Why You May Be Failing
Key accounts, strategic accounts, enterprise accounts. Only the names change. The reality is the same. It is the only area I know of where companies intentionally increase their costs and decrease their margins.
Think about it. It has been determined that an account is big enough to warrant an on-site or dedicated client services team which increases costs and because of the revenue associated with the account, deep discounts are offered and ultimately, the business has a lower gross margin. All of this in the name of volume.
Now, having grown up in sales, specializing on selling these strategic/key accounts, I can tell you first hand if done properly, they can be a catalyst for profitable growth. Here are two questions you need to ask yourself:
“Is my key account management program optimized?”
“Do I have a clear understanding of the best practices in key account management?”
Simply putting someone on-site does not solve the key account paradox. Yet, that is the simple answer for most companies. It may, in fact, make things worse if their onsite teams are not equipped properly.
Effective key account management is a direct correlation to your company’s ability to deliver on what you promised during the sales process AND your ability to adapt to the changing needs of your client over time, personnel change, changing priorities and advancing technology. Most companies do a credible job on the first half of that statement, but struggle on the second half due to the lack of tools and training specific to key account management.
The following outlines four “keys” to Key Account Management
1. Establish a customer-centric culture: this starts with measuring customer satisfaction and loyalty. This should be done at a minimum, on an annual basis. As Dr. W. Edwards Demming so eloquently said, “In God We Trust…all others must use data.” We recommend Net Promoter Score® Survey as it is quick, easy and can have response rates up to 50% in key accounts. In order for NPS® to be effective, you need ensure you have a closed-loop system for follow-up and use the data to adjust your efforts accordingly.
2. Develop a web-based Key Account Plan: “a failure to plan is a plan to fail.” This should act as a strategic plan and a central repository for account knowledge. The key account plan should allow for collaboration between the customer, key account locations and teams. It should consist of the following components:
Account Profile: information about the client, their strategic initiatives, revenue and profit trends, contract terms and renewal dates, etc. to ensure you and your key account are aligned in every way
Governance Map: this is a “Who’s Who” for customer relationship management. It should include assessments of the relationships, and provide insight into items such as decision-making authority/buying roles and the political landscape.
Service Delivery: this area should house the account team, KPIs, spend assessment and competitive assessment. It is your report card.
Goals: this should act as the day-to-day playbook and contain the customer’s strategic goals as well as your action items designed to improve business performance and advance the customer relationship.
Client Risk Analysis: every Monday you should receive a comprehensive report clearly illustrating the health of your key accounts. We call it the Monday Morning Report. It should be color-coded and clearly illustrate low risk v. high risk key accounts.
3. Establish a formal Key Account Management organization structure: these accounts look differently, run differently and resources need to be allocated differently. Why would you leave these accounts in your geographic field organization?
4. Measuring, recognizing and rewarding performance: key accounts are complex, highly visible within your organization and because of the associated volume, are demanding customers. It is critical that a separate compensation, recognition and rewards program be developed focused on expansion through cross-selling, improved margins and customer share.
Does your company have in place a formal key account management and training program? Done right, strong key account programs can obtain more customer volume at lower discounts without the associated costs. Unfortunately, most “key account” programs simply provide on-sites that simply react to customer needs and wants rather than proactively align with the customer’s strategic growth objectives. Contact us to learn more!
Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.