UA-160208557-1

How Key Account Management differs from other initiatives to increase sales to large customers.


04 Mar
04Mar

Are you an account manager?  Because of the ever present problem of job titles and program names, a title of account manager is meaningless unless we focus on responsibilities and behaviour.   A supplier may have a program that sells to large (key) accounts and may call it a “key account management program”.  Salespeople selling to large customers may be called account managers or key/strategic account managers but don’t undertake any of the important activities of a key account manager.  They are a KAM in title only.

It is common for the sales team to initiate a program to sell to large customers and it then morphs into key account management.  Sales may see an opportunity to generate more revenue by focusing its efforts on the larger customers.  Sales often begin these initiatives by appointing an “account manager” who sells to key accounts usually with a consultative selling approach.  Over time the title changes to key account manager – without the job changing fundamentally.

Selling to key accounts is part of key account management but it is not the same.

The distinction between the two is important.  The following illustrates the differences between these two approaches in managing an important (key) account:-


Account Manager who sells to key accounts

 

Key Account Management

 

Planning horizon

Under 12 months


1-3 years

Customer segmentation


By revenue



By revenue, growth potential and other strategic criteria e.g...

  • How they prefer to buy
  • Willingness to partner
  • Complementary competencies/fit


Offerings



Existing products and some custom solutions

Custom solutions & solving customers business and organisation problems, challenges and issues


Differentiates by


Quality products and services

Value add over time;

account manager skills and problem solving


Primary account responsibility

Account manager



Cross functional account team

Concerned with


Short and long term revenue

Profitability;

Account’s business challenges;

Share of customer


Number of accounts


10-25

1-5

Compensation


Half salary, half commission


Generous salary with some incentive bonus;

Overall quality of account plan;

P&L of account relationship.


Skills required


Selling skills

Communication skills

Time management

Product knowledge

General management skills;

Strategic thinking;

Influencing skills;

In depth understanding of customers market and business.


Programs to increase sales to large customers which are initiated by the sales department tend to work on shorter planning horizons, to measure success primarily on incremental, perhaps quarter to quarter revenue and they tend to sell mostly existing products to a small number of people within a large number of accounts.

In many cases these programs require a great deal of internal selling because sales may come up with creative discount, financing, delivery or service options.  Their creativity puts pressure on other departments to do things differently for large customers.

We know a manufacturer whose sales group decided to develop a program to increase sales to large account customers.  The company kicked off the program by making a big announcement to 15 of its largest customers about how great the new program would be for them.  The sales team started to come up with innovative ways to serve those customers.

But after the sales team made creative commitments to the customers, internal departments blocked their way.  Those departments saw no particular reason to do things differently.  Sales was spending a lot of time using its selling skills to sell back internally as it tried to influence and persuade departments to change.

The results were not pretty when the supplier’s responsiveness and reliability - as well as customer satisfaction indices - started to decline markedly.  At the end of the year the program was serving only a few of the original customers and those were not being served very effectively.

If the program is going to succeed, the entire organisation must understand and align around the account selling program’s goals – particularly if the company wants to move to a truly key account management process. It is an uphill battle for sales to develop a key account management program by itself.


Comments
* The email will not be published on the website.