How to Structure an Effective Account Management Program

How to Implement Key Account

Management

A framework for success

Warwick Brown

Presented by:

Hello World!!

A strong account management solution driven by purpose, supported by process and skilled through

practice will accelerate the trajectory of your growth, deliver your objectives and respect your values.

The transformation from supplier to trusted advisor and true partner of your clients begins with a

framework and follows through with a strategy to succeed

Warwick Brown

Founder & Consultant at Account Manager Tips

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Define Key Account Criteria

Establish systematic processes for selecting key accounts

Segmenting your customers will help you identify those clients that not only require

significant investment to manage, but also offer significant potential rewards.

Segmentation by Volume

Large

Your top 20% of customers. Major accounts are not

always key accounts.

The simplest segmentation is by client size, based on how much they spend with you.

The next 40% of customers. Look for clients with

future growth prospects.

Medium

Your lowest 40% of customers based on transaction

volume or spend. Very few clients are key accounts

because of limited no return on investment for key

account management.

Small

Segmentation by Geography

Global

Clients who’s business you have in multiple countries

in multiple regions around the world.

Geography can bring additional perspectives to your segmentation.

Clients who you have their business in multiple

countries within a single region (e.g. LATAM, EMEA,

APAC)

Regional

Domestic clients

National

Who Are Your Most Valuable Clients?

Evaluate clients based on their

commercial appeal and opportunities

to expand revenue and improve

margin.

Establish selection criteria for key accounts. Look beyond spend to other factors like harmony and value

creation. There should be a yearly process for selecting and de-selecting key accounts.

VALUE

CREATION

HARMONY

GROWTH

Evaluate clients based on how well

they fit your solution, your culture and

your business strategy.

Evaluate clients based on their

partnership orientation. To what extent

will your clients invest in the relationship

and view you as a strategic supplier?

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REMEMBER:

Key accounts are your most valuable

customers, not always your largest

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Organizing for Key Account Management

Not all clients are created equal

Design your account management solution and relationship models around client

complexity and commitment. Give your most time, attention and resources to your key

accounts.

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Client Requirements

Vendor relationship

Let growth and strategic value guide your account management strategy.

ACCOUNT GROWTH

AND STRATEGIC

VALUE

SMALL ACCOUNTS

SERVICE & RELATIONSHIP REQUIREMENTS

High

Low

Middle-market accounts with

growth potential

MEDIUM ACCOUNTS

LARGE ACCOUNTS

KEY ACCOUNTS

Drive volume. Vendor relationship.

Strategic value and partnership orientation

Global Account Manager

Orchestrates strategy across

multiple markets

Strategic Account Manager

Creates a vision for the

client’s business and how

you can help them perform

better.

Key Account Manager

Understands what the client does

and how your solution can support

their business

Account Manager

Understands what you do

with your client..

Account Management Tiers

Design your account management solution based on customer complexity

Alignment Tasks Client Access Resources Tier

Vendor Provides product

and/or services

Limited to lower

levels and

gatekeepers

Product is most

important

Account Manager

Preferred Provider Provides products

and/or services

Low and middle

levels

Product and some

value added services

Account Manager

Plus*

Business Consultant Provides consulting

to help customer

meet business goals

To all or most levels Products and

services, value

added services and

consulting beyond

products

Key Account

Manager

Partner Provides consulting

to help meet mutual

business goals

To all or most levels Products and

services, value

added services and

consulting beyond

products

Strategic Account

Manager

* Add some valuable services to your standard account management package (e.g. a strategy session) and offer it to potential key accounts and to former key accounts to help them transition.

Account Management Perspectives

Business relationships evolve and change, Vary the depth and scope of account management to align with customer needs.

