So what the heck is
key account management?
Look if you're not sure,
don't worry, you're not alone.
It's a difficult concept to nail down
and often misunderstood,
so let's figure out what key
account management is,
what it isn't, and how to do it well.
Sit tight.
I'm going to be right back.
Hi Heroes.
Warwick Brown, founder at Account
Manager Tips, hosted The KAM Club
and on a mission to help busy
key account managers get results.
So let's get the dull academic
definition of key account
management out of the way first.
Key account management
is the process of
allocating and organizing
resources to achieve optimal business
with a balanced portfolio
of identified accounts
whose business contributes
or could contribute
significantly or critically
to the achievement
of corporate objectives,
present and future.
Phew that's a mouthful.
Now here are a couple of stats
to back up the importance
of key account management
as a business strategy.
Existing customers are up to 70%
more likely to buy from you
than prospects.
80% of the company's
revenue comes from just 20%
like this much of existing customers.
In other words,
you know if you want to make money,
you need to spend more of your time
and more of your resources
on the clients with the
most growth potential.
Now there's a little bit
more to it, but first,
it might be helpful
to explain a little bit of the key
account management origin story
so you can learn how it became
the business strategy.
Once upon a time not only did
sales reps win the client,
they also supported them long after
the deal was done, but you know.
that was really tough to be out there
looking for new business
while still looking after old business.
There just was too much to do
and not enough time to do it in.
Over the years as buyers
became more powerful.
You know customers went global.
Costs came under pressure
and generally the supply chain
became a lot more complex.
It became obvious that you know
one person just couldn't do it all.
So somewhere in the 1960s
responsibilities started to divide.
Sales people won the clients.
Key account managers kept them.
Now look it took a while
for it to take off, but certainly
by the 1980s key account
management was the moment
and you know, it still is.
More resources and attention
on the needs of existing business
really helped companies
to accelerate revenue and retention.
And also clients developed stronger
relationships with their suppliers
and as a result
they achieved better results faster
and everyone was happy.
Well, you know, mostly.
Some clients are never satisfied.
So how do you decide
which clients to swipe left
and which clients to swipe right?
So you might think that
your biggest accounts
or your most complex
accounts or the ones that spend the most
are your most valuable customers.
But you'd be wrong.
Key accounts can be big or small.
They can be local or global.
They can be strategic or opportunistic.
So why is that? It's
because what makes a key
account important or what makes a key
account a key account is
its future value.
You know, not what clients spend today,
but what opportunities
may become available tomorrow.
So keep a lookout for clients
with a combination of these qualities.
Growth.
What clients do you have
with opportunities to expand revenue,
improve margins and
reduce the cost to serve?
Harmony.
These are the kinds
of clients who are just, you know,
they're good, fit for your solution.
They love what you do
and you meet their needs
better than other suppliers.
And then value.
Clients who consider you
a strategic partner
and want joint success.
They know that you give them an advantage
they couldn't achieve alone
and they want you to succeed.
So what does a key account
manager do anyway?
Well I'm glad you asked.
They partner with a company's
most valuable clients to understand
their challenges and needs.
And then they use those insights
to come up with new ideas
to create mutual benefit
for you and for your customers.
By following a systematic approach
to creating action plans key
account managers
also identify opportunities for growth
and for mutual benefit.
And they prevent the risk of clients
leaving, you know,
like stopping competitors
sniffing around.
Establishing influential
business relationships with decision
makers is a primary goal.
I mean, that's how budgets get approved,
and that's how things get done.
Key account managers also coordinate
internal resources
that they need to achieve their plans.
So you know I could go on and on,
but let me sum it up by saying key
account managers
make it easier for clients
to do business with you.
That's it.
Like the sales person that came
before them, key account
managers just can't do it all.
You really need to align everybody
in your organization
to key account management
and put supporting processes in place.
Otherwise it ain't gonna work.
Let's touch on some of those challenges
of key account management.
Not all accounts are created equal.
If you classify a key
account incorrectly,
you're not going to get
the return on investment.
They may even cost you money
as you divert resources
to clients with no growth potential.
Unclear expectations.
When clients don't know
that they are key account
or why they're a key account or what
even the difference is,
it can lead to dissatisfaction.
If there's no context
then expectations either
can become way too high
or they just don't
value the relationship at all.
Key account management
may even limit opportunities.
There are some clients that don't like
you working with their competitors.
This happens a lot with big global firms.
For example, if PepsiCo is your client
they may not like you
working with Coca Cola. And cost.
Key account management
is heavy on resources.
And it's not just people,
there are processes, systems, technology,
equipment, training
and more that you need
to achieve results.
Organizational change
is a factor as well.
Key account management evolves.
You need to frequently review
processes, teams reporting
lines, compensation plans and a lot more
and that can lead to disruption
and severe consequences
if some of those reviews
are not thought out well.
By now, you should have a really good
understanding of what key
account management is,
its value is a business strategy,
but there are some things that key
account management is not.
It's not short term.
Key account management needs a long term
investment of energy and resources.
It takes time to see
the benefits to the bottom line.
So you gotta be patient.
Sales.
Look key account
management grows revenue.
It absolutely does.
But it does so by linking opportunities
with solutions that improve
the client experience.
That comes first.
Cross sell and upsell
are tools, not targets.
Key account management
ain't for everybody.
Keep the number of key accounts small.
The greatest return on investment
requires a portfolio of clients
with significant opportunities
for account growth and, a key
account manager
that has time to convert them.
Key account management is not
a single point of contact.
Key account managers
are not the sole face
of the business to the customer.
It's impossible to deliver
strategic outcomes
when you're distracted
by day-to-day issues.
Try to connect subject
matter experts in both organisations
to develop those sort
of institutional relationships.
Key account management
is a great strategy to build
long term, profitable
business relationships
with your most valued customers.
Turn buyers into partners.
Yes, it requires
greater resources and increased costs.
But if you do it
right, you'll achieve
greater revenue and retention
in the long term.
And finally,
if you'd like to chat about your key
account management strategy
and how I can help, let's talk.
You can find time
in my calendar obligation
free at amtip.co/chat.
For more on the benefits
of key account management
check out my video
somewhere, somewhere here
on 9 unexpected reasons
why key account management is important.
I need a comment below.
Let me know what you
thought of this video.
Alright Heroes, that's all.
Thank you so much for watching.
You know where to find me.
If you need me and until next time.
Bye for now.