The benefits of these continuing relationships go beyond the obvious improvements in revenue and account retention. Key account management can help your team manage complex accounts, create new opportunities for growth, and cut your marketing costs.
Improved key account retention and value
When you spend more time and energy working on a few key accounts, it leads to better customer satisfaction. When key account managers focus on just a few customers, they are able to provide faster responses as well as more intelligent and thoroughly researched plans.
Especially in the case of more complicated accounts with higher resource requirements, the extra time that key account managers are able to dedicate will make a real difference in customer retention.
Superior customer lifetime value (CLV)
Customer lifetime value (CLV) refers to the revenue you will see from a client over the course of your entire business relationship. As we’ve seen, the attention that key account management gives your most valuable clients leads to better customer retention, which extends the lifetime of your business relationships.
Higher annual recurring revenue (ARR)
Key account management can also increase your annual recurring revenue (ARR) with each individual client by encouraging not only retention of key accounts but also their growth. This secures a reliable stream of income for your business.
Predictable revenue year over year allows you to plan ahead, invest in your business, and increase your overall earnings.
Better management of complex accounts
A company’s most valuable customers often require more engagement, knowledge, and skill to properly manage. Key account management helps you cater specifically to these clients, as you now have dedicated account managers for them.
If a client fits the criteria of a key account, the investment into their complex needs will convert into tangible and ongoing value for your business.
Creation of significant growth opportunities
When it comes to key account management, the focus is on the relationship-building process as a whole and not on individual projects. A key account manager considers their client’s collective business instead of just the initial areas of the partnership. They will continually look for new opportunities to grow in the account’s wider dealings.
As the strategic relationship between your company and your client grows, they will gain a proven track record of your capabilities. This history of proficiency will support your pitches for any future projects with other departments in the same company.
Reduced marketing costs
Key account management builds a mutually beneficial relationship between your company and your clients. If you consistently provide a stellar service, it’s likely that your clients will recommend your business to others.
This is particularly helpful if they are a key player or recognizable name within your area of expertise, as their support of your work will add to your reputation.
A template for identifying key accounts
When you’re looking to identify key accounts, think of your most important customers. They are the source of a large chunk of your revenue and require a good amount of attention. You might already have a positive working relationship with them and see some long-term potential and room for growth. Ideally, key accounts will be recognizable names within your industry to lend credibility to your work.
Be wary of giving too many clients the title of key account—it’s much easier to add more accounts in the future than it is to demote one. Too many key accounts will also put a strain on your team and make it harder to provide high-level customer satisfaction.
A meaningful percentage of your business revenue
When deciding which clients to classify as key accounts, the best place to start is with the large accounts that already represent a significant portion of your workload. Key clients will often contribute a disproportionate percentage of your company’s revenue, but that’s not the only criterion for a key account.
High lifetime value (LTV)
Your key accounts are your most valuable customers and represent long-term investments for your company. This means that they’ll have a high lifetime value, providing high returns over the course of your working relationship.
Requirement of custom services
As they call for more resources than other accounts, key clients require highly skilled and engaged account managers. When defining your key accounts, look for clients that occupy a significant portion of your team’s time or often have complex and demanding requests.
Promising potential for account growth
Your key accounts should have room for you to grow within their companies. For example, this can happen in companies that have many departments.
This factor is especially relevant for emerging key accounts where you might not have worked on many projects together yet. But it’s also a good idea to look for new revenue potential in clients that have been around for a while.
Good industry credibility
If you can secure a key account that is a well-respected player in your industry, their name alone will lend invaluable credibility to your company. This builds trust with other potential high-profile clients that you might look to bring on board in the future.
Strong existing client relationship
The ideal of key account management is to create a mutually beneficial partnership with your client. Existing rapport is important in helping you to continue growing together.
Have a look at the customer tenure of your target account—how long have you been working together? Do you have a strong existing client relationship to build on? If you’re answering yes to these questions, you have a strong basis to work from with this account.
What makes a great key account manager?
Key account managers are the ones that build trust in your client relationships and provide the excellent service that ensures your most valuable customers stay with you.
They should be solutions-oriented individuals with several years of experience within your industry. A good key account manager also needs to have deep knowledge of your company and the time to give your key accounts the attention they require.
