Part 2 of a 3-part series on Key Account Management by David Binks
A few years ago, the CEO of a large, multinational, multi-million $$ company decided that “Key Account Management” was the way to go – and for all the right reasons.
He went about enthusiastically investing the company’s dollars in recruiting and training his sales people into Key Account Managers, told everyone in the company how important they were to the company and their key customers and that the Key Account Management was going to be the most important initiative the company would be investing in for the next few years – only to abandon the whole “experiment” when there was a down turn in the market.
Clearly this CEO had ‘thought’ he knew all there was to Key Account Management from his MBA program, but never really understood or “lived” Key Account Management as a way of working in any of the business’s he had been involved in.
Yes, of course one must always be very prudent in managing costs in a tight market, but this should have been exactly the time, as a leader of the company, when he should have held his nerve, stuck to his commitment to his company, his customers and the Key Account Management process, and invested even more resources into their Key Accounts.
Even more so, as the relative cost of sales and the opportunity for leveraging most growth in a flat or competitive market is best obtained from large, loyal customers
At the end of the day a professional Key Account Management Training program should be focused on your most important customers as they are the ones providing most of the revenues and profits
As you review your Key Account Management process for 2017 start by assessing these 4 crucial factors:
1. Is your current Key Account Management process undermining your company image and brand?
If you give a strong promise and message of commitment to your key customers that you will be partnering with them and assigning them a dedicated ‘Key Account Manager’ who has the capability and expertise to a) proactively work with them to help them grow their business, and b) provide them with an improved level of customer responsiveness and fulfilment by speedily resolving all their supply chain needs and challenges, that is what customers expect!
So why do so many organisations promote into the Key Account Management role ‘product flogging, problem solving’ senior reps who have a strong technical background, but just don’t have the capability to hold a business conversation with a customer’ Senior Managers?
Having 10+ years’ experience doesn’t make a Key Account Manager, especially if that 1st year was a poor experience!
2. Is there a decline in your sales results and/or increase in cost of sales?
They are already under the gun, your market in Australia is flat, competitors are more aggressive and you have heard that some of your most capable sales people are thinking of leaving the company due to a shrinkage in sales volumes (and commissions)
If this is the case then it is time to really focus on where your business is going to come from in the future, not the past and customer selection is crucial
One KONA client recently took their sales and profits from $8,000,000 a year to $37,000,000 a year in 18 months by actually reducing the number of accounts they were doing business with, rather than increasing them
So are you giving your Sales Team the right Australian Sales Training and Sales Pipeline Training so that they have the skills and capability to spend their time with the right customers, at the right level, and having the right conversations?
3. Are your managers too impatient?
When you kicked off your Key Account Management Strategy you wouldn’t change it if you didn’t see an increase in account penetration and orders after 3 months would you?
Yet too many managers, who are daily under pressure to achieve this month’s and this quarter’s results, sometimes treat Key Account Management like having a shower – when they need more orders, all they need to do is turn on the hot tap!
Key Account Management development doesn’t work like that. It operates on a different rhythm than normal sales cycles.
Its’ growth is similar to farming – the farmer first has to select the right land (account), select the right farm worker (account manager), select the best seed (process or program), fertilise the ground with the right nutrients (account management coaching), water regularly (motivate) and prune to reap a great harvest.
KAM development needs patience to achieve its’ magnificent crop.
4. Do you know your Delay Factor?
Sales results are only a lag indicator – a snapshot in time, they are historical facts but do not tell the future very well.
The life cycle of account management is different to normal sales cycles because it takes time for the account manager to navigate the account, build lasting relationships with the right people, sow the seed of ideas around their company’s value propositions and take an opportunity through the Customers Buying Cycle and Decision Making Process
Unfortunately, too many organisations drop their commitment to Key Account Management like a stone the moment the market gets a bit tight, and they switch to a ‘spray and pray’ strategy and chase any and every opportunity they come across
Real life example: One large B2B organisation is currently selling their most popular products to ‘one off customers’ at the same price that they are selling to their high volume Key Account Partners at
How’s that for customer focus?
The chances of these loyal customers wanting to go down the account management track with this company again are extremely slim, regardless of the quality of their products
After all, how can you expect loyalty from your key customers if you do not stay loyal to them?
More importantly, how much additional Sales Pipeline generation resources, costs and time will be required to either win this customer back to get them back to the original purchasing volume, or replace the equivalent business volume from other customers?
A rule of thumb here would be around 7 times the annual volume and revenue. Is this the right strategy in your tough market?
Implementing a Professional and Customised Key Account Management process and program requires the necessary knowledge and experience to know what you are investing in, and how to take the correct steps along the way
With and without these, the consequences can have a major impact on your 2017/2018 Key Account results and profits
So if you are not sure, and want to receive a FREE Key Account Management Assessment for your organisation, contact KONA’s Senior Sales Productivity Coach, David Binks on 1300 611 288 or email email@example.com and make this year you accelerate and leverage sales order growth from your Key Accounts.
In addition, check out Part 1, 5 Reasons Why CRM and Key Account Management Don’t Work, and Part 3, The ‘5 Winning Ways’ to Execute a Key Account Management Strategy of David’s 3-part Key Account Management Series
The KONA Group is Australia’s Leading Sales and Sales Management Training and Coaching company and provide customised training programs that include: Sales Training & Coaching, Key Account Management Training, Call Centre Training & coaching, Negotiation Skills Training & Coaching, Motivational Speakers, and more.
So if you are looking to increase the effectiveness and results of your sales team, contact KONA today on 1300 611 288 or email: firstname.lastname@example.org to discuss how we can help you to improve your organisation’s results.