Account Management – a complete guide

In a business world full of endless opportunities and constant change, thoughtful, strategic customer relationship management – or more specifically, relationship management with key customers – is crucial. The truth is that, in this day and age, a company’s success largely depends on how well it can serve its customers.

From this article you will learn:

• Who is a key customer and how to identify them?
• What is key account management?
• Who is an account manager?
• How to build a key account management strategy?
• What are the best practices for key account management?
• Will a strategy based on identifying key customers work for your business?

Today, customers are more demanding than ever. In some cases, it is difficult to gain and maintain customer loyalty to a brand. For this reason, every business needs to manage its customer relationships skilfully and effectively. Without this, even the most innovative product or the most attractive price may not be enough.

In response to modern market requirements, we have prepared a complete guide to customer service. We hope it will help you to manage your customer and key account relationships effectively.

Key Account – who is a key customer and how to identify them

The Key Account, or key customer, is an extremely important business partner who, because of their value to the organisation, requires special attention and a personalised approach. Who exactly is a Key Account?

Definition of Key Account

In the simplest terms, a key account is that customer who brings in a significant percentage of the company’s revenue. This can range from the person who makes regular, large purchases to those who invest in more expensive premium products or services. However, the definition of a key customer is not limited to financial indicators.

A key customer will therefore be that person or company that is strategically important to your business. For example, it could be a company that gives you access to new markets or helps you expand your offering. A key customer could also be a so-called ‘opinion leader’ who influences the opinion of others and helps build your company’s reputation in the market.

Key customers can also include people who have the potential to make a future impact on your business. Even if they are not currently generating a lot of income, they may have the potential for significant future growth, making them valuable to your business.

It is worth noting that key customers are not a fixed category. Their status can change as your business grows, the market changes or their own needs evolve. For this reason, it is so important to regularly review and update your list of key customers, adjusting your business strategies, marketing strategies and ongoing activities accordingly.

Remember that a key customer is not only a source of revenue. It is first and foremost a strategic partner that can help your business grow. That is why a key account deserves special treatment and a personalised approach.

Criteria for selecting key accounts

The determination of who is a key customer should be based on a strategic approach and thorough analysis. The SBI (Sales Benchmark Index) suggests that you choose between three and five selection criteria to focus on the business needs and potential impact of your customers. Here is a list of ten criteria you can consider in selecting key customers:

• product fit – first and foremost, consider how large the potential audience for your products or services is that the potential key customer is interested in,
• average transaction size – how much a given customer spends on average in your business,
• revenue potential – how much a given customer could spend with you in the future,
• purchase process – how the customer purchases your products or decides to use your services – how many people are involved in the purchase process and how long the payment process takes,
• partnership history and potential – is the customer currently or has they ever been a partner of your business? Is there potential for such a partnership in the future?
• duration of the customer relationship – how long has the customer been using your services?
• liquidity – is the client able to meet their financial obligations on a regular basis?
• existing relationships – what relationships does the client have with other companies that could potentially become your clients?
• cultural fit – is there a match between how the client treats its customers and employees and how you treat your employees?
• geographical fit – is the customer’s location of strategic importance to your business?

Keep in mind that the aspects listed above will not guarantee you a perfect list of key customers. You need to develop a formula that takes into account such criteria that are relevant to your organisation. Then verify how much growth potential there is for each key customer.

When identifying key customers, it can be helpful to score them. Simply rate each customer according to the criteria you have chosen and assign them points – from 1 to 10 in each category. The customers with the highest scores will, in turn, become your key customers.

However, it is worth exercising moderation. Initially giving a large number of customers ‘key’ status may seem tempting, but it is better to be conservative. Implementing Key Account Management requires significant organisational change, management support, hiring and training staff and implementing new processes. By starting with a small group of key accounts, you can focus your efforts on them and gradually implement the necessary changes.

Key Account Management – what is key account management?

Key Account Management (KAM) is a strategy that involves managing a company’s key customers. The essence of KAM is to understand and recognise that not all customers are equal and that some customers have a much greater impact on the success of an organisation than others. As such, key customers require a special approach, dedicated service and more complex management strategies that go beyond standard customer service activities.

However, Key Account Management is not just about retaining important customers. It is equally important to develop relationships, understand the needs and expectations of key customers and tailor the company’s offering to their requirements. The aim of KAM is therefore to build long-term, trusting relationships that benefit both the client and the company.

In practice, Key Account Management requires an integrated approach that involves the various departments of the company – from sales and marketing to service and technical support. In effect, Key Account Management is a strategy that reflects the importance of an individual approach to the customer and long-term business relationships.

