Why Key Account Management Should Be a Priority
Key Account Management Strategy
If you want customers to renew, simply keep them happy and healthy. If you want to run a successful B2B business, it should be focused on acquiring large customers and growing the number of users or products inside those key accounts. This is typically done through something called key account management.
What is Key Account Management (KAM)?
Key Account Management is a strategic approach to managing a company’s relationships with its most valuable customers. Gartner calls it “managing a mutually beneficial partnership between an organization and its most important customers.” It involves identifying, analyzing, and prioritizing key accounts, and then allocating the necessary resources to retain and grow these accounts.
For anyone looking to improve their account management efforts or uncover more benefits and tips from it, we’ve got a template for you:
Importance of Key Account Management
– In a B2B company, key account management is crucial. As these customers often generate a large portion of the company’s revenue. A survey conducted by the ABM Leadership Alliance found that companies using a key account management approach generate up to 208% more revenue from their most valuable accounts compared to companies without a KAM program. By focusing on your key accounts, someone in sales leadership can ensure that the company is maximizing its revenue and maintaining strong relationships with its most valuable customers. Which is precisely the job of a sales VP or manager.
Reasons a Sales Leader should care about Key Account Management
Boosting revenue and customer loyalty
By focusing efforts on key accounts, a GTM team can increase revenue and customer loyalty by identifying opportunities for upselling and cross-selling. This takes a healthy key account management process to do. It’s why upselling into complex accounts can seem daunting. To the average seller, it’s a waste of time when one doesn’t know where to begin. A key account management approach can also help the company retain its most valuable customers and minimize customer churn.
Identifying and maximizing upselling opportunities
– A key account management GTM approach enables a seller or key account manager to understand the needs and buying habits of its most valuable customers. Part of B2B account management involves something called white-space analysis, where sellers visualize the different divisions of a top account to see which part of the customer business could benefit from more licenses or a separate product of yours. This information can then lead to growth in key accounts, which further drives significant growth for the company. Not only does it drive growth, but the expense of acquiring a new customer is eliminated because they’re already using your products.
Minimizing customer churn
When prioritizing key accounts, a seller can proactively address any potential issues that may lead to client churn. It’s important to track the sentiment key stakeholders hold inside a key account. Try mapping out the key stakeholders inside a top account and tracking their sentiment. This helps maintain strong relationships with these clients and ensures the company’s long-term success with your product. You can also run a report inside your CRM. See how much activity your team is putting into a key account over the span of 60-90 days and how key stakeholders have engaged over time. This helps hold your team accountable and gives leadership an easy home base to understand where efforts are being directed.
The Risks of not using Key Account Management
Missed opportunities for growth
– It should be clear by now, but if a sales organization is not using a successful key account management approach, they may miss out on opportunities for growth with its most key accounts. These clients may not be adopting your tool as much as expected. Or, have found the onboarding process to be long and confusing. If that’s the case, this key account may explore purchasing products or services from your competitors, or they may not be aware of new products or training offered by your company.
Ineffective use of resources and time
– Without a key account sales strategy, a VP of Sales may allocate time and resources in the wrong places. When leadership has no transparency or true understanding of the health of their most lucrative accounts, it can be extremely difficult to decide which sellers should focus on what accounts, and what resources to provide said account to boost product adoption or keep them satisfied. The same can be said about (I think something was missing here). They may focus on accounts that are not as valuable while neglecting the needs of key accounts.
Poor customer relationship management
– A key account management strategy doesn’t work if you can’t accurately gauge client sentiment. Leadership may not have a clear understanding of its key clients’ needs and expectations. This can lead to poor communication and a lack of trust. Ultimately negatively impacting the company’s relationships with its most valuable clients.
As mentioned above, it is critically important that salespeople working on a key account have an up-to-date map of stakeholders who are tied to business success. Another way to prevent this is by sticking to a thoughtfully built opportunity plan; something sales teams create when the target account is still going through the original sales cycle. This helps prevent the loss of any important data once sales hand the account off to either a customer success rep or account manager. The loss of key information during this process can be critical when the time comes to retain or expand said account.
The Importance of White-Space Analysis
Identifying untapped opportunities for growth
– As mentioned above, white-space analysis is a major component of key account management. It enables key account managers to identify untapped opportunities for growth with their key accounts. Using the information, sales teams can prioritize accounts and allocate resources more effectively. White-space analysis is a process sellers should use if they’re unsure which account will best help them hit quota and ultimately drive the business forward.
Aligning sales strategies with company goals
– White-space analysis provides sales leadership with a way to visualize the opportunities for growth with its key customers. Leaders can lead their team with data-driven playbooks. Typically on how to penetrate a new division in key accounts or clients. The organization can use this information to align sales strategies with its overall goals.
This ensures that the organization is working towards its long-term success.
Reporting and Future Forecasting
Simply put, white-space analysis gives you a clear visual to show to your board or to investors if they want to know how you plan to expand tool adoption and customer expansion. The proof is in the numbers. It also helps align your sellers around how to identify and expand a key account. Scaling your account management sales process is how many unicorns in the Saas space have risen above the competition. Effective account management will lead to improved predictability for growth, churn, and where resources need to be deployed.
