Risk Management Strategies for Key Account Management Teams

There are various forces in the business world causing stress for your company and for your customers such as banking issues, interest rates, and a pending recession. Although these external factors are out of our control, there are risks that develop within key accounts that you can influence, IF you spot them early enough.

That’s why it’s essential that account managers focus on understanding what’s happening in the customer’s environment. Then they can spot issues as they arise, while they’re still manageable and before they become overly complex and unwieldy.

But account managers have so much on their plates, it’s perceivable that they could miss the early signs of risk while juggling their other responsibilities. That’s why it’s critical to arm your key account management (KAM) team with the essential risk management tools, processes, and mindset. Putting these in place gives you an early warning system to detect and manage risk before it becomes unmanageable.

A Risk-Based Approach for KAMs

An account manager is tasked with being as customer-centric as possible. This means taking steps to know their customers deeply from a perspective of curiosity and a willingness to serve. When done properly, account managers are in the best position to see what’s going on with their clients.

Spot Changes and Ask Questions

As account managers spot changes in the customer’s business, industry, marketplace, or world, they should ask their clients questions to learn how they’re being impacted and responding to these changes. For example, an account manager might ask, “How are you responding to things that are going on right now and how has that changed your goals for the rest of this year?”

Asking these types of questions, when the opportunity arises, helps to identify unknown risks, and gives a clearer picture of what’s going on below the surface.

Reflection is Key

Then it’s important for account managers to take this customer feedback and reflect on it.

Things to consider include:

• What does this mean?
• How will it affect the customer?
• How will it affect us?
• How can we step up for them in an innovative way?

This is about being strategic instead of tactical.

So, when an account manager notices what’s happening and gets feedback from the customer about it, it’s time to reflect on it. Then they can bring their expertise into the conversation in a way that is helpful for both sides.

Top Risks: Warning Signs and Mitigation

There are many types of risk that account managers need to be aware of such as:

• Relationship Risk
• Value/Price/Commercial Risks
• Delivery Risks
• Satisfaction/Product/Service Risks
• Macro/Political/External Risks
• Mergers & Acquisitions Risks
• Contract/Legal Risks

There are many risks that you cannot control. But the top key account risks are ones that account managers should always be on looking for to spot them early and act on them while they are manageable.

These top three risks are relationships, not seeing value, and negative feedback. Let’s look at these three manageable risks.

Relationship Risk

Relationship risks can take several forms. For example, on the client side, when your champion within an account is leaving, moving to a new job, or has a new boss. On your side, relationship risk may be caused by an account manager leaving the company or changing roles, meaning that a new or different account manager will be managing the account.

When it comes to gauging relationship risk, start by considering how engaged stakeholders within the account have been. If their level of engagement has changed, try to determine why they might be more or less engaged and whether it happened suddenly or gradually.

Next, think about whether any stakeholders within the account have changed. If they have, this is a huge red flag that puts your partnership at risk. They may not understand why their company is doing business with yours.

So, it’s essential to learn what value means to the new stakeholder. Their perception of value may be very different than their predecessor. You can learn this by using some effective Voice of Customer (VOC) questions to gain insight into what matters to them and what value means to them. Then complete a SWOT analysis to realign your strategy with the customer based on the responses of the new stakeholder.

It’s important to help the new stakeholder learn about your partnership, collaborate with them, and let them know that you are there to help them succeed.

Not Seeing Value

Customer retention is far greater when customers see value in your partnership. So, failure to deliver on what value is for the customer is a huge risk.

To analyze value risk, consider if you have clarity on what value means for the specific customer. If the answer is no, or maybe you did but it has changed, it’s essential to get the answer immediately. Otherwise, how can you possibly deliver value to that client?

To learn what value means to the client and how they measure it, it’s time to leverage VOC with key stakeholders and contacts within the account so you can adjust your account plans accordingly.

