Key Account Management (KAM) is not just a clever sales trick for companies to make more out of a customer. It’s a long-term strategy to retain and expand your company’s most important customer partnerships. Time, energy, and other resources will need to be invested into developing a deeper relationship with your customers for KAM to work. You need to focus on building things up the right way, or all your efforts will be wasted.
To develop a stronger relationship with a customer, you need to understand what kind of relationship you already have. This has to be done individually for each key account customer. Misunderstanding the relationship you have with a customer may lead to accidentally making a decision or a strategic move that is not supported by your customer.
There are four basic stages of customer relationships with your key account holders. These are not static stages, and they should be adjusted to fit the true nature of each individual account relationship. But, it’s good to have an overview to help you understand how to interact with your more important customers.
This is the initial stage of every customer relationship. As you begin to work with a new customer, you will both be developing opinions about each other, both objectively and subjectively. At this stage, you may not know if that specific customer will be a key account, but you need to give your best service and determine as soon as possible if it is a strategic account. If you think the new customer has potential to be a key account, begin the best KAM practices immediately.
For most businesses, this is the stage that a majority of customers will stay in. Customers who are not your key accounts can easily and conveniently remain as basic customers, because the focus of this stage is transactional. It is not about developing strong, strategic ties, but focuses on selling yourself to the customer and providing the best point-of-sale service possible. When you are trying to practice KAM in your business, you need to advance key accounts out of this stage.
At this point, your company and your customer have begun to see more opportunities to work closely together. You need to look for ways to increase the value of the relationship for your customer and develop the partnership into something more concrete and strategic. This stage usually happens to those customers which you have identified as key accounts or potential key accounts. It’s common to have many key accounts in this stage if you are just starting to implement KAM in your company. Don’t expect account growth at this stage.
Key accounts should be taken to the interconnected stage as soon as possible. Many departments will be working together, information will be shared freely, and the relationship will be focused on providing as much value as possible to the customer to meet their goals. At the same time, your company needs to keep the relationship balanced, so that you’re also gaining value by expanding the customer account wherever plausible.
Once you understand which stage you’re at with each customer, you can more accurately proceed with strengthening the relationship. Many companies believe they have a stronger relationship with their customers than they really do, so it’s wise to be feedback from as many sources as possible to determine the true strength of the relationship.
For a KAM strategy to work, you need to support it with the right resources. KAM is not a short-term sales strategy. Good results will be years in the making, and you will have to invest into every key account relationship in the meantime. This change of mindset about KAM is vital to success.
You will need buy-in from top execs in your company. They don’t need to be a regular part of the KAM team, but they do need to be active when necessary. Customers will have greater trust in a strategic partnership when a high-level executive is also directly involved with them.
Because KAM is not just about sales, you will need collaboration from all parts of your company, especially those that deal personally with your customers. All departments should be involved, since the main goal will be to build value for your customer. You can’t build value if you only have access to the sales department! Delivering what your customer needs when they need it will help build a stronger bond.
Up-to-date information and monitoring will allow you to gauge what’s going on with your customers, and to keep a better eye on your key accounts. Before you even approach a customer to start a key account relationship with them, you need to know whether they’re strategically important or not. Without the right information, it will be difficult to separate your key accounts from regular customers.
It’s worth mentioning again that the benefits from KAM will not show up until years after you’ve been practicing this system. The point of this style of customer relations management is to eventually grow your key accounts into larger, more stable customers that will help your business succeed and thrive. It will give you a competitive advantage if you have a strong key account customer base that’s closely working with you.
Every customer is unique. You can’t create a cookie-cutter system for dealing with key accounts, or you’ll defeat the whole purpose. But, by focusing on how to create maximum value for your key accounts without ruining your margins, you’ll be more likely to build a stronger relationship with them.
Customers are more willing to work with companies that are concerned about the value of their products and services. To earn the trust of your customers, you must show genuine concern for their goals instead of focusing only on what your customers can do for you. Follow them through the stages of customer relationship, and work together to create a valuable partnership for both of you.