Churn is never enjoyable, but it’s especially difficult losing customers that buy often, grow your audience or bolster your brand’s credibility.
Strategic key account management prevents this by ensuring your most valuable customers are happy.
In this article, you’ll learn what key account management involves, how to identify your most valuable customers and how to plan for stronger, more profitable relationships.
Key account management describes the tools, sales processes and tactics you can use to retain and maximize the value of your most important customers.
All good key account management strategies aim to create and maintain mutually beneficial partnerships that help all involved parties sustain or grow profits.
In 2018, pharmaceutical business Sanofi UK worked with consultants at Rubica to change how it met the needs of key accounts.
With a clear understanding of key accounts and their importance, the company was able to reprioritize its work, engage with key customers and ultimately change its service for the better.
Sanofi’s national sales manager described the impact:
Sanofi saw customer satisfaction grow and annual income rise by £6m. Over half (62%) of its clients said they noticed a positive difference in how the company interacted with them compared to 2017.
A key account is one of your company’s most valuable customers.
These customers typically demonstrate their value in one or more of the following ways:
Accounting for a disproportionate share of your revenue (e.g., if you have five customers and 50% of your revenue comes from one, it’s a key account)
Referring new prospects to your business, helping you grow your customer base
Giving your brand credibility (e.g., they’re a high-profile name in your industry)
You may use other measures to identify key accounts. For example, a loyal client who was among the first to trust your company in its startup days will carry extra weight in your portfolio and might be considered a key account.
Sometimes, key accounts are customers you find easy to work with as these take up fewer resources.
Whatever the reason, key accounts are the ones you want or need to retain most, hence the need for a key account management plan.
Key accounts require specialized management for one or both of these reasons:
They typically have more complex needs. They demand (and justify through their value) more attention, understanding and skill from account managers and salespeople.
The ramifications of losing a high-value customer are greater. As a result, businesses must take extra care to maintain these relationships.
Consider this hypothetical example:
You have one client who accounts for 40% of your revenue. The company operates globally in a niche industry.
To continually meet this client’s needs, their account manager must:
Attend weekly meetings across multiple time zones
Understand the company’s specialist products in detail
Keep up with industry trends
Maintain relationships with various decision-makers
Should this client leave, your revenue would drop significantly until your sales team closes a similarly sized deal.
In contrast, another client represents 5% of your revenue and operates locally in an accessible, mainstream field.
To keep this client happy, their account manager must:
Attend quarterly meetings
Have a basic understanding of one product
Communicate infrequently through a single point of contact
If this lower-value client churns, your business can absorb the loss until the sales team closes a comparable deal.
Allocating the same account manager with the same level of skill, resources and strategy to both clients creates a problematic imbalance. One customer doesn’t get the level of service they expect while the other has access to attention and resources they don’t need.
It’s much more effective, efficient and sustainable to allocate different resources to these clients, hence the need for key account planning.
Using strategic account management to maintain strong relationships with high-value clients helps your business to:
Increase customer retention rates. Happy clients are more likely to stay loyal. That eases the pressure on your sales and marketing teams to generate new leads. Instead, they can focus on the most profitable opportunities.
Boost customer lifetime value (CLV). Loyal customers spend more over longer periods, making them more profitable to your business.
Grow annual recurring revenue (ARR). Predictable income from repeat customers makes planning, accessing finance and investing in growth easier.
Reduce marketing costs. Customer satisfaction leads to brand advocacy. Key customers recommending your business to others will help you grow your audience.
Just as effective KAM can help your business, a careless approach can cause you to waste resources and jeopardize important relationships. This is why you need a solid key account management strategy.
Although all customers are unique, setting up key accounts for success usually involves the same high-level actions.
Treat this step-by-step guide below as a repeatable roadmap for understanding and exceeding your VIP customers’ needs.
To meet your key accounts’ needs, you’ll need to understand who they are and what they value.
Start by writing down everything you already know about the customer.
Use customer relationship management (CRM) software as an easily accessible, centralized database of knowledge for your team, both now and as your relationship grows.
