What IS a Key Account?in Customer Engagement /
Key account management—focusing on the development of a company’s most strategic accounts—is at the center of everything we at Kapta do. But the question often gets asked: what’s the difference between a “key” account and a “regular” account? One typical way of defining a key account is to look at the “80/20 rule”—the oft-true premise that 20% or less of your client base drives up to 80% of revenue. But what defines a key account in actuality can be a bit more nuanced, and based on more than just revenue.
Let’s take a closer look at some of the other factors that go into defining what is a key account.
Potential for Development and Growth
Of course it’s logical to prioritize high-value clients. But there can be big gains to be had by applying a proactive approach to small and mid-sized accounts, if you’re able to identify their ability to grow with you.
In order to determine a client’s growth potential, it’s imperative you get crystal-clear about two things: first, what your company’s ideal customers look like, and second, who your current customers are. This dual-lensed approach is the best way to ensure that the foundation of key account management is in place, and that the relationship can be built to fuel mutual goals. (This exercise of determining your ideal clients is circular, by the way; once you’ve identified your core customer, real profits should be continuously analyzed to determine if your ideal customer is actually who’s bringing you business.)
Your client research shouldn’t be purely speculative, though; there should be a clear understanding from the client of what their philosophy is in partnering with you. How does this client buy? Do relationships matter, or is the client’s business more transaction-based? Is the sales cycle reliable? If you can collect evidence to show how and why a currently small or medium account has the potential to grow into your ideal, then it may well be worth applying a key account management strategy. Read our tools and best practices for getting to better know the clients you serve.
Providing targeted, smaller accounts with specialized treatment can require a lighter short-term effort that may still reap future big rewards.
Your Vision Aligns Well With Their Challenges
This one seems obvious, but it’s worth careful consideration in evaluating your most important accounts: are your solutions highly valued by the client? Is the client work an ongoing, collaborative process that takes advantage of the full scope of your company’s capabilities? A strong customer connection and jointly working toward mutual success is the bedrock of key account management. Your value should be evident to the customer; in turn, the customer understands the full range of your offering and wants to utilize your services and hold them to their highest capabilities and standards, ensuring mutual success.
Another angle to explore in assessing the mutual beneficiality of a client relationship is: How does selling to this client affect other areas of the business? You know that your large customers want personalized service and tailored solutions—so how do the operational costs and margins involved in creating those solutions trickle down to affect more nascent accounts? The needs of and learnings from your largest accounts can often shape your offering in a way that will attract and grow new business in the future. The result of a key account’s success should have a far-reaching positive effect on the business.
Executive Fit and Relationships
We know that key account management is based, above all else, on strong customer relationships. So it’s a simple fact that in order to be a key account, the ingredients that foster a strong client relationship must be in place. Some of the relationships areas to consider are:
- Communication: is communication easy and fluid? Or do difficulties often arise? Are points of contact clear or is there frequent confusion?
- Relationship-focused: does the relationship allow the account team to remain focused on customer service, or do smaller details typically require a lot of attention? Can the account team concentrate on the customer’s big picture needs or are they often mired in close or contractual issues?
- Trust: no relationship is perfect, but when issues do arise, are they addressed with a spirit of mutual trust? Are you given the opportunity to face potential problems as they arise, or do you have to take a reactive approach and constantly put out fires? Trust is built on a foundation of other attributes, and it should foster collaboration.
- Long-Term Strategic Planning: is the client willing to have conversations about shared values? Is the account one you’re willing to take a proactive approach in goal setting and troubleshooting? This process produces long-term goals and milestones that all parties embrace because they had an equal part in setting them.
- Having these attributes in place provides for sustainable, repeat business with a fair exchange of value—in other words, a key account.
The goal of key account management is to be a strategic partner and trusted advisor. Once you have clarity on who your key accounts are, you should have systems in place to make sure they receive white glove service and feel special. To see how Kapta can help you transform your approach through the power of our KAM Process™, schedule a demo today.
Alex Raymond is the CEO of Kapta.