Depth of client complexity and commitment

Preferred Provider

(Account Manager)

Business Consultant

(KA Manager)

Partner

(SA Manager)

Scope of Account Management

Value Creation

Value Focus Current share-of-wallet and its predicted

growth

Future share-of-wallet customer lifetime

value

Wallet dynamics of the extended value

network

Value Identification Account reviews with procurement –

quarterly

Consulting probing – ongoing Joint strategic dialogue across the

network – ongoing

Value Specification Account plan internally developed and

agreed upon

Value proposition crafted for and offered

to the customer

Business case jointly developed and

validated with the customer

Value Realization Hand-off to operations/fulfilment Value-adding oversight regarding

operational execution

Marshalling resources and orchestrating

activity internally and externally

Risk Management

Risk Focus Current share-of-wallet Customer relationship and its lifetime

value

Total value network dynamics that could

affect the business

Risk Assessment Anecdotal information on competitive

encroachment

Comprehensive analysis of future trends

affecting buying behavior

Joint and fully transparent examination

of networkwide vulnerabilities

Risk Reduction Extended contracts, preferred pricing,

executive outreach

Higher switching costs due to higher

integration, top-to-top engagement

Shared governance over intervention

measures

Source: Customer Centric Leadership: How to Manager Strategic Customers as Assets in B2B Markets, California Management Review VOL 55, NO 3, SPRING 2013

Customer Relationship Models

The Bow-tie account management

• Principal contact between two people – the

account manager and the buyer.

• Simple, low cost and high degree of control.

• Attempts to gain access to other contacts may

be seen as a threat by the buyer.

• Messages from other functions may be

misinterpreted.

• Projects and activities held up by account

management/purchasing bottlenecks.

• Over-reliance on one relationship. When the

account manager moves on, the partnership is

at risk.

Customer Relationship Models

One-on-many account management

• Account manager establishes direct contact with

other people within the customer.

• Useful model for the early stages of the

relationship to open doors, make first

impressions, get noticed and achieve quick wins.

• Interacting with a broader range of functions

improves understanding of customer’s needs.

• Provides insight into performance criteria beyond

the purchasing team.

• Account managers continue to work alone but

now represent the organisation across a wide

range of functions and issues. Risk of overwhelm.

Customer Relationship Models

Diamond team account management

• Individuals on the supplier side form a team with

their counterparts on the client side.

• Contacts are secured at all levels, from operational

to senior management.

• Collaboration speeds the pace of joint activities.

• KA manager’s role is one of coordination.

• Focus is on nurturing the business, account

growth and planning for the future.

• Managing relationships and maintaining

communication can be daunting. Risk of functions

working to their own agenda.

• Creating a diamond team involves more people,

more time and greater cost.

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Key Account Management Framework

The essential elements of a successful KAM program

Explain, define and describe your key account management strategy and explore the full

scope of KAM.

Implementing Account Management

Structure and Processes

Define the KAM role and team structure. Identify

what needs to be done and how. How does the rest

of the organization interact with KAM?

The essential elements of a successful KAM program.

People Aspects

How will you recruit, train, develop, coach and

motivate your team??

Metrics and Profitability

Decide how you’ll measure KAM performance

and customer profitability. How will you calculate

targets and track progress?

Value Based Business

How will you become a trusted partner? What are

the sales and account management activities that

create value for your client?

Account Planning

Establish a key account planning system

that allows you to develop and implement

strategies client by client.

Culture and Leadership

How will you communicate the KAM mission to the

wider organisation? Can you improve collaboration

across business units, help them understand your

clients better and develop new ways of working?

1. Structure and Process

• Industry insights

How do you track and monitor trends in your industry?

• Customer industry insights

How do you track and monitor trends within your customer’s industry?

• Service levels

Define the service levels for KAM and how they’ll be measured.

• Segmentation and portfolio

management

Have you segmented customers and identified different types of key

accounts? How often will you review criteria and evaluate clients?

• KAM resources

What hardware, software and other resources are needed to deliver

KAM and grow your client’s business?

• KAM Teams/Support

Do you have admin/support teams to help your key account managers

operate effectively?

• Policies and procedures

Is there a set of guidelines and procedures that explain how KAM

works?

• Alignment with sales

Do the sales teams understand what key account managers do? Are your

processes lined up with theirs?