For example, Pipedrive helps you keep track of all contact organizations:
Otherwise, a notepad or note-taking app will do the job. Consider Google Docs or Evernote.
Include the following information:
Background (include a timeline of milestones if you can)
Use social media profiles (especially LinkedIn) to fill any basic gaps. Then expand your profile with details from conversations and any customer data you can get from the client or a reliable third party.
It takes time to build a clear and accurate picture (the process is ongoing), but it will help you tailor your service to the client’s needs. It’s that tailoring that makes key accounts feel important.
List the client’s most pressing needs using a mix of past sales conversations and fresh communication.
These will come in two forms:
Basic product and service needs. For example, Pipedrive users typically want a better way to organize contact data.
General buyer-seller relationship needs. This includes the required levels of support and communication.
Dive deeper by looking at the pain points and challenges behind those needs. That will help you make personalized recommendations early and throughout your relationship.
For instance, if you sell project management software and the client asks about mobile functionality, find out why.
If it’s because they plan to build a fully remote marketing team, consider how else your product will support that transition. Cloud data storage would undoubtedly be a selling point in that scenario.
Perhaps the client expects daily contact as part of your relationship. They might have been stung by poor communication or their product is evolving quickly and they’re looking for hands-on support.
When you understand what a customer’s target audience wants, you can do more to help that customer excel.
You’ll need cooperation from your main contact but digging into buyer personas and ideal customer profiles (ICPs) will help you understand what your client’s trying to achieve.
Say their typical customer regularly needs support and prefers asynchronous communication. You might emphasize your software’s chatbot function and explain how the client could use it to enrich their relationships.
You can also learn about a customer’s audience through public social media interactions and reviews.
Take this online review for lead generation tool Outgrow:
Like many other Outgrow reviews, it shows the customer values speedy, helpful support. If Outgrow were your client, you might consider what your product does that helps them deliver that.
One of the differences between general account management and key account management is that you’ll need to think more carefully about who is involved in the relationship.
Key account managers tend to:
Have more experience. They know how to meet high expectations and handle the pressure of being responsible for large, business-critical contracts.
Have specialisms. They understand certain industries in more detail, allowing them to deliver thoughtful services to clients from those fields. For example, they may have useful contacts who could add value to a deal.
Have more time to spend per client. Where a regular account manager might look after five, 10 or even 20 accounts, a key account manager will typically handle 1–5. This way, they can spend more time embedded in their clients’ businesses.
If you don’t have any formally designated key account managers (few small businesses do), consider who in your organization best fits the above criteria. Introduce them to the client as early as possible to ensure a connection.
Once you’ve mapped your key client’s needs and expectations, plot how you’ll meet them.
Naturally, your product’s features will do a lot of the work.
Say you sell insurance. The cover alone helps the client to minimize risk and stay compliant. As a result, they can focus on delivering great service and growing profit.
However, adding value separates you from competitors with similar products.
Ramping up classic value-adds is a great way to make key accounts feel important, so think about what you have to offer from the following:
Match those enhanced value-adds with the key client’s objectives.
For example, if minimizing downtime is one of their priorities, offer a premium support package with shorter response times. If they handle a lot of sensitive information, implement extra security measures.
How well you’re able to turn step 5’s ideas and promises into specific actions and commitments makes the difference between success and failure.
Say you promise to reward loyal customers but don’t explain how. Your client might expect a subscription discount after the first year but get free access to a new add-on instead. You believe you’ve fulfilled your promise, but the client sees it differently.
Alternatively, you could explain exactly what your customer should anticipate after each year of a long-term relationship so there are no surprises.
Even better, offer key accounts a choice of rewards upfront to personalize their experience.
Commit to basic service levels too. Guaranteeing that you’ll respond to emails within a specific timeframe is always helpful. If you typically set a 24-hour benchmark, shorten it to 12 hours for key clients.
You can formalize these commitments by creating a service-level agreement (SLA). This document lays out the metrics by which a service is measured and the fixes or penalties you’ll enact should those standards not be met.
Before fully embarking on your new client relationship, meet with your main contact to summarize your plans.
Ensure you’re both on the same page about the journey ahead and offer to answer any questions before you commit to moving forward.
