“Every time we elevate an account to our key account management program, that’s a $1.5 million investment. If that underperforms, the impact is felt across the company.” This is an all-too-common sentiment, felt by many sales leaders, when it comes to key account management today.
Key accounts often fail to generate the outsized returns that companies expect based on both their size and investment
In fact, Gartner research shows that a full three-quarters of sales leaders expect their key accounts to outperform the rest of the business. However, 84% of those same leaders report that they completely rebuilt their key account program at least once in the past seven years due to underperformance. And more than 40% of those started over at least two or more times in that same seven-year period.
Key accounts often fail to generate the outsized returns that companies expect based on both their size and investment. That’s a huge amount of organizational capital expended with very little to show for it.
Focus on organizational design, not individuals
More often than not, companies look to the key account managers (KAMs) as the key ingredient to their success or failure. However, in-depth research into key account success — including an analysis of more than 300 KAMs with at least national responsibility for no more than three accounts each — reveals that it is far less about individuals and far more about the organizational design of the program itself.
Although individual KAM skills and attributes still matter for key account performance, sales leaders must focus more on the specific organizational and customer attributes that can significantly ensure or derail the performance of even the world’s best KAMs.
Key accounts unquestionably represent the lifeblood of many B2B organizations
On the supplier side, two factors in particular stand out as crucial for success: Widespread organizational support and understanding of key account objectives, and the provision of high-quality, real-time commercial information to the KAM. Meanwhile, on the customer side, being able to pinpoint which accounts should even qualify for inclusion is crucial to establishing a healthy and strong program.
Ask the tough questions
To ensure key account management success, sales leaders must ask these questions:
- Do we, as sales leaders, have a clear understanding of what it means to be a key account? Sales leaders must focus on identifying the clients that qualify for a key account and what criteria they are using for that qualification. In addition, they must also establish agreed-upon “value-add” services, personnel and/or resources they are willing to dedicate to that account as a result.
- Does the rest of our organization have a clear understanding of what it means to be a key account? In addition to establishing how a key account is defined, sales leaders must also ensure that everyone across the organization (geographies, business units and functions) understands and agrees on what those qualifications are and the specific incremental resources, time and attention those accounts merit as a result. Then the organization must provide the support and information necessary to support that vision.
- Do our customers have a clear understanding of what it means to be a key account? Customer understanding of what it means to be a key account is just as important as the supplier’s understanding. Sales leaders must identify whether or not customers see their inclusion in the program solely as a reason to ask for bigger volume-based discounts — in which case, they may not qualify as a key account. In addition, customers should be involved in the design and execution of a long-term plan of cooperation that maximizes value to both supplier and themselves.
Key accounts unquestionably represent the lifeblood of many B2B organizations, both in terms of current performance and future growth. But KAM programs are destined to underperform without a principled understanding of what a key account program is designed to do in the first place and what kinds of customers actually constitute “key accounts.”