Key Account Management and sales

Key Account Management (KAM) and sales are two different disciplines that, although closely related, have different goals and objectives.

A sales person’s main task is usually to achieve short-term goals – selling a product or service. The salesperson focuses on a specific transaction, a specific sales target. His or her work with the customer usually ends when the sale is finalised.

A Key Account Manager (KAM), on the other hand, looks at the customer relationship from a long-term perspective. His or her job is not only to sell, but above all to build a long-term, stable and mutually satisfying relationship. The KAM has broader objectives, which include working with the client on joint projects, helping the client to achieve their goals and providing the client with the necessary support.

Key Account Manager – who they are and what their role is

A Key Account Manager is someone who plays a key role in building and maintaining strong, long-term relationships with a company’s most important clients. The Key Account Manager’s role is to both protect the company’s interests and meet the needs of key customers by converting them into lasting and profitable partnerships.

The Key Account Manager has many functions. First and foremost, however, he or she is the link between the client and the company. His or her responsibilities include understanding the needs of key customers, identifying growth opportunities and then coordinating the company’s teams to provide the customer with products or services that meet their expectations.

The Key Account Manager’s job requires a high level of commitment. He or she must communicate regularly with key customers, monitor customer satisfaction through the use of customer satisfaction surveys and respond to any emerging issues or challenges that the customer may encounter. In addition, the Key Account Manager must keep abreast of industry and market changes to help the company anticipate customer needs and be able to adapt to them.

The Key Account Manager is also responsible for developing strategic plans for key clients. These plans include, among other things, setting sales targets, planning activities to help achieve these targets, and monitoring and evaluating progress.

Above all, the Key Account Manager is the person who builds and maintains relationships with key customers. He or she must have highly developed interpersonal skills in order to understand customers’ needs, gain their trust and build long-term relationships that benefit both the company and the customer.

Key Account Manager competencies and skills

As an individual with a very important role in the context of key client relationships, the Key Account Manager must possess a number of competencies and skills. Here are some key aspects:

Knowledge of clients – understanding key clients, their needs, expectations and the market in which they operate is essential. The Key Account Manager should be able to anticipate which products or services will best meet their needs and be up to date with their business and any changes to it.

Liaisingwith multiple departments – The Key Account Manager must be an excellent coordinator. The job often requires liaising with different departments within the company, such as marketing, finance or the sales department. This makes it possible to provide key customers with the highest level of service.

Managing key customers – Key Account Manager is a job that also requires the ability to manage key customers effectively. This means not only maintaining good relationships with them, but also identifying opportunities for growth, negotiating contracts and resolving any problems that may arise.

Planning and co-ordination of activities – A Key Account Manager must have the ability to plan and co-ordinate various activities to achieve the company’s business objectives and meet the needs of key customers.

Business awareness – Understanding the market in which the company operates, as well as general business awareness, is key. This means that the Key Account Manager should keep abreast of market trends, competition and changes that may affect the company’s business or the decisions of its key customers.

Analytical skills – The Key Account Manager must also be able to analyse different sets of data and information – so as to understand the company’s performance, identify opportunities for growth and make appropriate decisions.

Verbal and written communication – In this role, it is also crucial to communicate effectively – both to members of the company and to key customers. Therefore, a Key Account Manager must have the ability to express their thoughts clearly and persuasively – both verbally and in writing.

A Key Account Manager should therefore possess not only technical and business knowledge, but also highly developed soft skills. Without this combination, understanding and effectively managing key accounts can be difficult and sometimes even impossible.

What is the difference between a Key Account Manager and an Account Manager

Both the Account Manager and Key Account Manager are important members of the team and play key roles in maintaining and developing client relationships. While the two positions share many similarities, there are also some important differences.

The Account Manager is responsible for managing relationships with a number of the company’s customers. His or her main objective is to understand the needs and expectations of customers and to ensure that the company meets these expectations. At the same time, the Account Manager seeks to increase sales. He or she works with the sales, marketing and customer service teams to ensure customer satisfaction and build long-term relationships with them.

The Key Account Manager, on the other hand, focuses on key customers who are important to the company. He or she is concerned not only with maintaining and increasing sales, but also with developing strategic plans that help maintain and deepen relationships with key customers.

How do you build a key account management strategy?

