Central to any business model is the ability to spot the need of the customer, and addressing it effectively. Business models that have their products or services at the core and customers around them tend to disintegrate soon, as the needs and demands of the marketplace is never the same forever. Successful enterprises always focus with the customer being the nucleus - the products, services, channels, processes and the entire organization are built around the customer and his changing needs and preferences.

Considering the fact that the effort involved in identifying the prospect, investing in the sales effort that help converting the relationship to becoming a customer and executing the transaction - are all well demanding of management time, would it not then be logical that the relationship is further invested in, to increase stickiness? When a customer relationship is progressed from being transactional to that of a long-term partnership, the result is not only a deepened loyalty, but also a model of a much higher orbit, that of advocacy. The challenge however is, that the management bandwidth and high caliber resource pool is always limited, and it is hard to spread this thin. And this is where the concept of Key Account Management (KAM) truly plays a vital role.

While we all know it, the challenge is in coming to terms with the fact that every customer is not a key account – a very common pitfall that companies end up in the euphoria of actively engaging with its customers. Pareto principle always helps – it helps to know which are those 20% customers who drive 80% of the business. Depending on the primary focus of the organization, the maturity of the industry, the core ‘business’ measure may be that of revenue or profit or market share. What is important to recognize here, is that you determine the key customers who can make a difference to your organization - both quantitatively by driving your business growth, and qualitatively by being a promoter of your services to their peer group.

So how does a well-established Key Account Management strategy really deliver benefits? In simple terms, it provides a more conducive framework to drive a higher customer engagement, which in turn helps drive a higher customer loyalty and retention. However, that is but a means to a larger goal, which is to maximize customer value – both monetary and non-monetary. While the operational benefit is always a higher wallet-share, it eventually helps position the organization’s differentiated value proposition, resulting in larger mind-share in the medium to long-run, to bring in a sense of true partnership.

Sustained investment in a relationship is much beyond that of focusing on repeat orders or providing a beneficial pricing. A true KeyAccount-Management (KAM) model has 3 important facets to address:

  • Strategic: Set the scope for the Key Account Management – determining who is a key account, defining the value proposition, formulating the go-to-market strategy and most importantly establishing the measurement and monitoring its progress
  • Functional: Ensuring that the strategic objectives are then translated into operational tasks and actions which help in planning, coordinating and controlling the relationship at a sustained level of intensity
  • Organizational: Perhaps the most important facet of KAM is in the successful alignment of the organization to that of the customer. In a manufacturing setup, for instance, KAM Strategy is truly successful when there is higher access to customer information, when a customer could be involved in the production or delivery cycle, and thereby bring in an efficient supply chain process.


The question then is, what about other customers who are not qualified as KAM? Again, no customer can be unimportant to an organization. It’s a function of what stage and phase of relationship one is looking at to drive this strategy. Where the customer offers an attractive business proposition but the relationship strength is low, the focus is on development. Contrarily, where the attractiveness is less but relationship has been built over the years, the focus is on maintenance. KAM is typically applicable to customers who offer both. And what if the customer is neither? Of course, the relationship then gets opportunistic and tactical.

The elements of any KAM Strategy can be classified into 5 core initiatives:

  1. Developing a company-wide appreciation of KAM, and building an organizational culture around it. And this starts right at the top, and calls for the CEO’s time and commitment.
  2. Assigning the right account manager to each KAM customer, forming key account plans and enabling a 2-way interaction. Providing for the framework to hear the customer’s voice.
  3. Determining the right engagement model with the KAM – including mapping of who’s who and the respective counterpart from within your organization – both for sales and service.
  4. Defining the targets and joint activities, and working towards achieving target benchmarks – which also call for investments that need to be made to strengthen the relationship
  5. A continuous monitoring process to review the progress

It takes the best to deliver the best. Needless to say, KAM relationships flourish and genuinely reward with dividends when you assign the best of your resources in managing the partnership and delivering the services. This is key, and seeing this through calls for a sustained commitment to this model. And more importantly, rewarding the performance and recognizing improvements that come along the way are key for effective motivation and serve as the best incentive to the team that delivers. After all, unlocking true potential calls for the having the right key to account management!

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