Key Account Management: How Nurturing Top Accounts Can Grow Your Business

Over the last several years, I’ve learned firsthand just how important key account management can be. But what is key account management? And, how can teams develop a key account management framework that will set them and their organizations up for success?

In this comprehensive guide to key account management, I’ll walk through what key account management is, the role of a key account manager, and how to identify key accounts. Then, I’ll share some of my favorite expert-approved tips and tricks for developing a winning key account management strategy.

Ready to get started? Let’s dive right in!

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Businesses that use this strategy often enjoy greater sales volume and longer-lasting strategic relationships. Moreover, they also have more opportunities to grow revenue from these accounts through upselling and cross-selling.

This is backed up by the data: Recent research shows that key accounts are 60-70% more likely to close than new clients, and they spend 33% more than new customers.

Of course, key account programs do come at a cost. Offering customers more resources and better discounts isn’t free. So, this strategy can naturally reduce your margins in some cases. However, I’ve found that in the long term, key account management often pays off.

After all, a successful key account management strategy isn’t focused on boosting near-term profit margins — it’s focused on increasing the longevity of a company’s most valued clients. This is a great example of the Pareto Principle, or the idea that 20% of the effort may bring in 80% of the benefits. The long-term profits you’ll make if you increase major clients’ tenure with your business are likely to more than make up for the discounts you offer and the additional resources you provide.

Why implement key account management?

Why is it so important to implement a key account management strategy? Below, I’ll share some of the biggest benefits of this approach.

Happier Customers

First and foremost, key account management is one of the most effective ways to keep your customers happy. As digital marketing strategist Drup Shah explains, “By focusing on your key accounts, you can provide personalized attention, timely support, and customized solutions that address their specific pain points. This results in higher customer satisfaction levels, fostering long-term loyalty and advocacy.”

In other words, implementing key account management is a great way to ensure that the needs of your major clients are met. You can also make sure that your team goes above and beyond to prioritize big clients, responding rapidly and accurately to their concerns. As a result, these customers are likely to be happier with your business, making them more likely to become repeat buyers. They may even recommend your products or services to their friends.

Less Churn

Another vital reason to implement key account management is to reduce churn among your highest-value customers. Shah also speaks compellingly to the importance of reducing churn through key account management, arguing that “Through proactive relationship management and regular communication, a [key account management] strategy helps build trust, mitigate risks, and prevent churn.”

Shah goes on to describe how reducing churn in this way can help you stay ahead of the competition. “By delivering exceptional value and consistently exceeding expectations,” he notes, “you enhance client loyalty and reduce the likelihood of losing key accounts to competitors.”

Greater Revenue

Finally, a recent study of more than 500 B2B companies found that key account management substantially boosts both market and financial performance. This makes sense — after all, key account management is about focusing your limited sales resources on retaining the customers who are likely to drive the highest levels of revenue.

Steffen Thiel, partner and global sector head for marketing and sales at the international consultancy Roland Berger, points out that the impact of key account management on revenue is especially important from a competitive standpoint. He reflects, “Looking into increasing global competition, well-executed key account management can be a decisive competitive advantage to safeguard or grow revenue.”

Of course, the benefits of key account management can only be realized when you have the right staff in place. So, let’s take a look at the role of the key account manager, as well as how these managers interact with the rest of the team.

Moreover, KAMs don’t just find ways to address their clients’ challenges and opportunities — they also create and present reports about each client’s progress to key stakeholders across the organization.

Importantly, while some companies simply assign existing sales reps to act as KAMs for one or two customers, I’ve found that this isn’t usually the best approach. Unless your team is so small that you can’t afford a dedicated KAM, it’s best to separate sales and account management, as these roles really require very different mindsets and skills. Specifically, a key account manager needs to be focused on becoming critical to their customer’s operations — not just on winning a deal.

This is not an easy job. Below, I’ll share some of the skills that I believe are the most important for a key account manager to be successful.

Key Account Management Skills

1. Relationship-Building

A key account manager must have the relationship-building skills necessary to get to know their customers on a deep level. They must develop an intimate, sophisticated understanding of each key account’s strategy, market position, finances, products, and organizational structure. Then, they can use this knowledge to make the business case to their clients that the price changes, customization, and add-ons they can offer will add value.

2. Cross-Functional Collaboration

Key accounts don’t usually buy off-the-shelf: They’re likely to want a custom blend of products and services tailored to their needs. As such, it’s crucial for a KAM to be able to work across the organization to develop these offerings in collaboration with other teams.

3. Leadership Skills

Key account management is a team effort. A successful KAM will need to have the leadership chops necessary to guide team members such as salespeople, marketers, technical support, and/or onboarding specialists.

4. Coordination and Planning

Key account programs have a lot of moving parts. To be successful, KAMs should have the coordination and planning skills to organize both short- and long-term efforts. Importantly, that includes not just planning these activities but also implementing them, analyzing the outcomes, and applying those takeaways to future strategies.

5. Business Acumen

Another critical skill in key account management is business acumen. To help their customers succeed and to communicate relevant changes effectively, KAMs must develop a thorough understanding of how their clients make money. Armed with this knowledge, a KAM will be able to solidify their position as a trusted resource and advisor for their clients.

