38 Winning Edge

KEY ACCOUNT MANAGEMENT

F
or a long time account
management has been
seen as the ‘Holy Grail’
of selling in terms of its
promise to deliver some
or all of the following:
 Reduced cost of sale
 More profitable deals
 The opportunity to cross-sell and
up-sell
 Improved ability to block advances
from the competition
 Well positioned to influence future
purchases.
So why has it been a long time
coming and why, despite the amount

Fishing
of revenue generated from key
accounts, are most firms unhappy
about their key account performance?
There are many statistics that relate
to selling to existing accounts. Most of
these are now held in sales folklore,
commonly used but their provenance

for the
forgotten. Depending on the industry,
we all know the ‘it is seven or ten
times easier’ to sell into an existing
account than it is to a new-name
account. However, CSO Insights’ Sales
Performance Optimization report (see
www.csoinsights.com) tends to cast a
shadow over these statistics and on

big one
More than ever we are being told to
focus on fewer, key accounts – but how
best to proceed? David Batup discusses
the options for reeling in top business
the performance of key account
management (KAM) in terms of value,
approach and success.
From the report the initial picture
looks fine. We can see in the pie chart
(overleaf) that 63.5% of revenue has
been generated from existing
accounts. But this seems to conflict
with the results that look at a
company’s assessment of their ability
to farm existing accounts (see bar
chart). They show that 56.5% of sales
directors rated their sales team’s
performance as needing improvement.
Either the sales directors’
expectations are a bit out of line
with reality, or there is a genuine
performance issue. I suspect it is a bit
of both, along with a portion of poor
KAM execution thrown in for good
measure. The report suggests that
two-thirds of revenue from existing
customers and one-third from new
customers is a fairly balanced ratio.
The revenue source graph suggests

