Richard Ilsley’s Executive Briefing Paper on Key Account Management is a fantastic read for anyone in the KAM or Customer Success arena. In the article, he suggests we reconsider the ways that we deal with our largest customers. His ideas are extremely valuable in today’s business environment, so we thought we would share our summary of this article with you. If you are ready and amenable to taking advantage of his suggestions, we have 12 tips to help you do so.
But first, a few things to consider.
“Getting it right” is a competitive advantage. Most companies (when they are a vendor, partner or supplier) do not understand what key account management really means. The small number of companies that seem to “get it right” (15%) have a competitive advantage over those who do not. They continually show good results with key account management, even in a tough economic environment.
The majority of companies overlook critical factors. Ilsley identified nine areas that most suppliers do not identify as critical key account management issues. Suppliers fail in the following areas:
- Not identifying what it takes to make each particular key account successful.
- Not identifying what value means to each particular key account. Failure here means bearing costs without commensurate return.
- Not measuring what profitability means for each key account. Without this critical step, you are likely to make poor decisions on behalf of the key account.
- Not adapting to each key account’s own management approach (local, regional, global?).
- Not involving senior managers from across your business lines in the strategic planning stages for key accounts.
- Not engaging at the highest level by understanding how each particular key account makes decisions, how it builds strategies, and what it needs.
- Not developing effective plans for growth that are approved by your key accounts.
- Not giving your key account managers enough authority. In some cases, a supplier may have to alter its own internal processes to accommodate a key account’s needs. Giving key account managers the authority to make such changes is essential.
- Senior managers (CEOs, Presidents) not regularly engaging with key accounts.
What is the result of “getting it wrong”? If you fail at key account management, then your business fails. After all, these are your most important customers. Without a successful key account strategy, your company must rely on pricing as your primary driver, and you will continue to incur costs with little or no value in return. With continuously slim margins, you will remain unable to put your plans for growth into effect.
Key Account Strategy for the 21st Century: 12 Tips for “Getting it Right”
As promised, here are Ilsley’s 12 guideposts for successful key account management:
- Develop a simple, clear key account management strategy that is based on corporate strategy.
- Know where you expect growth to come from and why, as well as how it adds value to your key account.
- Involve your company’s most senior managers across all disciplines.
- Involve multidisciplinary teams so that your key account manager does not work alone.
- Understand that key account management means more than selling your product. Let this understanding guide your team.
- Draw your key account managers from among high-profile, quality managers.
- Add value that you can measure from day one throughout the relationship.
- Make reducing costs a central activity for your key account managers.
- Develop key performance indicators for each particular key account.
- Map out the boundaries for roles, responsibilities, and incentives as they relate to tools and skills.
- Strive to increase knowledge and a deeper understanding of your customer.
- Create simple key account management schemes, reinforced by regular and formal performance reviews.
To learn more about this topic, read Ilsley’s full Executive Briefing Paper entitled “Getting it Right with Key Accounts,” which was the inspiration for this post.