Quantifying account potential
– By scoring key accounts, a seller can quantify the health of each account and prioritize those with the most potential for expansion. An allocated account score is an effective way to give the seller an idea of how successful their efforts have been in each key account. There are a number of things you can score accounts on, including:
- Tasks/Objectives completed within your account plan – Is your team doing everything they can to ensure client success?
- Milestones hit in onboarding – Where do clients struggle or succeed when learning to use your product?
- User Engagement/Adoption – Once onboarded, are licensed users actually inside your tool on a daily basis? Why is/isn’t that so?
Even if said client doesn’t have the potential for a large expansion, a high account health score indicates they may be willing to work with your team on a case study or another way to document their success. Focusing resources on those accounts that will drive the most revenue and ensuring that sales efforts are put toward the right customers can help to drive sales and revenue growth.
Identifying risks associated with each account
– Scoring also helps to identify any risks associated with a particular account. Including an unstable client base or limited potential for growth. This information can be used by the seller to adjust the KAM strategy. Furthermore ensuring that sales efforts are used in the most efficient way.
Conclusion – The Case for Key Account Management
In conclusion, key account management is a critical strategy for any sales leader in a B2B company. By focusing on the most valuable customers, a successful KAM strategy can increase revenue, improve customer loyalty, and minimize customer churn. Furthermore, the risks of not using key account management, such as missed opportunities for growth and poor customer relationship management, highlight the importance of this approach.
Ultimately, white-space analysis and scoring accounts are two essential components of key account management. They can help prioritize accounts, maximize resources, and align sales strategies with the company’s goals. By implementing these strategies, a sales leader can ensure the long-term success of the company. It builds strong relationships with valuable customers. Like any relationship, you should treat your customers right. Keep them happy and healthy, and they’ll keep coming back.
What drives key account strategy success?
- KAM Team alignment – Ensuring everyone is aligned on the key accounts, the key business relationships, where there are potential risks/threats, what the strategic value your service provides, and how it helps organizations who partner with you hit their goals are major components. Your portfolio of customers that make up substantial percentages of your revenue should have strategic account plans that the team is working off of and updating on a regular basis.
- Strategic account managers who are incentivized by the right key account management program. If the business places emphasis on the strategy to drive the retention and growth of key accounts, plan usage, and information sharing, the team is more likely to work together as a unit to drive the best outcomes. Make sure the ways you compensate these professionals are aligned with driving good key account management performance as well.
What is the difference between key account planning and key account management?
Answer: Key account planning focuses more on the immediate plan put in place to help provide value to the account and map out the key account growth plan over a 3, 6, or 12-month time frame. It documents the challenges, current state, key stakeholders, and white space to grow the account. Account planning is very much focused on revenue. Key account management is more of the day-to-day engagement of the account, solving problems, and aligning your product or service with the customer. Key account management resources are leveraged to drive consistent adoption and usage of your solutions.
What does a key account management strategy entail?
Strategic account management brings together different team members to ensure your most important key accounts reach their strategic goals in part because of your partnership. These strategies need to account for the key stakeholders and relationships, the best practices the team has used in the past to drive quick wins and successes, the major goals, milestones, and requirements of your product or service, along with some visualizations and reporting that helps show where you have the potential to grow that account. Manage the relationship accordingly.
Account managers need to build a strategic relationship with people who can move the needle inside the businesses they work with. Large accounts that spend a lot with you should be the biggest priority, and the key account team needs a customized key account management plan for each one.
What makes a good key account management model?
At Prolifiq, we believe that opportunity plans play a pivotal role in a smooth transition from prospect to customer, and help internal resources get up to speed quickly. Successful key account management practice shouldn’t have to start from ground zero, all of the information needed to hit the ground running is accessible in the account plan that they have. One of the tips we’d give any revenue team is that the future of key account management actually starts during the sales process!
What metrics belong in a key account management report?
- Usage – Tools like Gainsight help you monitor key adoption and usage metrics
- NPS – What does customer satisfaction look like? How likely are they to recommend you? Segment your key accounts
- Customer retention rates – Especially with key accounts
- NRR – This is a key indicator of retaining and growing your key accounts
- Churn – what percent of your accounts don’t continue the relationship?
- Account Growth: How many accounts are increasing their spending year over year?
- Key Account Relationships: How many key decision-makers are supporters or champions of yours? The broader coalition you build, the more likely you are to retain and grow the account. Don’t forget to track this.
What is an example of key account management?
Go into your CRM and find the account that spends the most money with you. There should be a clear, and easy-to-follow plan of who the internal team members are that will have account management roles. They’re meant to build and maintain relationships, uncover opportunities to grow the account and handle any issues or challenges in a timely manner. Are the main stakeholders visible to everyone who is responsible for managing and growing the account?
From end-users of your product or service to decision-makers, budget-holders, signatories, and more. Make sure all of these people are accounted for and are regularly engaged by your team. Are multiple buying centers in different business units or subsidiaries laid out? There is a clear timeline of when certain objectives, tasks, and milestones should be completed. Everybody is aware of who is responsible for what. The benefits your customers expect to gain from you are outlined. The revenue potential of the account is stored on the account object in your CRM. The strategy to penetrate and grow the account is also visible for leadership and the KAM role. Once you’ve done all of this, you have a key account management plan and strategy in place to work off of. Follow this checklist and we’re confident you’ll become successful with your most important customers on a regular basis.