At Salestrong we often get asked to deliver Key Account Management (KAM) training, and having done so for a number of organisations, we notice that companies have vastly different views on what KAM is.
Some simply call their larger accounts, ‘Key Accounts’, whilst others have a well defined KAM programme. Such programmes often result from an Organisational Change initiative involving systems and process changes, board level sponsorship, company wide communications and detailed metrics to measure success. Sales Training is just one piece of that overall change initiative.
Despite this spectrum of views on KAM, one question that invariably comes out in KAM training sessions is the question of which of these accounts are actually the key accounts? The easy answer is to say that they are the accounts that are key to the business, usually based on revenue. But it’s not as simple as that, after all KAM differs from regular selling, or account management, because you’re choosing to invest proportionately more in these Key Accounts. It could be that you’re investing more as a defensive move, to keep the account from falling prey to the competition, but most KAM programmes channel increased investment into the accounts to get a better return in the long term than they otherwise would.
When choosing a Key Account, the seller/account manager (you) must determine which accounts they want to grow over the long term. Can the account give the return required for the planned investment? This means that you need to be crystal clear on the criteria being used to segment the key accounts from other accounts. The question to be answered to determine segmentation is therefore, “What are the criteria by which an account can be identified as being key to the business and attractive enough to support long term investment?” The question of attractiveness, beyond simply revenue, is where many businesses struggle.
This 8 point framework is designed to get you started on finding the attractiveness of your accounts. Use these as a framework to build your own list and then prioritise and weight the criteria you come up with:
- Stability of the business and the market they serve
- Opportunity for cross and up-selling
- Access to further and adjacent market opportunities
- Stable and regular order flow
- Aligned strategies and values
- Financially secure with good cash flow and payment terms
- East of doing business – people, systems and process
- Brand value association
In addition, the success of such a key relationship also depends on the other party. Will the customer also see you as key to their business and attractive enough to engage in such an interdependent way? So the customer also needs to ask the same question. What makes an attractive supplier and how do we identify them?
The below matrix is another simple way of working out a mutual level of attractiveness between Customer and Supplier:
One of the major insights that this model also brings is in the Account Maintenance box. There are lots of instances where businesses show a lack of ability in measuring customer attractiveness, which means that they invest in accounts of low attractiveness, which do not then give the required return on investment. This is a hard decision to make in any business. Sellers know immediately if an account is key to their business, that’s the easy part, but is it attractive enough to invest in for growth? That latter question takes time, resource and insight to be able to answer well.
Simply being aware of the fact that your customer is not as attractive as they could be allows you to put together a strategy on how to change that. What win/wins would there be if you could work better together? What a great way to open up a dialogue with your customer to create more business.
In summary, when defining which accounts are suitable for KAM, rather than simply saying it is the accounts key to a Company, prioritise accounts where there is a mutual attraction between Seller and Supplier, to invest in working in a close, collaborative and mutually beneficial way, over the long term.
Want to start defining your own KAM structure?
Download a FREE template by clicking HERE.
Did you know? Salestrong offer a Strategic Account Management service as part of our Sales Training. It is primarily aimed at Key or Strategic Account Managers and is designed to equip them with the skills and framework to deliver value to the client and have a strategic plan in place for account growth.
If you would like to learn about this service or any of our Training, Coaching or Consultancy services please contact the team on 01778 382733 or email info@salestrong.co.uk.
Team Salestrong