If you do understand what value is to the customer, are you delivering that value and does the customer realize that you are delivering value in their terms? Because if the customer is unaware, it’s as if they are not receiving value from your solution.

Negative Feedback

Customers often don’t take the time or effort to complain. Instead, they don’t renew their contract when the time comes. So, a customer complaint is a gift. It’s an opportunity to understand what the customer really thinks and what they care about and gives you an opportunity to resolve the issue.

Customer feedback helps you identify risks and red flags in your accounts. When the feedback is negative, consider what they are telling you and what you can do to rectify the situation.
And if you’re not receiving negative feedback, consider if you’re asking the right questions of the right people. Because when it comes to feedback, the quality of the question, the timing, and the person you’re asking is crucial.

Then you must act on feedback, otherwise, customers are likely to stop providing feedback when nothing changes after they share a concern. So, take action and follow up to make sure you have sufficiently addressed the issue to the customer’s satisfaction.

Risk Management Tools

Some strategies to help you overcome some of these risks and red flags by identifying them early include:

• Understanding the customer’s desired outcomes: It’s essential to understand what matters to the customer. Otherwise, you put the account at risk.
• Using Voice of Customer interviews: Asking the right people questions helps you uncover the real problem or get more details to better understand the issues that need to be addressed.
• Conducting effective Quarterly Business Reviews (QBRs): Doing a QBR as a strategic conversation with the client’s leadership can be an excellent way to uncover and prevent risk in a key account portfolio.
• Preparing Account Plans to drive action: Failure to have an account plan is a huge risk because you’re operating without a plan to deliver value.

5 Steps for Managing Account Risks

Once risks are identified, there are five crucial steps account managers can take to manage key account risks:

1. Rate the impact and likelihood of the risk: This helps you determine which risks you can influence so you can prioritize your focus.
2. Document your risk findings in a centralized location that is easy to share: This makes the information easily accessible to everyone in your organization involved with the account. It helps your organization make better business decisions, have better outcomes, learn together, and collaborate internally.
3. Collaborate internally and externally: Collaborate with other internal departments, possibly by conducting an account review meeting, and with the client as well to co-create a plan of action.
4. Create a strategic plan to resolve or prevent the risk: This is completed collaboratively with your internal team and with the client.
5. Communicate progress and close the loop: It’s crucial to keep everyone involved updated on the progress of the plan.

It’s also essential that account managers be prepared to answer leadership’s top questions about at-risk key accounts so executives can help whenever possible.

Shift to a Risk Management Mindset

One thing you can control is your mindset. Shifting your mindset can help you get ahead of whatever’s happening. It can change how you act in a way that is more positive for both you and your customer. Consider the following risk management shifts for better outcomes:

Follow a Process

Following a key account management process like our KAM Process™ provides a roadmap for account managers so they never miss a detail. It ensures you really Know the customer; you Act on what you know by creating an effective action plan; and then Measure progress toward delivering value. Then rinse and repeat.

Evolve to Meet Customer Needs

This is where you change the way you think by becoming more outcomes driven in the following ways:

1. Delivering value is most important. It’s no longer acceptable to have a lack of clarity about customer goals.
2. Share plans internally and validate externally. Infrequent, one-way client “check-ins” won’t do.
3. Conduct Voice of Customer interviews at the kick-off to align around the customer’s desired outcomes. NPS surveys sent at the end of the project are insufficient and lack context.
4. Purpose-built tools and processes to drive long-term success are essential. Data stored in multiple legacy systems that aren’t fit for the purpose are cumbersome and ineffective.

Manage Key Account Risk Effectively

It’s time to take key account risk management seriously. Account managers must keep abreast of their clients and spot risks as they arise. Early risk detection is your best defense, affording you time to effectively manage and mitigate risk before it’s too late. Provide your KAM team with the tools, processes, and mindset to detect and overcome key account risks.
 
Ready to arm your team with essential risk management tools? Schedule a chat with a team member to see how Kapta can help you mitigate key account risk.