A business of any size can increase revenues and improve customer loyalty, simply by creating Key Account customers.
Essentially, this involves creating a new category of customer or elevating a select few existing customers to become key customers – who, you will service differently to your other valued customers, with the expectation they will become higher-performing and long-term customers: typically delivering higher volumes and margins – and who value everything you do.
Operating a program of Key Account customers can be a major change to how any company sells and the chances of success can be dramatically increased by following a few simple rules and the guidance I have set out here:
Recognise that Key Account management is an organisational change, not a sales technique
Implementing a successful Key Account management program takes many months, and perhaps years.
The companies that have implemented a Key Account customer program successfully, have been those who think of it as a change in the way they did business, not as something confined to the sales department.
Companies who have failed at running a successful Key Account customer program have tended to think of it as an initiative within the sales department. This approach has and will always fail. Key Account management is in fact a commitment to work differently with and to support priority customers.
All other areas of the business have to understand and support Key Account management. One obvious example of this, is how the supply chain is managed.
If a Key Account is promised priority access to urgent products or services, it is operations who can provide that, not sales. Therefore, it is important to train operations staff and those responsible for logistics in Key Account Management as well as sales people – and staff in other areas of the company including administration and production.
High-level buy-in is essential
For most companies, introducing Key Account customers is a significant step forward in how they will grow and develop the business over time.
A change to the organisation of this importance will require that the directors and key stakeholders are not only ‘bought-in’ to the plan, but are fully committed to seeing it through and supporting it.
It ends up being about new business
A very exciting outcome of setting up a Key Account program is that after a while, you will realise that of those existing customers you elevated to Key Account status, most don’t meet the criteria you set at the outset.
This normally results in you having to go out into the marketplace, to find new prospective customers who do meet the criteria.
Then, after a while, the company will have weeded-out those customers who haven’t made the grade (downgrading them to a normal valued customer) and replaced them with high-performing, higher volume, higher margin and long-term customers who value everything you do.
If you are new to Key Account management here are a few steps you’ll want to take and topics to consider.
Key Account management is different
You need to understand that Key Account management differs from normal sales in that the objective is not only a transaction and the measurement of success goes beyond the financial.
The objective of a Key Account management program is become ‘embedded’. That is to say, a successful Key Account management program will make the Key Account manager and the company indispensable to their customer.
Position your Key Account Program
Making the transition from a product focus to a client focus is about moving from a technical perspective to a broader business perspective.
This is the transition all businesses need to make. Rather than gain credibility with their customer(s) through technical expertise, the Key Account manager must gain credibility through in-depth knowledge of the client’s business and related issues.
This includes but is not limited to, an excellent understanding of the key account customer’s strategy, vision, core values, important initiatives, culture, history and decision-making process.
Why the image of a tree?
I chose this image carefully. It represents how a Key Account customer should look compared to other customers – similar to other trees in the forest, but quite obviously different.
It stands out as being more interesting and valuable than the other trees – and needs looking after.
It’s Rarely About Price but Always About Value
Your product or service is going to be given an associated value by your customer.
It’s your job to uncover how that value is being assigned in order to properly sell your idea of its value and your price.
In order to sell the value of your product or service, you will need to uncover answers to three important questions:
- What is your Key Account customer’s (or prospective customer’s) value system? How do they / will they apply a value to your product or service?
- On what basis will the value of your products or services be measured (By your Key Account customer)?
- Post sale, how is theKey Account customer going to decide if your product or service delivered the value they were expecting?
A note about value: A Swatch watch performs the exact same function as a Rolex watch. The perceived value (and the price) of each is however, entirely different. It’s all about value.
Define the criteria of a Key Account for your business
Each organisation defines Key Account differently, but as a guide, your Key Account customer criteria will likely include some or all of the following:
- Has the potential to make repeat purchases
- Is or has the potential to become a high revenue customer
- Has significant growth potential
- Places a premium on having a preferred supplier relationship with the company that provides them with easy access to innovation, or new ideas, or superior service …
How many Key Accounts should you manage?
This is an important question.
You have identified a list of potential Key Accounts. Some will be existing customers whose status you can elevate, while others will be prospects – businesses you have never sold to before, but who you think can meet your Key Account criteria.
But, how many of them do you really want to handle as Key Accounts? Surely, not all of them on your list, as you almost certainly won’t have the resources available.
So be careful here. If you have resources to manage only a few Key Accounts, don’t take on more. You won’t have the time and you won’t do them justice.
Want to learn more?
If you would like to learn more about Key Account programs – perhaps how to implement a program in your company, or to better manage the program you already operate?
I will be pleased to show you how to get started, or improve your current Key Account program.