What is Key Account Management? [+ Checklist]

Your team just won a new logo! Congratulations!

This one has buzz. It’s modest to start, but there’s potential to sell into multiple buying centers, across geographies, and the new product your company is launching will help the customer simplify their processes, increase efficiencies, and reduce strain on their supply chain.

But that’s all in the hands of the key account team now.

The good news is that new business from key accounts is 60% to 70% more likely to close compared to the 5% to 20% likelihood of closing a deal with a new client.

Assuming the initial engagement goes well, your account team will be well positioned to start pursuing additional growth opportunities.

If you have growth goals this year, account management and retention should be a priority: research shows that a 5% increase in customer retention increases profits by as much as 95%.

Moreover, as we found in our key account management (KAM) research, the organizations that are best at account management see drastically better account growth:

• 3.1X more likely to grow revenue by 20% or more in their key accounts
• 3.4X more likely to grow profit by 20% or more
• 4.5X more likely to experience year-over-year client satisfaction improvement

Top Performers in Key Account Management Compared to The Rest

Source: Top Performance in Strategic Account Management Benchmark Report, RAIN Group Center for Sales Research

The problem is that most companies—87%—are not among the best when it comes to account management.

Based on our research and experience with clients, we find the organizations and teams that succeed typically have 9 things in common.

9 Reasons Account Management Teams Succeed

1. They have an effective definition of key account management

When companies lack an effective and universally understood definition of key account management, their success is hampered from the start.

If you can’t define something, it’s difficult to do it.

Beyond a core definition, we find that having a shared understanding of the following six components of key account management helps as well.

6 Components of Defining Key Account Management

1. Viewing key accounts as separate from those that are simply large in terms of revenue
2. Limiting the number of key accounts, and protecting vigorously from uncontrolled list growth
3. Pursuing key accounts as institutional partners with whom you collaborate and co-create value
4. Allocating key account focus on three core topics: penetrating, expanding, and protecting accounts from competition
5. Viewing key accounts as assets that require continued, and often significant, investment to yield maximum returns (including structure and process changes to maximize account value)
6. Viewing key account investment returns as tied to long-term business strategy

Companies that agree on a definition and its key components create a solid foundation for their KAM program.

2. They know how to identify key accounts

Let's start with a definition:

Key accounts aren’t necessarily your biggest revenue-generating clients. You may classify a key account because they have the potential to be a marquee client, or they’re an attractive logo on your client roster. There could be excellent growth in their industry, or they may be a prime target for being acquired. There are any number of factors unique to your organization that could lead you to classify a key account.

At a minimum, account managers should consider factors such as the:

• Current revenue
• Potential for growth
• Likelihood for renewals
• Likelihood you can succeed to win now and grow them later
• Relative effort it would take to make headway with them
• Relationship strength
• Fit of offers, cultural fit, or focus on their industry
• Attractiveness of logo

Not all your clients are key accounts, nor should they be. With limited time and resources, you often have to make difficult decisions about which accounts get your focus. Top Performers know this—and know their time is precious—so they value it and apply it accordingly.

Once you’ve identified a key account, it’s time to make a plan to grow the account.

3. They master account-growth planning and execution

Strong account plans and planning correlate significantly to Top Performance, according to our Top Performance in Strategic Account Management research. In fact, more than two-thirds of top performers report that account managers lead the account-planning process effectively and ensure the execution of account plans compared to one-third of The Rest.

Creating a key account growth plan can be overwhelming. It’s hard to know where to start. We’ve compiled an extensive list of questions—57 to be exact—to put you on the right path.

The questions are separated into 8 categories:

1. What does our team look like?
2. Who is on the account’s team?
3. What are the trends affecting this account?
4. What needs do they have?
5. What other insights do we know about this account?
6. Who are our competitors?
7. What value can we offer?
8. What else do we need to know?

Keep in mind that your goal isn’t to answer all 57 questions. The relevancy of the questions will vary by account. Also, as you answer questions, you may realize the account isn’t a good candidate for your key account management program at all. That’s okay.  It’s better to recognize this early on so you don’t waste time.

Once you’ve answered these questions, organize them in a key account tool, define the actions you need to take, and identify the resources needed. What questions do you still need to answer? Which pieces of information are you missing? Who is assigned to these tasks? What’s the deadline? Stick to your KAM process (see the next point) and you’ll be well on your way to top performance.

4. They follow a key account management process

Many companies that have selling built into their culture and systems believe they have all they need to implement key account management.

But as we note in #6 below, KAM and selling are not the same thing. Key account management processes should be systematic, action-oriented, and designed to produce specific outputs.

Our research found that 45% of Top Performers report having a world-class, or—at minimum—a defined account management process compared to 25% of The Rest. Also, Top Performers have much stronger processes in place to build account plans, find untapped value, hold teams accountable, and train in account management skills.

We find that a 5-stage process works best for account management. Ours looks like this:

5 Stage Key Account Management Process

It’s flexible and can be calibrated up or down depending on your needs. If it’s mission critical to grow an account, you can drill down into each of these categories, but if you have an account that needs less rigor, you can use the same process and work through it faster.

