Key Account Management best practices
If I tell you cholesterol, what do you think? What if I tell you Pareto? Do you follow me? Not really? Let me explain: the 80/20 rule is very useful in sales and customer segmentation. This principle reminds us that 80% of the results can often be attributed to 20% of the efforts made. And that not all customers are the same… some are more like bad cholesterol… Invisible, painless at the time but formidable over time. Measuring regularly and separating the good from the bad is therefore highly recommended for your health.
Would your company escape this law? If so, then congratulations! You are officially the exception that proves the rule and I am delighted for you. However, there is one small caveat. When we ask about the segmentation of customer portfolios, most of the people we talk to answer with marketing criteria. Very few analyze and categorize their clients into good and bad cholesterol. It is often complicated and tedious, and it is also necessary to be clear about the sorting criteria, which is why at Halifax we help you industrialize this with a Canadian tool: Venturi. But everyone can do it themselves.
Let’s go back to the Pareto principle. If it applies to you, no matter what the ratio, 80/20, 75/25 or even 70/30, the consequence is the same: a large part of your turnover depends on your relationship with a small portion of your customers, on which you can sometimes become dependent.
What happens if you lose one? Or if a geographical area or a division of your company is very dependent on it, with significant differences in economic conditions from one region to another. In an environment where annual inflation in the Eurozone is at 8.1% (figures published in the Economist, September 1, 22)!!! If you do your US dollar transactions, I don’t want to stir the pot but you can replace the 8.1% with 10 or 15%! For those of you in this case, we understand your pain; a large part of Halifax’s client portfolio is outside the euro zone and juggling rates from one zone to another for the same client becomes a headache.
In short, it is essential to protect yourself from all eventualities to keep your best customers. Zero risk does not exist, but in the absence of absolute protection, strategic management of your key accounts is the approach that will protect you from this type of catastrophe…
This approach to customer relations (also known as strategic account management, key account management or KAM) transforms the salesperson from a mere service provider to an essential partner for the customer.
In this new dynamic; the strategic account manager is not satisfied with having sold a service or product. He or she is actively thinking of “every” possible way to add value to the client. He acts as a true advisor. He continually identifies his client’s challenges and actively works to solve them or at least provide relevant directions. The topics of conversation are therefore multiple: sales, marketing, staff performance, networking, business opportunities… The primary focus is not the sale of services but rather the economic growth of the client.
If you were in your client’s shoes, who would you replace more easily? A salesperson always ready to increase your expenses or a consultant always ready to contribute to your growth? The former is seen as a nuisance, at best a necessary evil. The latter is seen as a valuable ally. Guess what? Your customers think exactly that. So you can see why the only approach that makes sense in this challenging economic environment is key account management.
According to Gartner, key account management is the process of planning and managing a partnership between an organization and its most important customers.
Halifax Consulting agrees with this definition, but we believe that Key Account Management (KAM), in addition to focusing on existing “good” customers, should also identify high potential customers. The long-term sustainable growth of your organization justifies such an approach. It is a principle of economic anticipation that allows its members to stay ahead of the competition.
I hope you understand the importance of this approach and don’t need to be reminded of all the benefits. For more details on the benefits of KAM, visit the Halifax Consulting website https://bit.ly/LivreBlancKAM or scan the QR code.
For this article, we will assume that you are convinced of the benefits of the practice and that we can then move directly to the best practices.
THE 4 BEST PRACTICES OF KEY ACCOUNT MANAGEMENT
- Identify your strategic accounts correctly
Let’s start at the beginning. Make sure you identify key accounts. To do this consistently across the company, choose your selection criteria well (choose 3 to 8 criteria): revenue, growth potential, cultural fit, customer relationship history…
Remember that according to the definition used by Halifax Consulting, your criteria allow you to identify the important accounts but also the ones to come. Keep an eye on the latter. As soon as possible, dedicate time and resources to your key accounts as well. They will be forever grateful.
Don’t forget to review these criteria on a regular basis and update them as needed. When to change them? There are several scenarios, but a classic case is when you don’t see any growth for an account that has been identified as strategic despite the time and resources devoted to it. It is always wise to first question the good execution of your action plans. That said, it is also possible that your selection criteria are simply outdated or inappropriate. It is then appropriate to change your priorities and discriminating criteria.
- Correctly identify the right manager
Key account management cannot be improvised. The key account manager is not a salesman 2.0. Sales and negotiation have their place in the key account manager’s arsenal of skills. However, the latter will need much more to be able to talk about a long-term strategy for your commercial growth. In this case, the key account manager almost plays the role of a consultant, a mix of market specialist and strategic management. He knows his client’s company from top to bottom: its structure, its managers, its influential people, its economic stakes… He knows and understands perfectly the stakes of his client.
I recently heard a client compliment a consultant, Xavier Lorenzo, for his business knowledge. This was a negotiation training course, the famous DEAL Method® . I can’t help but think, as I write this article, that this is exactly the kind of compliment that a key account manager worthy of the name should receive from each of the companies he/she is responsible for.
- A multi-disciplinary support
In order to play the role of advisor and be seen as such by the client, the strategic account manager cannot work in isolation. The challenges of a large client are often multifaceted. The manager could not do a quality job by relying exclusively on his own skills.
Have an internal support system for key account managers.
This can take many forms. A common model is to have easily accessible in-house experts working closely with the manager. This in-house support is extremely important. It not only allows the Key Account Manager to ensure the proper execution of commitments made to the client’s account, but also to stay on top of trends in areas outside of his or her area of expertise.
- Ensure a customized follow-up of the client
Personalized treatment is, of course, at the heart of this approach. You need to be able to present the key customer with a well thought-out action plan that is of course tailored to their situation. Ultimately, your key accounts want to feel that you are fully invested in their success.
Plan a coherent action plan for a period of 1 to 3 years with specific objectives, short, medium and long term, strategic recommendations… To help you in this delicate and time-consuming task, think of :
- Measure your performance. As Peter Drucker said, what is not measured does not count. Define your KPI’s in advance and have formal, clear, measurable and repeatable processes so you know exactly what needs to be done, by whom, how and when.
- Communicate regularly with your client. Allow your client to track the progress of your efforts, provide feedback and actively participate in the solutions you implement
- Leverage sales relationship tracking and optimization tools: Zoho, Salesforce, Hubspot… to name a few.
The thing to remember is that in the uncertain times we are experiencing (inflation of nearly 10%, loss of value of the euro against the dollar, increased competition from Asia, threats and crises …), resilience on key accounts is a must. You can’t afford to lose them.
The best way to protect yourself from this eventuality is :
- Identify those 20% of customers who generate 80% of your revenue.
- To implement a KAM strategy
This approach takes time to implement and comes with its own set of challenges, but once in place, you now become a key partner for your client.
Are you ready to implement a key account management strategy? Halifax Consulting can assist you at any stage of your program, train your employees or help you better identify the right profiles for you. For more information, www.calendly.com/e-cot
PS: In terms of Key Account Management, you couldn’t have come across a better choice than Halifax Consulting, the reference in this field in France and Europe. Halifax is at the origin of several important initiatives:
- The Key Account Management Club
- The Annual Key Account Management Symposium, in collaboration with Chicago-based SAMA.
This year, BNP Paribas, Orange, Suez, Total Energies… and many others were present.
The next edition will probably be sold out by the time you read this article but get ready for next year 😉
- Several specialized books have been published by Dunod, including the latest “Key Account Management” written by Frederic Vendeuvre and Eric Pinard.
More info: firstname.lastname@example.org
Did you like this article? Share it