One-third of an organization’s revenue often comes from a few key accounts. Identifying, nurturing and growing those relationships is critical if sales leaders are expected to lower selling costs while producing stronger results.
Key account programs provide a strategy for doing just that. Focus your resources on client relationships with the potential to drive long-term growth, expand market position or provide effective resource allocation.
“Key account programs are a strategy designed to provide a holistic view of the top customers’ potential value and to align that view with the broader supplier organization’s current and future capabilities,” says Robert Blaisdell, Senior Director Analyst at Gartner. “The program’s goals can’t be achieved by sales alone without cross-functional involvement. Sales drives the process, but the final results depend on appropriate internal stakeholder buy-in and support.”
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The challenge for many organizations that hope to create a successful key account program is deciding who qualifies. Use this three-step process to select the right candidates through cross-organizational buy-in, relevant qualification and key metrics.
Step No. 1: Collaborate to align goals and responsibilities
Though key account programs start with sales, making them effective revenue growth strategies requires contributions from across the organization. The product, finance, supply chain and service teams each play a role in delivering value to the key account. The program member may expect, as a status perk of being a key account, access to new functionality or expedited service. So the seller function leaders who deliver on those promises should contribute to the program design. Functional leaders must understand what their added contribution looks like, agree on it and plan for it in their talent and resource budgets. Ensuring everyone is aligned to take that on requires sales to adopt a collaborative approach to designing the key account program, one that aligns the goals and expectations of internal stakeholders.
Clarity about who owns the relationship with the customer also requires tight organizational alignment. B2B sales continue to move away from a single buyer connecting with a single account manager. Instead, some buyer organizations are demanding a digital process. Others make decisions by committee, the representatives of which may engage one-on-one with their counterparts on the seller side. Early collaboration is a necessary foundation to ensure all the counterparts communicate consistent messages and clear expectations.
Step No. 2: Establish key account criteria
Determine an objective and standardized method for qualifying key account candidates in a way that keeps the number manageable and the relationships meaningful. If done right, it benefits both parties. Start by asking three questions to narrow the field of candidates:
- Strategic alignment. What is the potential for increasing growth long-term with this customer?
- Value. Does the customer value our unique strengths, solutions and capabilities?
- Willingness. Has the customer demonstrated a desire to partner with us?
After answering these questions, apply a standardized set of criteria for weighing the value of an account. A best practice is to limit the number of criteria to no more than 10 — a larger number can overwhelm sales decision makers. The criteria should include a mix of qualitative and quantitative metrics, internal and external factors, and current impact of the relationship versus future potential. Some example criteria include the candidate’s revenue, profit margin, acquisition potential and the ease of doing business with them. In fact, account growth potential and the current level of revenue/share of account were the two most common criteria according to the 2019 Gartner Key Account Growth and Selection Survey.
Once you determine the criteria, validate them using a 2x2 matrix to ensure there is a balanced mix.
Step No. 3: Create a scoring tool to apply the criteria
A measurement tool allows sales leaders to apply the criteria in a consistent and scalable way that can also be adapted as business needs change. In many cases, the criteria, though all important, are not all equal, and thus need to be weighted. Effective tools do just this to produce a final, composite score for a given candidate.
The score creates an initial list of qualified key account candidates — but score is not the only decision factor. Involving stakeholders to review and validate the results ensures alignment and collaboration before proceeding.
Remember: Qualification is not permanent. Successful key account programs reassess key accounts on an annual basis. An internal key account review process maintains focus on customer needs and how they align with the seller’s growth — this ensures the seller has the resources and investments in place to allow key accounts to evolve.