Key account management (KAM)

What makes a certain customer key to your business? While sheer size is a basic indicator, it does not provide a solid basis for sustainable segmentation.

At Simon-Kucher, we recommend distinguishing key accounts by three key criteria:

Financial compatibility

Look at basic quantifiable criteria that indicate the customer’s current performance and potential. Accounts that generate substantial revenue provide a strong foundation for sustained growth. Here, it's important to evaluate not just the current revenue but also the consistency and reliability of this revenue stream over time. Accounts with stable and recurring revenue are often more valuable than those with high but sporadic earnings.

Profitability is another essential criterion. High-revenue accounts are beneficial, but they must also be profitable and contribute positively to your company's overall financial health. Assessing profit margins helps in identifying accounts that not only generate significant income but do so efficiently. Look at the costs associated with maintaining the account and ensure the net profit is substantial.

Analyzing the future growth prospects of an account can help in prioritizing those with the highest potential for expansion. This includes evaluating market trends, the customer's industry position, and their strategic goals. Accounts that show strong growth potential are valuable for long-term planning and investment, as they can lead to increased revenue and profit over time.

Strategic compatibility

This indicates whether the customer’s position and growth direction are compatible with your capabilities and priorities. How strong, for example, is your customer’s market and innovation leadership? Are the customer's decision-making processes compatible with your sales and service delivery models? What is their influence and reputation in the market?

Strategic alignment reduces the likelihood of conflicts and misunderstandings, ensuring smoother interactions. Leveraging key accounts strategically can also strengthen your company’s market position and competitive advantage. It may even open up opportunities for joint ventures, co-development, and innovation.

Attitude

This refers to factors such as loyalty, willingness to share information, and desire to engage in a working relationship. You must also know whether your customer buys your services based on the price or on their loyalty to your company. Because in the end, a key account relationship involves a mutual commitment in which both sides grow together.

Unlock the full potential of your key accounts with Simon-Kucher's tailored expertise in key account management. Contact us today to develop robust strategies, enhance your team's skills, and grow your key accounts. 

Not every sales rep makes a great key account manager. Different sales types bring varied strengths to the table. Recognizing these can help in selecting and developing the best KAMs for sustained business growth.

A great key account manager is able to see the big picture and align account strategies with your company's long-term goals. Their interpersonal skills allow them to build and maintain strong, trust-based relationships with your key customers. Not only are they clear and persuasive with customers and internal teams, they can analyze data, understand market trends, and make informed decisions.

Key account management also requires a strong ability to negotiate terms that benefit both the customer and the company. KAMs must be resourceful in finding solutions to customer challenges and obstacles, with the ability to lead account teams and coordinate efforts across different departments. Their role is not just about closing deals but about building and maintaining enduring partnerships that deliver mutual value.

Different sales reps have different skill sets. We can typically categorize them into four sales types based on their leadership and acquisition potential:

Hunters

Excellent at finding new opportunities but may lack the focus on nurturing long-term relationships.

Farmers

Great at maintaining and growing existing accounts but might struggle with new acquisitions.

Consultants

Strong in building deep relationships and understanding client needs, ideal for KAM roles.

Challengers

Skilled in pushing customers to think differently. They can drive significant growth but may not always focus on relationship-building.

In many companies, KAMs are salespeople who have successfully grown business with one of their accounts in their territory. These individuals already have an established relationship with the account, understand their needs and culture, and have demonstrated their ability to grow the business.

However, this transition can lead to a loss of focus on other smaller local accounts. The salesperson might not have the strategic or global perspective required for effective key account management. The skills needed to excel in sales are not always the same as those for managing a key account on a global scale.

In other companies, key account management becomes its own department. They bring in new KAMS to take over responsible for these accounts. The operative sales organization remains unchanged, with the new KAMs providing coordinative support.

These KAMs can bring a fresh perspective, chosen for their strategic and managerial skills. They can focus exclusively on key account management without the distraction of smaller accounts. However, they might initially lack the deep, established relationships with customers, which can take time to build. The existing sales team might also feel a disconnect if coordination isn't managed smoothly.

To ensure the most effective key account manager setup tailored to your company, industry, and situation, reach out to Simon-Kucher today. 

Understanding the roles within the buying center offers several advantages. It allows for a tailored approach that addresses the specific needs and concerns of each person involved. This increases the likelihood of a successful sale and builds stronger, long-term relationships. Failing to understand the buying center can lead to miscommunication, unmet needs, and ultimately, a lost deal.

Key account managers must leverage various tools and skills to achieve the best outcomes. CRM systems, market research, and customer feedback platforms can provide valuable insights and help manage interactions effectively. 

Mapping out the buying center and understanding each role's influence ensures you address all critical aspects of the purchasing process. This strategic approach not only boosts your chances of success but also positions you as a valuable partner to your key accounts.

Unlock the full potential of your key accounts today! Contact Simon-Kucher for expert guidance on navigating the buying center and securing successful deals. Let us help you build strong, long-term relationships with key decision-makers. 

Increasing the share of wallet at each key account is essential for a sustainable business. Key account growth not only boosts revenue but solidifies your position as a trusted partner. By deepening your engagement with key accounts, you create more opportunities for long-term success and mutual benefit.

One effective way to grow your share of wallet is through better penetration of key accounts in all international regions. Expanding your presence across various markets ensures that your products and services are available wherever your customers operate. This approach requires a deep understanding of each region's unique needs and challenges. Tailoring your offerings and support to fit these specific requirements can help build stronger relationships and increase sales.

Another strategy is to leverage cross-selling across your entire product and service portfolio. Understanding the full scope of your customers' needs allows you to introduce complementary products and services that add value. Here, effective cross-selling involves identifying opportunities where your solutions can solve multiple problems for your customers. Providing comprehensive, bundled solutions can also enhance customer satisfaction and increase your overall revenue from each account.

Increasing your hit rate through higher customer proximity is another key factor. The closer you are to your customers, the better you understand their pain points and can respond swiftly to their needs. Establishing dedicated account teams, frequent visits, and maintaining open lines of communication foster trust and reliability. This proximity not only increases your chances of winning new business but also enhances customer loyalty and satisfaction.

Unlock the full potential of your key accounts today! Contact Simon-Kucher for expert guidance on key account growth strategies.

Not all key accounts turn out as promising as expected. You fail to realize its potential, the market declines, or sales managers have been overly optimistic. True insights into cost-to-serve and price build-up per customer are essential ingredients to manage relationships profitably.

These insights keep you well-equipped and prepared to boost negotiation prices or cut down on the services offered. Mastering the precarious balance between the right price and the right services should be a core skill of every KAM.

As key account plans typically focus on volume and growth potential, they often lack focus on profitable growth. Yet increasing profitability is a main challenge for successful key account management. After all, your largest customers are usually the ones that generate the smallest margins. They negotiate the best prices, enforce the highest service levels, and drive up the cost-to-serve.

Mastering the precarious balance between the right price and the right services should be a core skill of every key account manager. They should know precisely which services they offer, the cost-to- serve, and what the price premium and build-up are. This is the difference between being just a price-oriented seller and a value-oriented one.