Key Account Management for Growth
How Much More Could You Grow Your Key Accounts?
One important lesson learned in 2020 is the importance of Key Account Management. When getting new business is as difficult as it was for many companies in 2020, maintaining and growing existing accounts is critical. But it's not just crucial in lean years. It is essential all the time. It doesn't make sense to bring in new business if you can't maintain existing customers. Customer retention is job one. That is especially true because getting more business from happy customers is easier, faster, and less expensive than bringing in new customers.
That makes Key Accounts that much more critical. Whether they are too big to lose or have great growth potential, your team should be actively managing those relationships. Does your team know how to manage your key accounts effectively?
According to CSO Insights, only 33% of companies have a formal Key Account Management Plan. That means the other 67% are randomly and ineffectively managing and growing key accounts. Having Key Account Plans in place drives revenue.
Identify and grow your most important accounts by using these account management guidelines.
Select Key Accounts
The two primary reasons for selecting key accounts are current value and potential value.
In some companies, as much as 80% of revenue comes from a handful of customers. When that is the case, the impact of losing any of those accounts would be devastating. Even if your key accounts don't represent such a large percentage of revenue, maintaining and possibly growing those largest accounts is vital.
At the same time, companies often don't recognize the potential of smaller accounts. They focus on accounts with a considerable current value but don't recognize the potential revenue they may be missing. If they aren't getting the attention they deserve because they aren't currently in your top tier, it's time to fix that. Get your team well-positioned to recognize the growth potential of these accounts.
There are some companies that, despite size or potential, should be considered key accounts. If, for example, they have gravitas in the industry, being able to claim them as a client makes them valuable. Keeping these customers happy is important too, and since you don't want to lose them to a competitor, you should have a team and plan for these as well.
Sometimes the customers identified as key accounts are a drag on your company. Because they represent so much revenue, companies tend to hold on for dear life even if they are challenging to work with and unprofitable. Those companies should have a key account team focused on making them profitable accounts or successfully terminate the relationship.
There are two more considerations– profit and fit. Some large accounts are not profitable. You certainly don't want to grow or pursue accounts that aren't profitable unless you can change that. The only way to change that is through a concerted effort to build the relationship and improve satisfaction.
Often the reason accounts aren't profitable is because they aren't a good fit. Either your solution doesn't solve their problem, or they aren't a good cultural fit with your company. When you select key accounts, you want to focus on companies that are a good fit, especially if your goal is to grow them.
Key account plans are an investment of time and resources, so select key accounts carefully.
Key Account Plan
The key account plan is the road map your team will use to shore up the relationship with your key accounts to retain, grow, or improve profitability.
A Key Account plan has four parts
1. Customer Story
3. Situation Assessment
A Key Account Plan always starts with the account and ends with revenue potential. That may be a different perspective than you are used to, but it is the only way to grow an account over the long run effectively.
It is easy for sellers to forget the customer exists outside of their relationship. The company has goals, problems, initiatives, and priorities. The individuals inside the company have daily activities to perform, key results they are measured against, and problems they are trying to solve.
Those all exist for the customer whether or not they have anything to do with your solution, and they frame the conversation customers have with you. Key Account Teams are responsible for uncovering the customer's story and building a strategy around it.
What is happening at the highest levels of the client company? What initiatives or goals are they trying to achieve? Are they achieving those goals? What external factors are impacting the economy, the industry, or their customers?
How do those things play out in the buyer's daily life? How much of the published story is the individual buyer responsible for achieving? What is the timeline? What is getting in the way? What are the individual buyers' goals and problems? What is their focus?
You cannot create an effective plan to improve a relationship if you don't understand the company's story and the individual buyers' stories. I'm not suggesting you need to know how many kids they have or how much money they have saved for retirement. I'm encouraging you to learn how their business life works, how it impacts them personally, and what problems they would most like to solve.
As you come to understand those things, you can determine how you and your company can help. Understanding where your solutions fit into the larger landscape allows you to position your team to have the most significant positive impact possible.
Too often, sellers focus on order-taking in key accounts. That means that sellers wait until a customer identifies and problem and then determines you might have a solution for them. That reactive way of handling account relationships will leave you vulnerable to the competition. The account team's job is to understand where your company fits into the landscape of goals initiatives and problems and offers the customer solutions or help planning solutions long before they are ready to buy.
Understanding your customers' story should help you identify what opportunities you have to help them achieve goals, work toward initiatives, and solve problems. Match up your solutions to the needs they have. Where do you fit? Get as far ahead of their problems as possible. Build relationships that give you insight into what is coming in months or years from now.
