Key Account Management
Securing and developing your key accounts
(Written by David Tovey)
Who are your key accounts?
All customers are important; they are all valuable to you. Even if the Pareto 80/20 rule holds for you – 80% of your profit comes from just 20% of your clients – there is still a lot of cash flow and potential with the 80% who are probably not yet going to be your Key Accounts. Every client and every customer deserves to get great service from your company.
However, you simply will never have time to implement a detailed action plan to secure and develop relationships for every customer. Accounts nominated as ‘key’ are usually selected based on their:
- Current revenue
- Potential revenue
- Referral value
- Strategic importance.
Your client base might be less than ten customers or it might be hundreds depending on your business. However many you select you need to be sure you have the time and resources to dedicate to producing and implementing action plans.
If you don’t have a list of Key Accounts, start to compile one based on criteria appropriate to your business today. The effort and cost of winning new customers is considerably more than securing the revenue you already enjoy from your existing custo
It costs 6-7 times more to acquire a new customer as opposed to retaining an existing one according to recent research conducted by Flowtown.com.
If the most important strategy for your business right now is to maintain current revenue levels from existing relationships, then identify the customers most important to you in terms of the existing income they generate, and make them your Key Accounts.
If you are seeking to grow revenue from existing clients, identify those who you believe could buy more of the same products or services and those who you might cross sell to; i.e. who could buy a wider range of products and services from you.
KEY ACCOUNT MANAGEMENT – ACTION PLAN
There are five elements to an action plan for your Key Accounts:
- Understanding customer expectations
- Mapping contacts and relationships
- Objectively measuring the strength of relationships
- Developing new relationships and opportunities
- Taking action.
You have to be sure you know what your Key Accounts expect regarding the products and services you provide to them. Just because a client happens to be in the same business as other customers doesn’t mean they have the same expectations. Each Key Account contact will have their own ‘icebergs’, their own motivations, their own likes and dislikes.
Your first action in a Key Account Action Plan is to set out the expectations of all the key contacts. Be clear about:
- Their expectations of your product and service
- Their expectations regarding how you communicate with them
- Their expectations of customer service.
The product or service you provide will have a different impact on people with different roles within your Key Account.
The senior executives are most likely to be interested in the strategic impact on the critical success factors affecting their business. The finance people will be focused on monitoring actual cost versus budget together with payment terms and processes. The head of a department you supply might be more interested in the impact on their team, on the unit’s productivity and efficiency. The operators or users are most likely interested in the impact on them personally and their workload.
The way you communicate with people has to match their preferred style. Some people like to have a meeting at the end of a project; some will want a weekly blow by blow account. Some people want face to face meetings, some are happy with an email update or Skype calls. You just need to know who prefers what.
Expectation of customer service may also different between different people. Senior executives might be very happy if they never have to speak to your customers support team, the front line operational people may want to know someone is available 24/7 if anything goes wrong. Departmental heads might want a monthly meeting to discuss service issues. Again you need to be cler about everyone’s expectations.
If a number of your colleagues interact with a Key Account make sure you get their input regarding customers’ expectations.