Once criteria are established, the KAM team—along with cross-functional partners—must evaluate accounts objectively. The KAM program can fall apart if you don't avoid common pitfalls, the worst of which is letting the list grow too long because you're not using the established criteria. In this video, learn about more common pitfalls.
- With a set of criteria in place that you and your colleagues agree on, it's time to select which accounts do and don't make the key account list. Now, this can be tricky, and a somewhat emotional step in the process. You might have some colleagues, or even your boss who have a pet account that they've known for a very long time. And those people might try to make a strong case for their favorite account to make the list. So, you need to prepare yourself for some conflict here.
The best way to avoid or overcome this conflict is to collaborate with a cross-functional team of people who can help you apply the criteria to each account. Now, your team should include representatives from those departments most impacted by a key account management program. Your finance partner should definitely be a part of the team. He or she can give you and the team the most accurate picture of the financial performance of each account.
That includes past performance, as well as expected future performance. It should also include, not just top line revenue performance, but also bottom line profit in after tax cash flow generation. From my experience, I think it's critical to know which of your accounts are paying your bills and funding future growth projects like new product development. Now, be sure to include representatives from your sales organization. They probably have the best grip on what's happening in the accounts right now.
Is the relationship good or bad? Are there important changes happening in the account that could impact sales, such as a downsizing, a major acquisition, or perhaps a management shakeup? You need to consider these factors in your selection criteria. Now, here's a tip, as you evaluate and select customers to be part of your key account program, you may run into an issue where the list starts to grow too long. That could be a problem because too many accounts will stretch your resources too thin, and you won't be able to do a good job for any of them.
Not good. If this happens, you and your colleagues need to go back and look at your selection criteria to see if they need tightened down. Now, it may happen that a very large portion of your clients fit the criteria. Perhaps you're a relatively new company with very few clients. Well, in that case, every account matters a lot, but it may be premature to start a key account management program until some of those accounts grow to the status of key.
Here's another tip, just because an account makes the initial list doesn't mean it'll stay on the list. Things change with your clients, so you and your team need a regularly scheduled review process to see if the list needs revision. Some accounts may drop off and others may be added. If you're going to get the most out of your key account management program, you always have to make sure you're spending your efforts on the right accounts.
- Understanding key account management
- Understanding the key account management process
- Developing criteria for key account status
- Selecting key accounts
- Defining a vision, mission, and strategic focus
- Identifying the key account management task
- Communicating your strategy
- Hiring, training, and rewarding key account managers
- Developing a call plan for key accounts
- Measuring key account results