The Economic Case for Key Account Management

You’ve probably heard all about how Key Account Management (KAM) can boost your profits and increase customer retention rates, but you may still be on the fence about investing in KAM platforms. We understand your hesitation. It’s a hassle to license new software, solely relying on exaggerated promises like “Grow your profits by X%,” only to find there is no practical use for it in your business. Key Account Management is different.

The reality is that Key Account Management is a proven way to increase your revenue, profitability, and lifetime account value by simply identifying and investing in your key accounts.

In this article, we’ll discuss the hard evidence that supports Key Account Management to help you see why so many B2B companies are switching over to KAM systems.

The Theory Behind Key Account Management

It’s cheaper to sell to an existing customer than it is to find a new customer. This is a well-known fact, but many businesses surprisingly neglect their best clients. The central principle behind KAM is identifying the clients that are bringing in the most profit and focusing on building a long-lasting relationship with them. By making them apart of your family in a way, revenues will increase while expenses stay at the same relative level.

What separates KAM from traditional sales is that the Key Account Manager is focusing on the long-term goals of the business and the client rather than the short-term profit. To achieve success with a KAM system, you have to play the long game—results don’t happen overnight, in fact, it can often take a year before the returns are evident.

For a more in-depth explanation of what KAM is, take a look at our article “What Is Key Account Management?

Shifting Focus

Before Key Account Management entered the picture, many B2B businesses would instruct their account managers to simply keep the client— not actually help them grow. Building and maintaining long-term relationships with your key accounts is one of the primary philosophies behind KAM itself and to be successful, your business must develop a long-term strategy. We’ve dedicated an entire article to the importance of strategic thinking for KAMs and recommend you give it a read if you want to get the most out of your KAM system.

Building Relationships Builds Profitability

By focusing on a strategy that builds a long-term relationship with clients, many companies find that it pays off—big time. In fact, studies have shown that increasing customer retention by as little as 5% can result in over 25% gains in profit.

Existing customers are more likely to buy more products and pay for services in the long-run than new customers. Key accounts will also be more interested in your premium services and products because they’ve had such a great relationship with the company, and because they enjoy working with your business, they’ll recommend their friends and family which brings in even more revenue.

Key Accounts Will Be More Forgiving

Existing customers are also more likely to give your company a second chance if you were to make a mistake. According to a study by Marketing Sherpa, after interviewing 2,400 consumers, they found that roughly 40% are very likely to keep working with a company even if they’ve made a mistake that could reasonably end the relationship. However, the best practice is to keep your accounts happy as they are 60-70% more likely to close than new clients.

People don’t like looking for new service providers just as much as companies don’t like having to court new clients. It’s a hassle for both parties so if you can keep your existing clients happy, your business and balance sheet will be happy too.

Identifying Key Accounts

That being said, some clients will spend more on your services than others. It boils down to the Pareto Principle of the 80/20 relationship. You may have heard of this before— 20% of your inputs will equate to 80% of your outputs. The 20% of your diet that consists of ice cream and cheeseburgers will result in 80% of your weight gain; 20% of your investment portfolio provides 80% of your profits. You get the picture.

Identifying key accounts revolves primarily around the Pareto principle, and we’ve written at length about this in our article discussing the benefits of investing in key accounts over sales.

To summarize, when identifying your key accounts with the Pareto Principle in mind, focus on each of these factors:

  • Current revenue from the account
  • Potential revenue from the account
  • Referral value from the account
  • Strategic importance

Think of these key accounts as an investment of not only money but more importantly time. There’s nothing in this world that can replace taking the time to engage with a client to identify their needs and wants while finding a way to provide them with valuable services and products that will help them grow. If you invest the time, you’ll see a return.

Automate Your Key Account Management System

Automation is the way of the future and the more processes in your business that you can automate, the better. KAM platforms such as Kapta are not meant to replace the employee that manages key accounts, but to help them focus on building and nurturing the relationships, not spending time organizing clients in a spreadsheet.

If you’re thinking that adding yet another software platform to your enterprise sounds like a hassle in itself, you’re not alone. Many companies are deterred from adding new systems because they think it will be challenging. This couldn’t be further from the truth, in fact, according to a study by The Rain Group, 53% of companies surveyed actually found that KAM systems were actually not that challenging to use and their employees were able to learn relatively quickly.


There are real, tangible benefits to implementing a KAM platform into your B2B business and the only way to achieve your long-term business goals is to help your clients reach theirs. Look around our website for more information and to try a free demo of Kapta.


CEO at Kapta
Alex Raymond is the CEO of Kapta.