Make a list of these opportunities as you identify them. This is where a good funnel comes into play. Of course, you want to list the opportunities that are ready to close. Then the ones you are working on. But you also want to list the ones you haven't qualified yet and the ones that are ideas that could happen 5 years from now. Get them all listed and organized so you know what work you need to do and what relationships you would need to build to close those opportunities.
The situation assessment is a survey of how well you are positioned in the account. There are three critical parts of positioning. Do you have relationships with all the people you need to know? How do the buyers perceive you? Do you have the right solutions for the problems they are experiencing?
If it is indeed a key account, there are potentially dozens of people you need to build relationships with. Some have answers to critical questions. Some use your solution every day. Some manage the use of your solution. Some make sure everyone follows the process. They are the I dotters and T crossers that can interfere in the process. Are you well-positioned across the account, or are you counting on a few good relationships?
Sellers often make assumptions about how they are perceived. If no one is complaining, they must be happy, and we are well-positioned to make our next sale. Assumptions are dangerous. Check and recheck your credibility across all of your relationships. If you there are problems, your plan will need to include ways to improve those perceptions.
Even if you have the right relationships and the customer is happy, you still have to have the best solutions for their problems. Sometimes, a competitor may have an advantage in one area, but hopefully, the whole of your solution, including the way you help them solve problems will outweigh those advantages. If your solutions isn't the best for this customer, you need a plan to address that, or you need to be prepared to lose to your competitor at some point.
It is easy to get excited about potential or to throw out a goal for a percentage increase without taking the time to understand the customer's story and your positioning in the account. You can't grow an account if their situation won't allow for increased spending, or if you are not positioned to make the sale you are hoping to make. Your goals should be a result of the first two steps.
Revenue goals are the easiest to set. But they probably won't be achieved if other kinds of goals are not achieved first. It is good to have goals around helping them solve problems. While that may be as a result of selling them something, the focus is on the customer solving a problem or achieving a goal the perceive as important.
A second kind of goal that is important to have is relationship goals. Set goals around people you want to meet, relationships you want to improve or gaining access to higher levels in an organization. As you build the right relationships, achieving your revenue goals will be easier.
The third kind of goal is around satisfaction or perception. Do they see you as a partner or as a vendor? While it isn't critical to be seen as a partner in every relationship, if you are not perceived as a partner in your key accounts, you have work to do.
The rubber hits the road, as they say, with the action plan. I am a strong proponent of planning but planning just shows you what needs to be done. The strategy needs to be turned into an action plan and executed.
Based on all the work done above, make a list of near-term actions that need to take place to move your team toward the goals you have identified.
Don’t forget to include when the action will get done, and who is responsible for doing it. Making a list without providing deadlines and assignments won’t get you were you need to be.
You will need to create actions around research, relationships, selling and customer satisfaction.
Make a list of the research activities that need to be done. Figure out who on your team is the right person to do that research or find someone who can do it. Then figure out what order it needs to be done in and assign dates. All the research about the company and the industry needs to be completed. Research about the buyers and users, their problems and their goals needs to be done. That is person to person research but is may not all be the seller’s job. The customer success team, the engineers, the trainers, or designers may be better positioned to find this information. Assign it to the right person and give them a timeline.
Building relationships is the most important part of key account management. You will rely on those relationships to both provide information and make buying decisions. Everyone on the account team is responsible for building or improving relationships. Even people on your accounting and legal team can make the overall relationship work better.
Make a list of all of the people that you interact with in that account. Then add the people you should be interacting with. Determine who will be responsible for those relationships and how they will accomplish the relationships goals you set out for them. While you may not be able to set a date around the outcome, you can set timelines around the activities that need to happen to achieve the improved relationships.
It’s impossible to separate selling activity from research and relationship building, but because we have a team working on this together, we want to make sure that the seller is taking the critical steps to move opportunities forward. That includes things like, mapping the decision process, determining specs, demos, and proposals.
You have to get the selling work done to maintain credibility and to solve problems. Research and relationship building are important but focus on the forest so much that you miss the trees.
Salespeople spend a lot of time doing activities, expending resources, and talking to customers, that don't result in improved relationships or closed deals. Having a key account plan will help prioritize activities for the seller and the rest of the team, so they are focused on the activities that are moving toward the long-term goals for this client.
If you need help getting started on your key account plans, please schedule some time with an account strategist. There is no cost or obligation for this meeting.