March 08, 2022
March 08, 2022
Contributor: Jordan Turner
Traditional key account management principles are broken. Here’s why.
Chief sales officers (CSOs) tend to double-down on key account growth by allocating more resources to their largest accounts in the hopes that doing so will help them increase growth rate. But this “biggest customers get the best resources” approach is falling short, according to most CSOs.
“Despite consistent and costly efforts to grow key accounts, concerns about their performance persist,” says Robert Blaisdell, Senior Director Analyst at Gartner. “In fact, 79% of sales organizations have rebuilt their key account programs at least once in the past seven years to address underperformance.”
Download now: How to Build — or Rebuild — Key Account Programs for Growth
During key account selection, CSOs tend to designate the largest accounts as key accounts, and any factors beyond spend, like strategic relevance or customer willingness to partner, are lower priority.
In a 2021 Gartner survey, account spend (current and future) and company size ranked among the three most important key account selection criteria. However, the past is not always a reliable indicator of continued growth. The same survey found that organizations that lean heavily on current customer spend as a metric for selecting key accounts are 51% less likely to see increased customer spend.
Download now: 3 Strategic Actions That Drive Success for Chief Sales Officers
KAMs are busy. On average, they are responsible for seven to eight key accounts, each of which requires their providing support to execute customer strategies and coordinating to garner internal resources and rally support.
Expectations are high, with 82% of CSOs viewing KAMs as equally or more important than the overall key account program to increasing revenue. But resources often don’t align with those expectations.
Our research finds that 76% of KAMs rely primarily on their personal relationships with colleagues — as opposed to their formal authority or processes defined by the supplier organization — to secure cross-functional resources.
CSOs devote their best resources and people to the biggest accounts. But each of these resources has a cost — not just the cost of providing the resource, but also the opportunity cost of not investing in another account.
While CSOs assume providing the most expensive resources and best people to the biggest accounts is the winning formula to derive growth, the reality is very different. Our research finds that key customers do not find equal value in all these resources and are thus underusing them. Only 16% of KAMs describe their key customers as fully utilizing dedicated and often expensive resources.
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Recommended resources for Gartner clients*:
(Re)building Key Account Programs for Growth
Strategies for Selecting and Maintaining a Profitable Key Account Portfolio
4 Actions CSOs Must Take to Engage Key Accounts
*Note that some documents may not be available to all Gartner clients.