Why Key Account Management Should Be a Priority
It’s the week after Valentine’s Day, when many of us took our partner or someone special to us out for a nice dinner. Living in Chicago, we like to constantly try new restaurants to find new favorites. It dawned on me the striking simplicity parallel to B2B selling. 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.
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.
II. 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 and almost 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 to 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.
III. 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 process 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, which will indefinitely negatively impact 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.
IV. 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, as it enables key account managers to identify untapped opportunities for growth with their key accounts. This information can then be used to 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 on how to penetrate a new division in a key account or client. This information can then be used to align sales strategies with the overall goals of the organization, ensuring 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.
V. Scoring Accounts
Quantifying account potential
– By scoring 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. This helps to focus resources on those accounts that will drive the most revenue and ensure that sales efforts are put toward the right customers.
Identifying risks associated with each account
– Scoring also helps to identify any risks associated with a particular account, such as an unstable client base or limited potential for growth. This information can be used by the seller to adjust the KAM strategy and ensure 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 that 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 and build strong relationships with its most valuable customers. Like any relationship, you should treat your customers right. Keep them happy and healthy, and they’ll keep coming back.