Not all of your client accounts are equal. A minority of your customers probably generate most of your revenue.
Paying close attention to your key accounts is important in order to maintain and increase the amount of revenue your business generates. Having a key account management process is essential to achieving this goal.
What Is a Key Account?
A key account is one of your company’s most valuable customers. Customers who generate a lot of revenue, refer other potential customers, and improve your reputation are extremely valuable.
The meaning of “valuable” is different for every organization because it is based on that organization’s values. For example, it could be based on any, all, or some of the following:
- Amount or share of recurring revenue they bring in
- The level of profitability you have with them (revenue taking into account cost)
- Customer lifetime value
- Level of influence and/or authority
- Number of referrals they make
- Level of alignment between shared goals (partnership)
Key accounts need an explicit and strict definition within your organization. It is better to have detailed and specific criteria so that the chosen customers will be worth the company’s time, energy, and resources.
How to Identify Key Accounts
Don’t choose solely based on revenue. Analyze your current customer base to get an idea of how much revenue they bring in relative to their costs. Then, calculate the potential for expanding each account. You need to decide if they would be a good strategic partner for your company. This means considering if they have the right connections, resources, and business reputation to improve your company’s chance for success.
The key account scoring matrix can help you categorize your accounts and prioritize them based on different criteria. Evaluate each account by choosing criteria and assigning a score from 1 to 10. Your key accounts will be the ones with the highest scores.
SBI recommends choosing three to five selection criteria. Here’s a list of examples:
- Product fit
- Solvency
- Existing relationships
- Possibility of becoming a channel partner
- Cultural fit
- Geographic Alignment
- Purchasing process
- Revenue potential
It’s better to be conservative and not label all customers as “key accounts” in order to significantly alter your company’s trajectory. You should not tell a key account that they have been demoted, but you can tell a traditional buyer that you are promoting them.
In addition, you don’t want to overcommit yourself. A KAM program cannot be successful without buy-in from the entire organization, starting from the top. This requires hiring and training employees who are dedicated to the program, as well as implementing new processes that everyone must follow. Starting small allows you to focus your efforts.
Key Account Management
It is a way to build strong, lasting relationships with your most important customers. The majority of the business’ income is made up of these accounts. A key account manager typically helps turn buyers into business partners by providing dedicated resources, unique offers, and periodic meetings.
Programs designed to manage key accounts often lead to increased costs and lower margins, according to professional services firm BTS. The end result of giving a customer more resources and often your best discounts is them leaving.
If you use the right key account strategy, you’ll be able to sell more and create relationships that last.
The Benefits of Key Account Management
Why should you start a key account management program? Key accounts are responsible for 33% of sales revenue.
According to Gallop’s poll, organizations that are good at key account management see much improved account growth when they engage their customers. Some of these benefits include:
- 34% more profitability than companies that don’t have a key account management process
- 50% more sales and revenue generated
- 33% greater chance of being their client’s top choice for future business
Customer satisfaction will improve by 20% a few years after a key account management program is put into place, as reported by Harvard Business Review. Profits and revenue, meanwhile, can increase by 15%.
Programs that have been around for five or more years are twice as likely to see results.
Key Account Management Strategy
Although key account management could be beneficial to your organization’s profitability, it’s not right for every organization.
Before fully committing to a key account strategy, it is important to consider a few things.
How transactional is your current sales process?
If your sales cycle is relatively short and your sales reps have minimal interactions with prospects, key account management probably isn’t the right choice. it will be difficult to teach your salespeople to adopt entirely new processes for just a few clients.
If your product has to upsell and cross-sell potential.
There’s no reason to keep a relationship with the customer after the sale if they’re not going to buy anything else. Even though you still want to provide excellent customer service, it is not the only thing you should do to promote word-of-mouth marketing and high retention rates.
Your ability to ‘land and expand.’
There is an exception to the above rule: If you are able to get your foot in the door of the prospect’s company and then grow the account by selling to other departments, offices, subsidiaries, etc., a key account strategy may be a good investment.
The competitive landscape you’re facing.
A key account program could make your business more competitive. Imagine your customer has narrowed their vendor choice down to you and another company. If you can guarantee to make them a key account – and your competition can’t do the same – you’re likely to win the deal.
Company capacity and resources.
The success of key account management depends on the support of the entire company, the approval of executive management, and a team dedicated to key accounts. You’ll also need enough money to invest that might take 12, 24, or 36 months to recoup.
