Key Account Management can be described as the process of sustaining and expanding
relationships with important key accounts. It also includes working closely with different business departments in order to maintain the existing relationship with the key accounts and further develop the relationship as well. Key account management is also referred to as strategic account management as it is responsible for achieving the sales quota and is assigned targets and objectives that are relevant to the key accounts.
Rather than picking out your Key accounts based only on their revenue, it is better to consider their ratio of revenue to costs over time. This will enable you to calculate the underlying potential of the account and decide whether they will be a strategic partner. Here are a few selection criteria that also need to be considered while picking out Key accounts:
- Product fit
- Existing relationships
- Purchasing process
- Revenue potential
- Geographical alignment
- Cultural fit
Although you might be tempted to label several accounts as Key accounts, it is better to refrain yourself. Demoting a Key account at a later point in time is not exactly a good business move. Overcommitting yourself to several Key accounts takes away from the actual purpose behind Key Account Management.
KAM or Key Account Management is often used by organizations to ensure retention and long-term development of a relationship with strategic customers. Unfortunately, some organizations make the mistake of using the same business model for all their accounts. According to the experts in the industry, automated processes and systems will work for about 80% of your strategic accounts, while you focus more time on the remaining 20% of the Key accounts. In fact, this can be made easier by using software from top companies like Kapta.com, developed specifically for this purpose. You can avoid this by identifying different account types and creating business models that are more suited to their purposes and requirements.
Let’s take a look at some of the distinguishing features of Key Account Management:
- Although it is a high profile process, it is rather a difficult process.
- It works best when there is a degree of trust and a mutually recognized partnership between the suppliers and customers.
- Sometime mismatches may occur due to miscommunication.
- It is essential to monitor the profitability of individual customers regularly to develop the relationship further.
- A broad portfolio of business management skills come in handy to deal with integrated or interdependent customer relationships.
In order to manage Key accounts successfully, it is essential to identify the Key accounts. Experts recommend setting a strict and explicit definition of key accounts to make the classification easier. The more specific and detailed the criteria, the better it will enable you to identify the accounts that will benefit the Key account to receive more of your company’s focus, energy, time and resources.
Most Key account programs have plenty of moving parts. In order to be successful at KAM, it is essential to be able to land short-term and long-term plays, carry them out, analyze outcomes and ultimately apply the takeaways to strategies in the future.