefits for both the company and the
client.
• For the company, client knowledge is retained and this is where an IT solution for account
management is required.
• For the client they get the extra value of deeper knowledge from the supplier by mixing
with like minded experts.
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Planning for strategic accounts
Best practice companies adopt a collaborative approach with the customer, developing long
term plans ‘for’, and together with, their strategic accounts
• Develop an effective joint account plan with the customer is critical to ensuring
relationship lock-in, uncovering new business development opportunities and driving
rapid implementation
• Short, sharp account business plans that “live” are best
• Strategic marketing planning should in turn relate to the corporate strategic plan
• Organisations that invest resources in detailed analysis of the needs and processes of
their strategic accounts perform much better in building long term profitable relationships
• The underpinnings of it all is really having a deep understanding of the customer, not just
the power politics, but what their marketplace is and where it is going, so that you can
genuinely add value
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Risks and failures
• Relationships must be reciprocated and appropriate
• Common mistake is to assume that the customer want to have close, partnered relationships
with their suppliers
• Many companies do not do business on this basis at all; instead their purchasing
professionals reduce all supply decisions down to transactions based on trading off quality
with price, and flexing market power to obtain the best result.
• Large customers are not always the best customers
• Assumption that the biggest revenue earners are the most profitable is false, and that great
care must therefore be taken to before committing substantial resources to large companies
who demand great service at lower cost. Research has found that often the most profitable
customers are often just below those that generate the largest revenue.
• Important to stay close to strategic customers but reaching out to other customer groups to
reduce dependency on a few, and being locked into long term low performance with
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Risks and failures
Misreading customer loyalty
• If the supplier links their future strategy to the success of its customer, it creates a strong
dependency and consequently a risk on the customers future success or failure.
• This is with the added risk of a customer switching to another supplier, which can often be
part of the of the customers strategy.
• Therefore it is important not to be over reliant on one customer and avoid the critical error
of believing that customer is a loyal partner.
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Benefits Strategic Account Management
Strategic Account Management -> Take account management to next level
Customers -> Service for life
• Build long term strategic relationships with customers
• Retention of strategic customers - more cost effective to retain customers
• Spot new opportunities and generate new business
• Increased consultancy provides the hook for increased downstream activities
Internal Integration / Consolidation
• Break down internal boundaries and reduce silos
• Use as part of a Company standard to manage consultancy client relationships with major
customers
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10 lessons account management teaches you
1. Be patient - things go wrong things get delayed stay strong & don’t get swayed.
2. Manage Expectations - know what can be done tell clients what to expect put it across the
right way
3. Show that you care - understand the client put yourself in their shoes show that you care
& u’ll have nothing to lose
4. Ask the right questions - till you get the answers u need it will give you clarity & help you
succeed
5. Communicate regularly - keep in touch with the client be it for updates or advice it makes
you look responsive and makes them feel nice.
6. Keep the client’s best interests in mind - do what’s best for the client give them all u’ve
got the client has trusted you they better regret it not.
7. Educate when required - Don’t assume that the client knows it all coz if they did they
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10 lessons account management teaches you
7. Keep it “black & white” - document conversations keep stakeholders informed this will
avoid confusion & strengthen your ground
8. Communicate regularly - keep in touch with the client be it for updates or advice it makes
you look responsive and makes them feel nice.
9. Be honest - be open state the facts use the right tone with some tact
10. Do the right thing - clients can be unreasonable but that’s not always true follow your gut
& do what you gotta do
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