• Alignment with Marketing

How will your team work with marketing? What support do you need to help

with customer retention and growth (and how much budget should be

allocated).

• Consistency internationally

Are objectives, plans, resources and procedures the same in other countries

or markets? How can you align to ensure the client experience is as

consistent as possible.

• IT support

Do you have the right data and reporting in place? Are there any

enhancements needed to existing tools that may require development?

2. Metrics and Profitability

• Business case

How will you develop strong business cases to secure additional

resources and investment when you need it?

• Client feedback

Are customer feedback loops in place and are they aligned to quantify

performance?

• Client profitability

Are you able to generate a profit and loss for each key account? How

will you calculate profitability?

• Benchmarking

How do you benchmark your key account management performance

against other industries and organizations?

• Target and objective setting

Are key account strategies, objectives and targets clear and aligned across

the entire organisation?

• Share of wallet analysis

How do you estimate the opportunity to capture more of your client’s

activity?

• Business reviews

How is the client’s performance tracked and reviewed (i.e. spend,

transactions, service level agreements and key performance indicators).

3. Account Planning

• Plan template and structure

Do you have a key account plan template?

• Client specific value

Does the template enable customer specific insights, strategy and value

proposition development?

• Client insights

Does the plan encourage account managers to understand their client’s

long term strategy and associated analysis (e.g. SWOT, PEST).

• Plan evaluation

How regularly are plans reviewed and input sought? Are they internal,

external or both?

• Action plans

Does the key account plan expect the account manager to outline clear

strategies and the actions required to achieve them? How will these be

tracked (e.g. project management software?).

• Progress tracking

How often do key account managers meet with team members to ensure all

strategies and actions are completed? Should senior managers be involved?

4. Culture and Leadership

• Customer centricity

How do you stay focused on your client’s needs and develop new ways

of working that meets them.

• Commercial leadership

How will you prepare your team to be commercially focused?

• KAM champions

Have you got the buy-in of your senior executives and are they

champions of key account management?

• Executive Sponsor Program

Will you invite your top management to be involved with your key

accounts? An executive sponsor program assigns members of your

leadership team to a key account. They will be involved in developing

and implementing strategy as decided by the KA manager.

• Internal communications

Do you have a formal communication strategy to engage with internal

stakeholders and keep them informed?

• Account Managers as experts

Are your team highly regarded professionals? How can you elevate their

standing? Industry events, associations, courses, mentoring etc.

• Organizational knowledge and

understanding of KAM

Does the whole organization understand what key account management is

and how each business unit contributes to its success?

5. Value Based Aspects

• Managing conflict and negotiation

Do you have risk management models in place? Are your team skilled at

dealing with conflict and leading negotiations?

• Sales processes

Will you use any methodologies to manage the sales cycle (e.g. BANT,

MEDDIC, SPIN). Are your KAM processes aligned with your Sales

processes?

• Value added services and solutions

Do you offer bespoke offerings? How are these packages developed.

Are there any account management activities you could monetize (e.g.

additional reporting).

• Relationship management

Developing influential relationships with decision makers, budget holders

and influencers is vital. Are there processes to identify, connect and engage

with key stakeholders and how will you measure the quality of your client

networks. Are your account managers competent at relationship

management?

• Value based pricing

Conversations with clients should always be centred around the value you

provide so price becomes relative. Are your teams capable to negotiate

value based pricing?

6. People Aspects

• Personality type

Will you select key account managers according to their personality

type (e.g. Myers-Briggs)?

• Background and expertise

What is a ideal candidate profile in terms of employment history and

previous experience?

• Skills and competencies

What are the skills required to fulfil the different key account manager

roles?

• Reward structure

Decide target compensation for key account managers including annual

salary, incentives and other rewards.

• Identifying and appointing

Is there a defined process for selection, recruitment and appointment of key

account managers?

• Training and coaching

Are there adequate training, coaching and development programs in place

for key account managers?

• Performance monitoring

How are key account managers measured? How does personal performance

link up with the overall KAM strategy?

