Most companies now do more business with fewer customers than ever before. But each of your key customers takes on critical importance to your business. Losing even one of them would be disastrous: although keeping them can be financially punishing too.
Key account management is a strategic planning approach that goes beyond traditional selling to tackle today’s customer issues.
Driven by the 80/20 rule – 80% of current or potential revenues come from 20% of customers – many firms have come to realise that these customers must be treated somewhat differently from the average customer. Of course, it is one thing to recognise that these accounts should be treated differently, it is quite another to figure out exactly what to do.
The benefits that come from a key account management approach are as follows:
- Greater customer satisfaction – satisfied customers are loyal and eager to acts as advocates for referral business.
- Higher customer retention – finding new customers is said to be 10 times more expensive than selling to existing customers.
- Stronger customer relationships – enabling you to get under the skin of your customers’ business and identify problems and solutions more efficiently.
- Better managed customer interface – more contact, but not just for the sake of it.
- Higher barriers to competitor entry – your customer is less likely to switch to another supplier if they feel that you do a good job.
Like all good systems they operate on the simple principles of planning, action and review.
Planning is about gathering, processing and analysing information on all aspects of the customer’s business. Not just the firm’s business but a much deeper audit of the whole of the customer’s business, personnel, issues and objectives.
Get to know all about your customers’ business
Include general company report type information, who the most important contact is, all the contact details, and any appropriate comments specific to the customer business.
How the customer sees itself
What you know about the customers business and it’s business strategy. Useful information includes what offices there are, where they are, if the customer has many different business activities. Any person reading this for the first time should be able to get an instant feel for the business from the information given.
Not just about how well they are doing but also about how much of the business you do with them is proportionate to their spend on those services by the customer as a whole.
Key contacts, their names, titles, roles, responsibilities and contact details. Most important who wields the power to make decisions and on what issues
Note down the strengths and weaknesses of your relationship with your customer. Who else among your competitors has similar relationships?
Based on what you know about the customer, what are you going to try to achieve? What strategies will you need to help you meet these objectives?
This will cover actions, descriptions and responsibilities, i.e. ‘who is going to do what’. These must be discussed and agreed by everybody who is involved in working with that customer. There also needs to be a nominated person responsible for the relationship, who also has a view on quality control issues- the Key Account Manager.
The hardest part of any key account management programme is to keep the whole thing working; actioning and reviewing progress and keeping processes alive. You will not get far without approval from the top of your business and also it’s important that you have a clear time/investment commitment and the support of all other partners to facilitate this investment in applying the system.
Last but not least key account management practice needs results. These need to be given time to come through and should be circulated to all involved.
Related Article: Customer Insolvency – Getting Your Goods Back