Key Account Manager
A KAM’s primary responsibility is to manage high-value clients. The account manager is responsible for maintaining the relationship with the client, identifying any potential difficulties or opportunities, and finding ways to help with these issues.
A key account manager is responsible for managing and building relationships with large clients. These clients make up most of the business’ income. KAMs not only find ways to address the client’s challenges and opportunities, but they also create and present reports about the client’s progress to key stakeholders.
What is Customer Success?
““Customer success” means making sure your customers get the most value from your product or service. It means making your customers happy and helping them achieve their goals. This means that customer success is working to ensure that customers are able to achieve their desired outcomes using your product.
Customer success should not be confused with other business methodologies, as it is uniquely focused on creating a positive experience for customers.
Customer Success vs Customer Service
customer service is designed to quickly and effectively solve customer problems.
Customer success involves proactively using customer data to address potential problems and needs before they arise.
What is the Difference Between Customer Success and Customer Service?
customer success vs. customer service involves different approaches to customer interactions. Reactive customer service focuses on solving problems as they come up, while proactive customer success takes steps to prevent problems and encourage growth over the long term. It is beneficial for customers and helps them reach their goals.
Customer service is more in-the-moment and reactive. The goal is to solve specific customer issues and complaints in the most effective way possible while providing them with a great experience. It is ideal for customers to have their problems solved and to have a positive perception of the organization they are dealing with.
Customer success, meanwhile, is about the big picture. This means using customer data to identify and implement strategies that will help them succeed in their business goals, which will also help you achieve your own goals. The goal is to do this while giving customers a great experience. The focus is on making sure your customers get the most value from their investment in your products or services.
Both customer service and customer success are important tools for achieving positive outcomes and growth. The most important thing is not how much of an impact they have, but how well they work together.
How Customer Success Supports Customer Service and Vice-Versa
While customer success and customer service may have different goals, neither can operate effectively without the other’s help. If the two parties don’t communicate clearly, important information will be misunderstood. Since members of both teams will likely have to repeat information to customers, the customer experience will take a hit. Customers may get contradictory answers or advice from the teams, which will only increase their confusion and frustration.
It is important that the two teams are able to work together harmoniously to ensure that all employees are aware of each customer’s individual needs and challenges. Transparency and open communication are essential at every stage. This makes it easier for both teams to identify solutions and strategies that will improve customer experience and success.
Customer Service Responsibilities
The customer service team is responsible for keeping the success team informed of any problems an individual customer may be having, especially if the issue is ongoing or keeps happening. If you’re using the right solution, your teams won’t have to waste time in a lot of meetings trying to figure out what’s going on – the data should be able to give them that information easily. It’s beneficial to connect all of your data streams to create a more complete picture of the customer.
The author suggests that businesses should be clear about the problem they are trying to solve, as well as the method they are using to solve it. The customer’s success team can take this information to help them plan better and, if possible, stop the issue from happening again, or reduce the issue’s effect on the customer’s success.
Customer Success Responsibilities
Customer success teams are responsible for providing support teams with the necessary information to help customers solve their issues. If customer support understands a customer’s business goals and brand identity, they can offer better solutions that are more likely to achieve the desired results.
If your teams can work together better, it will be better for everyone involved, including your customers.
Communication is Key to Optimizing Service and Success
How do you ensure your customer success and customer service teams are able to work together successfully? Focus on these steps:
- Make sure all customer data is easily accessible to both teams and that both teams are seeing the same information. The best way to accomplish this is to gather all data in one central location which can be accessed by members of either team at any time.
- Facilitating data analysis and setting up a reliable system to ensure no pattern is overlooked and no trend is missed. Whether a customer is ready for an upgrade or needs a little extra support, it is vital that both teams are not only aware of the situation, but know exactly how to address it.
- Granting both teams the ability to communicate clearly and efficiently with one another. A simple question or quick memo can be sent and received instantly via a digital platform, saving the unnecessary time it would otherwise take to physically track down someone in the office in person.
- Allowing team members to communicate clearly and effectively with customers whether digitally or over the phone. This means making sure they can access the customer data they need, when they need it, and making sure that data is always up-to-date.
- The platform your teams work in should facilitate transparency. Think fewer meetings and easier access.
Customer Success vs Customer Experience
The customer experience revolves around how easy and enjoyable it is for customers to use your product. This includes specific interactions that customers have with your product.
Customer success is all about the customer journey from start to finish and how CX can help them reach their goals along the way.
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