1. Strategy: Know what you’re planning to do, with whom, and why
2. Research: Begin work on the account plan, form the core account team, and gather data to inform your strategy
3. Action Plan: With gathered information, develop a compelling case that will guide you to implementation
4. Execution: This is where opportunities are created, expanded, and captured; relationships are deepened; and competitors neutralized
5. Review: Analyze KPIs and make adjustments to your action plan

What the Top Performers do well is embedded into the 5-stage account-management process. If you want your account management efforts to yield results, follow a process that covers these areas.

5. They put the right people in the right roles

Sounds like a lot, right? That’s because it is. In fact, there are 6 account management roles that need to be represented on your account teams, but very rarely does the key account manager, or one person, do them all well.

6 Account Management Roles

Some people are good at building and enhancing relationships, but they aren’t great at finding innovative ways to deliver value. Others are great at finding ways to deliver value, but they aren’t good at organizing teams to bring ideas to light internally or with clients. People who are great at organizing the team and getting things done may not be good at either building client relationships or innovating, and so on.

The key account manager will often play several roles, and other members of the team play multiple roles, as well. Most companies have the roles of Technical Expert, Relationship Lead, and Collaborator covered on their account teams. The others are less common. But if you want to drive the most account growth, make sure the roles of Project Manager, Innovator, and Results Driver are covered, too.

6. They know the difference between selling and account management

When we ask our clients what they need to do to maximize success with key accounts, we often hear:

• The leaders at our accounts need to know about the value we can bring them besides what we’re doing for them right now
• We need to penetrate new and different divisions of the accounts
• Our relationships need to be deeper if we want to keep our competitors out
• We need to work directly with decision-makers at the enterprise level

All good points, but not unique to key account management. In fact, we often get these same responses when we ask them what they’d like their sellers to do more of.

While many of the outcomes of KAM and sales are the same (e.g., higher revenue, higher margins, longer contracts, deeper penetration, more mindshare, more products and services sold, stronger relationships), the paths to get there are quite different.

Read Now: 5 Ways Account Management and Selling Are Different

7. They have fluent knowledge

When clients don’t buy from you again and it’s not related to satisfaction, it’s often related to lack of knowledge. The client may not know:

• A product or service that could help them exists
• They have the problem your other product or service solves
• The value of solving the problem with your product, service, or capability, or they don’t see the impact as a priority

It’s up to account managers to solve these issues, but they often don’t:

• Ask themselves and their teams what additional value they could be delivering
• Have enough familiarity with all areas of their own business and don’t ask or involve the people who do
• Know the questions to ask that would uncover problems they could be solving for the client
• Engage in conversations when they do discover something because they don’t know enough or are uncomfortable with those types of discussions

It’s important to equip account teams—across all roles—with expert knowledge of all the value you can deliver to clients. This doesn’t mean everyone must be an expert in everything. But, at a minimum, team members must be able to speak fluently about:

• The range of customer needs you solve
• Your products, services, and overall capabilities as solutions to those needs
• The marketplace
• Your company and your value proposition
• The competition and how you’re a better value

Account managers must be fluent in these areas to have productive conversations with existing clients. The same skills that allow a seller to excel across the selling process are applicable when growing accounts.

8. They have internal trust and collaborate frequently

Account management has trust, cooperation, and collaboration between you and your clients embedded deeply within it. When there’s insufficient internal trust, cooperation, and collaboration within your own organization, you can’t bring these concepts alive for clients.

This isn’t a skills issue. It’s not a value delivery or capability issue. It’s not even a belief issue, as people generally believe they should trust each other and collaborate.

It’s the elephant in the room that people don’t want to talk about. Yet, it can have a significant negative impact on your account growth initiatives. It may look something like this:

An account manager brings X division at their company into their most important account and that division screws up. Bridges are burned. Relationships are ruined. Trust is gone.

Underlying issues can be cultural, operational, or isolated. To address them, start by asking questions like:

• Are trust issues personnel dependent?
• Do our account teams know how other divisions can support their account management initiatives?
• How do we foster cross-divisional collaboration?
• Does our process encourage exploring cross-selling opportunities?
• Does our compensation structure support bringing others in?
• What incentives do we have in place?

Once you have the education, processes, and structures in place to support internal collaboration, your teams will be much better equipped to use all available resources to grow their accounts.

9. They have leadership support for account management

As with many corporate initiatives—and business in general—it frequently isn’t competition, market factors, or some other external factor preventing growth. We’re often our own greatest obstacle.

Top-performing organizations report fewer challenges when it comes to gaining leadership support and getting the budget and resources needed to maximize account growth.

Organizations with the best account management have leadership teams willing to make account management a priority and who are willing to ask and answer these questions:

• Are there significant growth opportunities in our accounts?
• What will it take to capture these opportunities?
• Are we willing to do what needs to be done to turn these opportunities into results?

Now that you know what you need to do to succeed, let’s look at what you need to do to get to the top.

4 Keys to Top Performance in Key Account Management

In this video, Jason Murray, Chief Sales Officer of RAIN Group, shares four keys to top performance, and how a Key/Strategic Account Management program can help teams learn a proven process to systematically grow accounts.

Take steps toward top performance by creating a universal key account definition, adopting a systematic, action-oriented process with specific outputs, and avoiding common pitfalls.