Building an effective key account management strategy, known as Key Account Management, is vital to gaining and maintaining customer loyalty, as well as to the long-term success of your business. Here are some steps that should be included s Key Account Management strategy:

Set goals

The first step in building a Key Account Management strategy is to set measurable and achievable targets in customer service. These should be related to both the needs of your business and the expectations of your key customers. They may include aspects such as increasing revenue, improving customer satisfaction, increasing market share or developing new business opportunities. Remember to make your objectives specific, measurable, achievable, realistic and time-bound (the SMART method).

Deliver exceptional products/services

Key customers expect and deserve the highest quality products and services. Therefore, it is important that your company is able to deliver products and services that meet or even exceed their expectations. Special offers may include unique products that are tailored to the individual needs of key customers or services with exceptional levels of customer service.

Measure results

Any successful strategy requires regular evaluation and measurement of results. This will allow you to verify whether your strategy is effective. You will also find out what you can do to improve it. You can use various indicators to do this, such as sales revenue, customer satisfaction levels, market share or customer loyalty levels.

Anticipate future customer needs

To stay competitive and at the forefront of the market, you need to anticipate the future needs of your key customers. This means tracking market trends, understanding changing customer preferences, and using data and analytics to predict what your customers will need in the future.

Remember that an effective key account management strategy should be flexible and evolve with the changing needs of your business and its customers. This requires constant monitoring, evaluation and adjustment of your strategy – to make sure it is fully optimised.

As a result, a key account management strategy in the context of the customer lifecycle aims to maximise the value and retention of these customers, through focused action, tailored to individual stages and needs, and thus contributes to the long-term success of your business.

Best practice in key account management

Key Account Management (KAM) is not just a strategy, but a mindset that focuses on building and maintaining long-term, valuable relationships with a company’s most important customers. Here are three best practices for managing key accounts.

Choose the right Key Accounts

Not every customer is a key account. Key accounts are those that bring the most value to your business – it could be the highest revenue or the greatest growth potential, for example. You need to choose your key accounts carefully, based on clearly defined criteria such as customer value, growth potential, strategic importance or cultural and geographical compatibility.

Build a key account team

Managing key accounts is not a task for one person. It requires a team of people with different skills and experience. They must also demonstrate a strong commitment to serving and understanding the needs of key accounts. Your team should include not only Key Account Managers, but also people from sales, marketing, customer service, product and other relevant departments. Each team member should know their role and responsibilities in the context of key account management.

Create a key account plan

According to RAIN Group’s research, the most important difference between the most effective and the rest of the business is effective key account planning. This is because a plan helps to identify, among other things, the greatest opportunities for growth, potential obstacles or threats from competitors.

A customer service plan should take into account:

• Your relationship with the client,
• your current business plan, your goals and financial health,
• Your goals for working with the client,
• Your strategy to achieve these goals.

Invest in useful tools

Key account management requires effective tools to help manage the relationship, monitor performance and anticipate future client needs. This can include customer relationship management (CRM) tools, business analytics, marketing automation, project management tools, as well as communication and collaboration tools. Choosing the right tools can significantly increase the effectiveness of key account management and help you achieve your business goals.

Remember that key account management is a long-term process that requires continuous monitoring, evaluation and modification of ongoing activities. With the right strategy and commitment, however, key account management can bring significant benefits to your business.

Is Key Account Management a strategy that will work for your business?

Key Account Management (KAM) is a strategy that can bring significant benefits to your business, but it is worth bearing in mind that it is a strategy that will only be suitable for selected business models. Here are some aspects you should consider before you decide to implement this strategy:

The nature of your sales process

If your sales transactions are short-lived and require minimal interaction with customers, KAM may not be the best solution. Managing key accounts requires building long-term relationships and a thoughtful sales strategy, which can be difficult to implement in a business that tends to focus on one-off transactions.

Potential for up-selling and cross-selling

If there is no potential to sell additional products or services to the customer at the end of the transaction, the KAM strategy may not be delivering your intended benefits. Of course, it is important to maintain a high quality customer service, but focusing on a few key customers is a strategy that should yield additional financial benefits.

An exception to the above rule may be if your company is able to win a small contract with a new client and then expand the relationship to other departments, offices, subsidiaries etc. In this case, a KAM strategy may prove to be profitable.

Market competitiveness

A key account management strategy can become your competitive advantage. If your customer has a choice between you and one competitor, the promise of treating them as a key customer can tip the balance in your favour.

Company financial resources

Successful key account management requires company-wide support, management commitment and a team dedicated to key accounts. You also need enough resources to make an investment that can pay off after 12, 24 or even 36 months.

Don’t forget the need to constantly adapt your strategy to changing conditions and respond to the results of performance measurements. Key account management is a dynamic process that requires constant analysis and optimisation.