Winning Edge 39
 KEY ACCOUNT MANAGEMENT
Percentage of revenues
by customer type
New
customers Existing
36.5% customers
63.5%
Farm additional revenues from existing customers
60%
50% 56.5%
40%
Source for graphics: CSO Insights
30%
33.6%
20%
10%
0%
Needs Meeting
improvement expectations
that a significant number of
companies have already achieved this.
Looking at these results you could
ask the question, “Is KAM worth the
time, effort and expense?” The report
is conclusive in its statement that the
answer is yes. But, and there is always
a but, it depends on the level of
relationship you have with your
customers. Relationships are a difficult
thing to define but the report gives us
a handy chart that shows the levels of
relationship in the form of a pyramid.
The largest numbers of customers are
at the bottom with the fewer strategic
accounts at the top.
As you move from ‘approved vendor’
status towards ‘trusted partner’ there
are serious implications for investment
in the key account. These are resources
needed, and processes and systems,
at the same time balanced by
considerable rewards. This suggests
that any process for KAM must of
course identify existing and potential
key or strategic accounts.
40 Winning Edge
Levels of relationship
Trusted
partner
Strategic
contributor
Solutions
consultant
Preferred
supplier
Approved vendor
6.1% 3.8%
Exceeding Don’t know
expectations or n/a
This is a fruitful area where
marketing and sales can combine
forces to identify the customers with
the highest potential or propensity
to buy more and be open to other
solutions your company has to offer.
From the CSO report it can be seen
that over 48% of sales directors
believe their ability to prioritise
which accounts to focus on needs
improvement. Not being able to do
this creates a double whammy –
spending too much on accounts that
have low potential and not enough
time on those that do.
The process of identifying which
customers to focus on should have the
same science behind it as employed in
building sophisticated marketing
campaigns. In its simplest form this
could be a weighted list of criteria
all the way through to applying
complex statistical tools designed
for the purpose.
There is clear evidence that
indicates that a company’s ability to
meet its revenue goals is enhanced
if there a robust process to support
KAM and the relationship is strong.
Quoting from the report:
“We see that with the combination
of strong relations and process
adoption come rewards. These
companies enjoy performance
advantages over their competitors by
excelling at most aspects of sales, and
are in fact turning ‘how’ they sell into
a strategic competitive advantage.”
KAM, done well, can become a
highly effective and important
competitive weapon in the fight for
time, mindshare and influence within
an account. Done poorly, the time
invested developing a key account
plan is not only wasted but the
chances are there will be other
opportunities that get missed. The
ramifications of poorly executed KAM
are felt across the company in terms
of missed targets, loss of status in the
key account and potential ‘knock out’
by the competition.
This raises an interesting question
about KAM and the way it is
implemented and managed that give
some clues as to why more than half
of sales directors felt that KAM was in
need of improvement. I have worked
with many organisations that have
KAM implemented and apparently in
use by account managers or dedicated
key account executives. In many
situations when I have asked to see
an example of a key account plan
there has been a problem in finding
one that is complete or current in
terms of the content.
This suggests two potential
weaknesses in the adoption and
running of the KAM approach. The
first is the motivation of the account
manager to develop and execute
the key account process and plan.
The second is the performance
management of the individuals and
how well they use the supporting
process.
In addressing the motivation of the
account manger, care should be
exercised in terms of ensuring:
 The WIIFM factor (what’s in it for
me) is clearly understood
 It’s not planning for planning sake
and is an important part of the
company’s success
 It is strategically important to do well.
 This might seem like pandering to
the ego of the account manager, and
maybe it is, but I’m convinced that the
lack of motivation in the account
manager to adopt and operate a full
KAM approach is one of the main
reasons for its poor performance in
many companies.
There are lots of examples where
the inappropriate adoption of a KAM
approach has led to significant
rebellion against it. Here I’m mainly
referring to the key account plan itself.
I have seen examples of strategic
account plans that have been some 60
pages long. Then, in addition to the
account plan, there has been a plan for
each opportunity. These opportunity
plans have been around 16 pages of
more specific campaign information.
So, using this example let’s say
there is an account plan and three
opportunities running at any one time.
This would mean that the key account
manager would be completing 108
pages of forms or planning material.
Then there would be the task of
getting it approved and communicated
within the company.
I think it would be fair to say in a lot
of cases this would be more than
could be reasonably expected. But
having said that I’m not suggesting
there isn’t a place for this level of
planning. The point is one of caution
when selecting a KAM approach for
your organisation. The approach
needs to appropriate to the return on
investment you could expect and the
potential size of the opportunity within
the key account.
Before I look at what a process
should look like I’d just like to restate
the three main goals for having a KAM
approach in place. The first is obvious
but the other two less so:
 Generate additional or incremental
revenue at a lower cost
 Build the relationship to increase the
ability to influence future decisions
 Be seen to deliver ‘value add’ over
and above the solutions you have
implemented.
To achieve these goals the KAM
process needs to be a fluid one. It will
probably be changing all the time, as
the customers’ needs change and as
the key account executive makes
additional inroads into other
operational areas. As such the KAM
process can never be seen as a ‘tick
the box’ exercise. So what should
KAM include?
If the goals above are to be achieved
then the account executive needs to be
in a unique position of almost knowing
more about the client company than
some of its employees. Engagement
with the account will be on many
different levels and to be successful
the account exec should
‘I have seen
be both proficient and
examples of
comfortable at operating
across the board.
strategic account
To achieve this the
plans that have
KAM process should
look something like
been some 60
the steps below.
pages long’
Just to reiterate the
comment made above,
the scope and depth of
the KAM needs to be
appropriate.
Steps to KAM approach
 IDENTIFICATION – Selecting the key
accounts that have the highest
propensity to generate additional
revenue and who are most likely to
be open to additional approaches.
As mentioned this should be as
scientific as possible so as to get the
best ROI on the time invested.
 RESEARCH – The research should
not resemble an MBA assignment
but at the same time needs to be as
thorough as possible. It should include
external factors, maybe supported by
a PEST or SWOT analysis. Don’t forget
to ask your customer or professional
services group to contribute to the
operational aspects.
 PLANNING – The planning stage
should be a team event. The key
account executive should own the
process and facilitate the planning
session. If the first two steps have
been done well then this stage should
not take long. Depending on the size
of the opportunity the team should not
spend more than two to six hours on
an account. The plan should reflect the
potential within the account. The
larger, strategic accounts will warrant
more time and complexity in terms of
the actual plan. My view is that the
account plan should be no more than
five or six pages in length. Beyond
this, you should take a hard look at the
actual ROI on the time invested.
 EXECUTION – The most important
part of the KAM process is in the
activity of producing the plan and
executing it. The execution can only
be effective if the planning process
has generated actions that are SMART
(specific, measurable, achievable,
realistic and time bound) and build
towards the three main goals.
This may seem obvious but I have
reviewed a lot of account plans
which on the surface looked
good but underneath did
not really build towards
the three goals. Plans
that fall into this
category will generate
lots of activity but will
not generate enough
hard cash – and will be
very good at spending it.
I would suggest that’s not a
great situation.
In wrapping up, I would encourage
the use of a formal KAM process and
account planning. Done well, the
rewards are clearly there. Aiming for
the three goals of KAM will require a
performance management approach
both by the key account executive
and the sales manager responsible.
Both individuals should always be
assessing the ROI, the performance
and status of the key account.
Last, I’d like to share the profile of
some of the best KAM executives I
have had the good fortune to work
with. They have always been:
 Very focused and business minded
team players
 Consultants to the key account
senior management and influencers
 Able to see the big picture
 Great facilitators and motivators
 Good communicators in the sense
of ensuring information flowed and
was understood
 Great managers of expectations.
contributor
David Batup is managing partner of
Perperitus, a specialist in developing
sales knowledge management
solutions for direct and partner
channel sales teams. Visit
www.perperitus.com or call
01189 654066. CSO Insights is at
www.csoinsights.com
Winning Edge 41