In key account management, key performance indicators (KPI) and metrics are critical not only for client reviews (external), but also for performance reviews (internal).
KAM performance needs to be evaluated comprehensively—it’s more than whether or not someone hits a sales quota that quarter. Because key account managers aren’t just salespeople. Their job is to build long-term customer engagement, and that takes skilled client management.
Client management is about relationships, and relationships can’t be measured using numbers alone—but data can and should serve as a valuable lens into your KAM’s effectiveness. By integrating the right metrics into your performance review, you’re able to use data to drive a meaningful dialogue. And you can use that dialogue to drive compensation—your account manager’s salary will ultimately be based on how effectively they do their job.
This post looks at the primary metrics you should use to inform your review of a key account manager’s performance both in the short and long-term. When you establish these metrics and use the right platform to track them, you make expectations crystal clear while creating a tangible scorecard and a cadence of accountability that contribute to effective performance from key account managers.
Customer Lifetime Value
Customer lifetime value is the total worth of a customer over the whole period of their relationship (rather than a purchase-by-purchase basis).
Don’t be sidetracked by an especially strong—or even especially slow—quarter. Instead, look at the strength of the customer relationship overall. It costs much less to keep customers than it does to find new ones, so what you want to see are customers who stay with your KAMs for the long haul, ultimately growing their business with you.
Are your clients proud to mention your company in public and on the record? Would they recommend you to their friends in other companies? The answer should always be a resounding “yes” without pause or hesitation. If not, your key account managers aren’t performing to their fullest.
There are a couple of ways to track this information. One is social media listening. You should be tracking the overall conversation about your company anyway—drilling down into mentions by key clients can shed light on the experience the client is having with your KAM.
Another way to learn about referencability is simply to ask your clients. We’ll talk more about this in the Customer Satisfaction section below, but consider including in your periodic voice of customer surveys a question around likelihood to recommend your organization.
And finally, if potential customers are reaching out to you, it’s always worthwhile to ask where they heard about you. If you have a small, niche roster of clients, you’ll likely find out in a conversation. If you have a larger client base, consider including a “how did you hear about us?” field on your contact initiation form. However you do it, it’s helpful to trace where new business requests are coming from, as they often reflect positive outward-facing feedback from current clients.
At the end of the day, your KAMs are the face of your organization. So the way your customers talk about your organization—publicly or privately—is a direct reflection of the relationships they have with your KAMs.
The customer satisfaction score (CSAT) is one of the crucial ways to measure the health of your customer relationships and is a great tool to measure the performance of key account managers as well. Typically, most organizations use customized surveys to gauge a customer’s satisfaction with their company. You can conduct these surveys either via phone, email or through your account management platform.
You can use a few different methodologies to score your customers’ satisfaction, but many in the industry are starting to favor Net Promoter Score (NPS) over others these days. It relies heavily on one question, the ultimate question: How likely are you to recommend our services/products to a friend or colleague?
However you do it, you need to get actual feedback from customers in order to conduct a comprehensive review of your KAMs. After all, their function is to serve customers—so there’s no way to know how effectively they’re doing so unless you speak to customers.
Just remember: Your customers’ time is important, so use it wisely. Make sure to set a predictable cadence for feedback early on, and schedule your internal performance reviews accordingly. With quarterly check-ins and 1-2 surveys annually, you can get the information you need to have a timely conversation with your KAMs. A client management system like Kapta can help you set up regular VOC surveys and capture information in a central place.
Customer centricity means putting customers’ goals first. From a performance management perspective, that means tracking customer goals as part of tracking KAM performance.
The caveat here is that sometimes there’s only so much a key account manager can do. Make sure to look at leading as well as lagging indicators to get a sense of whether lukewarm results in the metrics you’re tracking are related to lukewarm effort on the part of your KAM—or if there’s something else going on. Customer interaction (below) is a strong leading indicator, letting you know whether your KAMs have done the right inputs. If they have, and outputs are still low, it’s worth discussing directly with your KAM to see if you can diagnose and address the problem together.
This is a key leading indicator—how much time do your key account managers spend working with your customers? Customer goals, expectations, and challenges can change rapidly, and your key account managers need to stay in the loop. A platform like Kapta can track client interactions and flag when it’s been too long since a key customer heard from you. Make sure your team is in constant contact with their customers using continuous relationship management techniques.
Even better, try to get a sense of how often clients reach out to your KAM (vs the other way around). When customers proactively seek input on problems they’re trying to solve, you know your KAM has become a trusted advisor. “Trusted advisor” is the status all KAMs should be seeking, as it indicates a resilient relationship with high lifetime value.
Organic growth is the most profitable form of growth—it costs less to keep existing clients than to win new business, and satisfied clients tend to spend more on premium products and services, because they’re already convinced of your organization’s value.
Thus, a key measure of your KAM’s performance is whether they’ve grown their accounts. Have their clients consistently renewed their contracts? Have they expanded their SOWs? Doing so is a tangible—and profitable—measure of your key account manager’s success.
With the right set of metrics, you can better manage your key account managers. These data sets provide a window into your KAM’s performance: What they’re doing, and how well they’re doing it. The ultimate goal is to build customer engagement so you can drive organic growth and inspire a lifetime of loyalty with customers. That’s a larger and more complex objective than simply hitting sales quotas, and it takes a comprehensive performance review process that’s both data-driven and human-focused.
To see how Kapta can help track the metrics that help you conduct insightful, inspiring performance reviews, schedule your demo today.