Deep industry experience
One of the most important key account management skills is a clear understanding of how your industry functions and where your business is located in relation to its competitors. A key account manager should have specialist knowledge in their field and a proven ability to work under pressure. This deep industry knowledge allows clients to trust your key account manager with their business.
Extensive company knowledge
Beyond industry knowledge, key account managers should have a practical understanding of how your company functions and what products or services you provide. This allows them to see opportunities for you to provide solutions that are different from past and current projects.
Space to focus on just a few accounts
Building long-lasting partnerships with key accounts requires a lot of time. Unlike regular account managers, who might be overseeing 10 to 20 clients at a time, a key account manager will work with only a handful of accounts.
Often, smaller businesses won’t have a formal key account manager role and will just designate someone from within the wider team. Whoever is acting as a key account manager needs to be given the time to properly dedicate themselves to their key accounts without too many other distractions.
How to create a successful key account management process
A strong key account management program is essential to its success. To build your process, you’ll want to create profiles for each of your key accounts. This will give you a clear idea of how your business can help them and where there might be future opportunities for growth.
Once all these elements are in place, you need to continually review your team’s performance and client relationships. This will allow you to continue to provide the best service possible and maintain your key account partnerships in the long term.
Let’s break this process down.
Build a profile for each key account
Strategic account management begins with a clear idea of how your client works and what they want to achieve going forward, whether it be in the next year or the next 10 years. A good customer relationship management (CRM) program can help you to collect the information needed to build a clear business profile for each key account.
Business size, industry, and location
First, you’ll want to note down the basic details of your key accounts. This includes clocking how the size of their business relates to the amount of work they are currently giving you. This will help you predict how big your account teams need to be and see if there’s room to expand your work with them in the future.
Knowing the industry sector your key account represents will allow you to source for team members who have specialist knowledge. Geographical location matters too—if you’re working in a different time zone from your key accounts, you’ll need to coordinate your working hours for meetings and other touchpoints.
Business plan and target audience
Having a good idea of your key accounts’ business plans allows you to work within their current processes. Creating buyer personas and ideal customer profiles (ICP) will help you better understand their target audience and produce goals that help them achieve theirs.
History of your business relationship
Knowing the history of your partnerships with existing customers can help streamline your sales process. By understanding what they have liked or purchased in the past, you will know if you need to change your approach and will be better equipped to give proactive suggestions.
Approach all strategic relationships with your key accounts with their competitors in mind. This way, you can hone in on their unique selling proposition (USP) and better understand how you can give them that crucial edge.
Plan to exceed your clients’ needs
Once you have a good idea of your clients’ business plan and goals, you can begin your key account planning. Use the information you have gathered to ascertain their pain points, how you can address these needs, and how you can take everything a step further.
This means you’re not just problem-solving, but actively providing improvements.
>Form a strong key account team
Strategic account plans are only as strong as the team delivering them. Having a reliable team that will follow through with your objectives is just as important as making the plan itself.
Set clear objectives and deliver them
Setting clear goals and reviewing them with your client allows you to get on the same page with all the stakeholders. A coherent account plan with internal targets as well as client-facing objectives will streamline your key account management strategy.
Stay focused, flexible, and aligned
Within a long-term relationship, key accounts’ company goals are likely to change over time. Consistent communication and reviews will allow you to stay aligned throughout your partnership and keep everyone happy.
Recognize white space opportunities
White space analysis refers to the process of finding new areas within a business to cross-sell or upsell your products or services. White space opportunities often present themselves as unmet needs or unnoticed gaps within a key account.
The best way to find these opportunities is to think about what you can do to help your client achieve their goals or ways you can contribute beyond your current projects, rather than looking to simply sell them something.
Take a look at how this can be achieved.
Keep up-to-date with existing products and services
Sales leaders who keep themselves informed of any changes and developments within your products or services are better placed to find new areas of work within an existing account.
Identify the main decision-makers among your clients
Your key account might have multiple buying centers in their company. Buying centers are dedicated decision-making units for specific areas within a wider business. Identifying the stakeholders in other departments of your key account will guide you in looking for new growth opportunities.
Find opportunities to upsell and cross-sell
Identifying business opportunities within existing key accounts is also known as cross-selling. Where cross-selling is about finding new areas for your services within a company, upselling offers an enhanced version of a service you are already providing. Both are important if you want to expand your work remit.