Key Account Managemnent as an Engine for Growth?

Customers have always been important to business—and they’ve always been demanding. But we believe that customers are harder to engage and easier to lose than ever. Key Account Management is a strategic approach to ensure the long-term development and retention of strategic customers.

1. Core Concepts of Key Account Management

80% of Revenue from 20% of Customers

In many companies 80% of revenue is coming from 20% of their customers. The remaining question is, are they contributing 80% of the profits? If not, a Key Account Management approach is the solution to deal with this dilemma. 

The core role of a key account manager is to handle the most valuable customers. They manage the account, build strong relationships with the customer, identify challenges and opportunities and find ways to deliver value propositions to capture value from the strategic relationship.

Your key customers are smarter and more sophisticated than ever. They need and want a sparring partner with the ability to work effectively across regions, business units and functions.  Above all they expect from their supplier substantial supporting activities to enhance their own competitive advantage in the market. 

2. Know your Customer

Before it is possible to plan for key accounts, a detailed analysis of each key customer must be undertaken. Key account managers are expected to know customer's market, his strategy and policies, the business canvas, his 'money making logic', the last financial reports and his competitors as well. Based on this deep understanding of the customer, the key account manager is able to build a trustful relationship and deal with the buying center in order to create the path for a mutually profitable value exchange.

3. Planning for Growth

The art of key account management is to manage for growth measured by improvements in revenue terms, in the share of wallet and in profitability at the same time.

A key account plan serves as your guiding star in managing the key customer. It is the map that shows where the customer is today, where they want to go in the future and what you are going to do to support them to get there. Since we are all looking for growth, the essential questions to be addressed are: a) what is the opportunity (for the customer and for us)? b) What do we wish to achieve (for the customer and for us)? c) How will we achieve it (actions and time plan)? and who will be involved (customer and our side)?

Key account planning for success is not something the key account manager is doing to a customer, it must be something which is done with the customer.

4. The high Value Relationship

Key account management is responsible for adding value to the customers. The traditional transactional perspective tends to assume that value is produced by the supplier only - embodied in products and services and then transferred to the customer. This perspective does not properly capture the more dynamic aspect of value generation in high value relationships as they happen to exist in industrial markets.  High value relationships are based on joint value creation processes. Key account managers are expected to iniciate and orchestrate these collaborative processes. 

5. Key Account Management Health Check

1. Do all senior managers talk openly and frequently about key customers and their account managers?

2. Is the company prepared to invest in key customers and business cases with returns beyond one year?

3. Do key account plans play a major part in the corporate planning process?

4. Do you measure the profitability of key customers beyond revenue?

5. Can you identify all the account team members and define their roles in the relationship with the customer?

6. Are key account managers payed at same levels and on a similiar basis to strategic business unit directors?

7. Is your key account plan written for at least three years, complete, live and up to date?

8. Do you have a busines-focused relationship with at least one of the customer's board members?

9. Would your customer rate your understanding of their business and their market higher than 8 out of 10?

10. Can you define and quantify the added value you brought to the customer in the last year?

11. Can you outline the strategic importance of the ongoing joint value creation projects  with your customer?