"You keep using that word. I do not think it means what you think it means."– Inigo Montoya
People at large companies bandy about the terms "key account management" and "strategic account management" in conversation every day.
Ask 10 people to define what these are, or to tell you what the criteria are for an account to be named a "key" account, and you’re likely to get 10 very different answers.
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 develop a strategy around it.
At RAIN Group, we define key account management as:
A systematic approach to managing and growing a named set of an organization's most important customers to maximize mutual value and achieve mutually beneficial goals.
There’s a lot packed into the definition. Each word has been chosen carefully, as words create meaning, meaning drives behavior, and behavior drives results.
6 Components of Defining Key Account Management
As well as having a core definition, we find that having a shared understanding of the following six components of key account management helps create focus.
- Viewing key accounts as separate from those that are simply large accounts in terms of revenue.
- Limiting the number of key accounts, and protecting vigorously from uncontrolled and ill-advised key account list growth.
- Pursuing key accounts as institutional partners such that you build innovation and value together, becoming deeply linked to each other’s future.
- Allocating key account focus on three core topics: penetrating, expanding, and protecting accounts from competition.
- Viewing key accounts as assets that require continued, and often significant, investment to yield maximum returns. These investments often include structuring and aligning your business’ processes and systems to maximize account value.
- Viewing key account investment returns as tied to long-term business strategy.
Companies that agree on a definition and the components of a key account can make great headway. Without agreement, however, efforts stall out before they can even get started.
Differentiating Sales and Key Account Management
We spend quite a bit of time differentiating between the concepts of sales and account management with our clients. As we wrote in Why Strategic Account Management Fails – And What to Do About It, they are not the same thing.
But they’re both necessary, and they work closely together.
Take a look at the stages of RAIN Group’s Strategic Account Management Process:
Account management skills are required throughout, but without the sales skills necessary for execution, your efforts will not come to fruition.
In our research, The Benchmark Report on High Performance in Strategic Account Management, we found that weak strategic account management and sales skills ranked as one of the top challenges for average and below-average performers.
Without strong sales skills, you can’t:
- Create new opportunities
- Penetrate new buying centers
- Inspire clients to pursue new ideas and possibilities
- Understand clients’ buying processes
- Move opportunities forward
- Stand out against the competition
- Make a compelling business case for buying
- Present solutions, overcome objections, and win new business
Without account management skills, you can’t build a good account strategy or plan, won’t put the right team together, and won’t be able to work with clients over the long term to maximize the overall strength of relationships. (Learn the key differences between selling and strategic account management here: 5 Ways Strategic Account Management and Selling Are Different.)
How to go about building long lasting sales and key account management skills is the topic for another piece, but the fact remains: your team needs the skills to implement key account plans and implement them well.
If you want to grow key accounts, you first need to create a universal key account definition, and make sure everyone understands it, agrees with it, and lives by it. Secondly, you need your team to excel with both account management and sales skills.