Key accounts are essential to your business. They are the 20% of your accounts generating up to 80% of your company’s revenue. So, it’s important to select them wisely and protect them from defecting to the competition who is always trying to win them over.
Selecting key accounts is not a one-time exercise. It is a proactive ongoing process where you make adjustments as your customer list evolves. Executives often make the mistake of trying to define their criteria for a “key account” based solely on revenue or the client’s brand name. But it’s not always about how big the account is or how well known they are. There is so much more to consider. At the end of the day, you’re looking for your best customers, not your largest ones.
At Kapta, we recommend creating an account scoring matrix to guide your key account identification process leveraging several important criteria. Start by selecting 3-5 attributions for your account scoring matrix. Depending on your product or service, your criteria might include:
- Product fit
- Existing relationships
- Geographic alignment
- Revenue potential
- Shared vision
Let’s take a closer look at each of these.
It’s essential that there be a good match between your key accounts and your product or service. These clients should meet your ideal customer profile and use your solution efficiently and effectively. When the product fit is excellent, your key account will be able to use it to meet their goals and will enthusiastically tell others about your offerings, further helping you grow your business.
In a model rooted in subscriptions, look beyond the monthly or annual renewals. Focus on the strength of the relationship: Between you and your customer.
Making “land and expand” work requires Key Account Management to shift from being a product vendor chasing renewals to a strategic account manager, engaging deeply with existing, key customers to solidify the relationship and drive steady growth.
To accomplish this, leverage Our KAM Process as follows:
- Know your customer: Spend time with them to understand their process, their goals, how they do things now, their interactions with the organization as a whole, and more. Build a complete picture, working your way out from the initial team to the organization as a whole.
- Act on their behalf: Going beyond your product itself, find out how you can ensure they’re making the most of your solution.
- Measure what matters: Demonstrate your value with cold, hard numbers. Set success metrics at the beginning and track them carefully to show your client how your product pays off.
For some organizations, account geography can be an important element to consider when designating key accounts. You want to be sure your account managers can easily service and grow their accounts whether it’s in person or virtually. If the customer is across multiple time-zones it can become challenging to stay in sync with the client.
When selecting key accounts, it’s more important to find the accounts with the greatest growth potential, not necessarily the ones currently generating the greatest revenue. These might be small, medium, or large-sized accounts with excellent growth potential and an expanding need for your products or services. Their needs should be recurring and complex for greater volume and diversity of requirements. And you want to make sure that the accounts you select aren’t transactional, only requiring one product or service from you—this would limit growth potential in the long term. Another element to consider is your own growth strategy. Your designated key account should have a consistent recurring need for the product(s) or service(s) that you want to sell more of. And you need to remember to factor in profitability by considering how much it costs to serve each account and what the margins are on sales to them.
You should always consider the financial stability of each account when identifying key accounts. Are they in good financial standing or are they a higher-risk start-up? This may indicate whether or not they’ll be in business in the long term. You don’t want to waste your resources on accounts that won’t be around tomorrow.
When it comes to sizing up a key account financially, go beyond growth potential and consider their annual recurring revenue (ARR) today. This is important for a couple of reasons. It will help you gauge how much growth potential they have and how profitable an account they currently are.
Identify customers who have needs, goals, and strategies in line with yours. This creates a win-win scenario for both parties, enabling your team to pursue engaging and meaningful work while driving better performance. This improved execution helps your customer meet their goals and leads to a continuously growing partnership.
Taking the time to thoughtfully consider your chosen criteria assures you and your key accounts will benefit by meeting mutually established goals. By developing strong relationships while growing a broader footprint in each account, prevent churn and drive revenue higher.
Want to learn more about how your business can benefit from Kapta and key account management? Schedule your demo today.