Even if there’s not much to say at this stage, the gesture will show you value their thoughts and happiness – it sets a positive, collaborative tone.
Be prepared for key accounts to expect special treatment.
While you’ll lay out both sides’ expectations as clearly as possible in any contracts or SLAs, your client may make additional requests throughout your business relationship. Fulfilling those requests encourages account growth (i.e., the client is more open to cross-selling and upselling).
You shouldn’t let one client’s demands compromise other accounts or your business’s stability. The key is to make yourself available and be as helpful as possible.
Your client’s business will evolve like any other. Account for their growth and other changes by revisiting your key account management strategy quarterly (or more frequently if that suits them).
For example, if your main contact leaves the business, take time to understand how their replacement prefers to work and communicate. If you carry on exactly as you were and your new contact doesn’t enjoy your interactions, it may strain the relationship.
Equally, be mindful of changes in your business that could impact the client. If you’re switching to a new project management tool, consider what will change for the client. They may lose or gain access to helpful reports, for instance.
Ensuring your key account is consistently happy and that the relationship is always mutually beneficial will contribute to trust and loyalty.
Mastering the key account management process takes time. Our step-by-step guide will help and you’ll learn from every client relationship.
The key account management strategy template below is a summary of the steps we have just visited. Use it as a cheat sheet for keeping valuable clients on board and satisfied.
Step 1: Build a profile and expand it with research
Step 2: Map your client’s needs
Step 3: Understand the customer’s target audience
Step 4: Assign the most suitable team member
Step 5: Plot your strategy to impress
Step 6: Turn your objectives and value-adds into actions and commitments
Step 7: Align with your client and commit to growing together
Step 8: Take every opportunity to impress
Step 9: Refine your approach quarterly
The pressure of managing important relationships can still be daunting, especially for the first time.
Here are three tips to help you manage high-value clients effectively, whether you’re just starting or are further into your journey.
The definition of key account is slightly open to interpretation. Only you’ll know what’s most valuable to your business. However, sales data can help you decide.
If you’re concentrating solely on profitability, use a CRM tool to identify those with the highest…
Customer lifetime value (CLV). The total revenue your business can expect from your relationship with a single client.
Annual contract value (ACV). A measurement of how much an ongoing customer contract is worth by averaging and normalizing its value over one year.
If you’re focusing on loyalty, measure clients’ importance using their purchase frequency or the date of their first purchase.
Beyond meeting all the standards you’ve set, look for chances to make helpful gestures.
Spending extra time and effort on key clients encourages them to:
Stay loyal. Happy customers have no reason to go elsewhere. Retaining them will boost your average CLV.
Advocate for your brand. Happy customers will recommend your services to others. By doing so, they’re marketing your business for free.
Be more flexible. Happy customers are typically more forgiving. Satisfied key clients are more likely to see past unavoidable issues like system outages and staff illness than clients with a low or neutral sentiment.
Helpful gestures of all sizes can impress key accounts. It could be as simple as a personalized product recommendation or an introduction to a valuable contact.
Unless you give every customer the attention they need, your churn rate will rise. That’s as true for a client that accounts for 5% of your revenue as it is for one that represents 50%.
You might feel you can afford to lose a “small” client for the sake of a key account but consider the broader impact of cutting ties. For example:
Unhappy customers write negative reviews. That’ll impact your reputation and make it harder to find new business.
High turnover puts stress on sales leaders. Constantly closing new deals as your reputation declines is a near-impossible task. It’s more sustainable to keep customers happy.
Short-term relationships are harder to maintain. The early stage of any new business relationship is a testing experience for both parties. Keeping clients happy is easier when you’ve had time to connect with your contacts and understand the products they sell. You’ll never get that far if you keep neglecting “small” customers.
In other words, remember that one client’s importance doesn’t detract from another’s value to your business.
By profiling your client, setting expectations and planning your strategy, you can set any important business relationship up for success.
A ready-made roadmap will help you tick all those important boxes and more when forging new partnerships.
Just remember that every key account is unique. Use what you learn from each relationship to tweak your key account management program for the best results. That’s by far the best way to optimize revenue growth.
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