Key Performance Indicators

Qualitative insights that measure the interaction between the supplier and

the customer. Process quality and efficiency, information sharing, solution

development and role performance.

How to measure KAM performance

Results Driven

Quantitative insights that measure financial performance and relationship

quality. They should include a blend of short term accomplishments and

long term goals.

Product/service mix optimal

Cost to serve

Account plans in place and progress made

Quality of internal relationships

Top management commitment

Revenue growth

Profitability

Customer satisfaction

Customer loyalty/retention

Relationship quality

Process Driven

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Implementation

Change management is the secret to successfully launching key account management.

Key account management is a different way of working. Engagement, communication and

senior management support are essential to gain momentum with your KAM program.

KAM Implementation Milestones

Conduct an internal/external audit

Why do you need key account management? Be

clear about want KAM to achieve, current gaps and

potential obstacles.

Design your strategy, define capabilities and manage change

Form a steering group

Develop a cross-functional team with executive

sponsorship to define what is a key account.

Create a vision

Use the KAM framework to develop a strategy, define

actions to build your key account management solution.

Pilot with a few selected accounts to test.

Engage and communicate

Connect with the wider business to explain the case

for change and seek buy-in from key stakeholders.

Training and coaching

Create training programs to develop key account

managers.

Quick wins

Generate account plans that drive growth. Use these

as case studies. Seek customer testimonials for

evidence of the impact of your KAM solution.

Build on success

Engage with more middle/senior management to

communicate systems and talk about successes.

Embed

Continue to refine and review your strategy on a

regular basis until KAM is understood and

embedded across your organisation.

KAM Implementation Checklist

PRE-LAUNCH

 Our senior managers have really bought in to KAM

 We have defined selection criteria for key accounts

 We have clearly identified our key accounts as separate from other accounts

 We have individual account plans

 We have someone who is the KAM champion within our company

 We have appointed specialist key account managers

 We have fully trained key account managers

 We have specific targets for key accounts

 We have KAM teams that deal with individual accounts

 We have developed specific motivation and reward schemes for KAM

 We have well-developed feedback processes with key customers

 The top management in the company have an active involvement in Key Accounts

 We have changed our organization structure to accommodate KAM

 We benchmark against other organizations about KAM

 We have established specialized policies and procedures for handling key accounts

 We have completed a pilot with a few accounts to test the KAM model.

 Our KAM managers have good access to internal resources

 Our key accounts have higher service levels than non-key accounts

 We have joint activities with key accounts (e.g. process improvement)

 We have joint investment in relationship between supplier and key account

 We measure the performance of our KAM program

 We have IT support systems for our KAM program

 Everyone in our organization is educated to understand the KAM program

POST-LAUNCH

 We have increased our share of key customers' spend

 Revenues from key customers have grown faster than revenues from non-key

customers

 Costs to serve key customers have grown faster than costs to serve non-key

customers

 The profit margins on key customers have increased

 Our relationships with key customers have improved

 Our customer satisfaction ratings with key customers have gone up

 Our retention of key customers has improved

 We have obtained increased advocacy (word of mouth recommendation) from our key

accounts

 The amount of shared investment (e.g. joint projects or shared innovation) with key

accounts has increased

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Lao Tzu

The journey of a thousand miles begins

with one step

Additional Resources

Whitepaper: Which resources and capabilities

underpin strategic account management?

Research: Key Account Management Performance,

Measurement and Rewards

Research: Customer-Centric Leadership: How to

Manage Strategic Customers as Assets in B2B

Markets

Whitepaper: Competencies of Strategic

Account Managers

Case Study: Implementing KAM at 3M

Framework: C.A.R.E. Key Account

Management Model

Worksheet: Key Account Scoring Matrix

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Account Manager Tips serves organisations who want to

optimise their account management solution and develop

eﬃcient, eﬀective and sustainable strategies that grow client

revenue and reduce churn.

Account Manager Tips Ltd

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London W9 2DB

United Kingdom

t: +44 (0) 752 768 0631

e: hello@accountmanager.tips