6. Analytical Skills

In addition to business acumen, I’ve found that key account managers also need to have an analytical mindset. A KAM’s analytical skills will help them create and present business cases, and their ability to think quickly and apply their knowledge to various clients and markets will help them be confident when presenting information to customers.

7. Written and Verbal Communication

Finally, one of the key responsibilities of a KAM is to keep clients and other stakeholders updated about any issues. That means a lot of emails and a lot of live presentations — and as such, the ability to write and speak clearly is a must.

Key Account Manager Job Description

Ready to start the hiring process? Use this key account manager job description to find and attract the most qualified candidates:

Key Account Manager vs. Account Manager

It’s important to note that key account managers are not the same thing as regular account managers. Account managers manage non-key clients: customers that bring in less revenue or that may not be as much of an ideal product fit. In contrast, key account managers focus only on a company’s most valuable clients.

The relationship between account managers and key account managers is not hierarchical. Account managers do not report to KAMs, and KAMs typically do not report to account managers. While KAMs are generally more senior, both roles are usually found either on the same team or on adjacent teams.

Key Account Management vs. Sales

Key account management and sales are also two very different things. Key account management is all about managing existing high-value accounts, whereas sales is about closing new accounts.

As a result, while a salesperson (by necessity) focuses on the short term, a KAM prioritizes the future. In addition, sales reps generally zero in on specific opportunities, while KAMs have broader goals, including collaborating with the customer on mutually beneficial projects, helping the customer meet their objectives, and making sure the customer is getting the necessary support.

If you’re hiring a key account manager for the first time, one of the first duties they perform may be selecting the key accounts that they’ll serve. Below, I’ll share some of my favorite strategies for identifying key accounts.

How to Identify Key Accounts

While there’s no one-size-fits-all solution to identifying your company’s key accounts, key accounts tend to demonstrate value in a few ways:

They represent a disproportionate percentage of revenue.
They refer new prospects to your company.
They give your business credibility in their industry.

Beyond these high-level criteria, I’d suggest choosing some other key factors from the list below to use when determining which accounts are the most critical for your business:

Product fit — or how closely your product matches the client’s needs and requirements.
Average transaction size — the average amount of money the client spends with your business.
Revenue potential — the amount of money the client could reasonably spend with your business in the future.
Purchasing process — the process by which the client purchases your product. For example, is there a single stakeholder who can make a purchase decision, or does a larger group have to weigh in? How long does payment processing take?
Partner history and potential. Are they currently or were they formerly a partner of your company? Do they have the potential to become a partner in the future?
Customer tenure — the amount of time the account has been a client of your business.
Solvency — the client’s financial ability to pay their debts.
Existing relationships — the relationships the client has with other businesses that could potentially also become your clients.
Cultural fit — alignment between the way the client treats its customers and staff and how your organization treats its own customers and staff.
Geographic alignment — if applicable, the physical proximity to your business’s headquarters or service centers.

Once you’ve decided which of these factors are most relevant in your unique business context, you’ll want to develop a formula that weighs each one based on its relative importance to your organization. Then, you can use that formula to calculate how much potential there is to expand each account.

If you’re not sure where to start, I suggest using a key account scoring matrix to identify your key accounts across these criteria: Simply evaluate each account based on the criteria you selected and assign each account a score from 1 to 10 in each category. The accounts with the highest scores will be your key accounts.

Importantly, while I know it can be tempting to label a large number of your customers as “key accounts” to make it look like your company is doing really well, it’s better to be more conservative. After all, you don’t want to overcommit yourself. Starting a KAM program requires organization-wide change, support from the C-suite, hiring and training employees, and implementing new processes. Starting small allows you to focus your efforts — and that focus is critical if you want to provide real, lasting value to your customers.

So, you’ve got a short list of your key accounts, and you’ve hired the right folks to be key account managers. Now, it’s time to execute the strategy. But how do you do that?

With this four-step process, I’ll guide you through defining and executing a successful key account management strategy.

1. Set objectives.

Before you can share the great news with your customers that they’re being promoted to key account status, you need to level-set expectations (both internally and externally). That means setting key account management objectives.

This process works just like it would for any other strategy. Using the why, how, what objective-setting framework, you can get to the root motivation underpinning your key account management strategy. You’ll also come out on the other side with measurable results.

Source

2. Deliver exceptional products and services.

Next, once you’ve defined your goals, it’s time to act on the objectives you’ve set by outlining how you’ll deliver on those promises.

Whether you’re selling physical products (such as clothing or accessories), a software-as-a-service offering, or some other kind of product or service, you’ll need to have a reliable way to deliver those products to your key accounts consistently.

Your KAM is responsible for ensuring not only that this happens but also that the client is delighted every single time. This means they’ll need to work closely with your sales, service, and operations teams to get everyone on the same page. It could also be worthwhile to set up key-account-specific processes and procedures so that the client knows what to expect and your team knows how to deliver.

3. Measure account growth outcomes.

As with any objective, setting it is only step one. Once you’ve defined your goals and built the systems necessary to deliver exceptional products and services, you’ll need to make sure you’re measuring the results.

At a high level, the end goal of any key account management strategy is to grow the account in terms of both revenue and the quality of the relationship. To measure your progress, you can start by using the metrics that correspond to the criteria you used to select the key accounts in the first place.

Beyond these basic metrics, I’ve also found that it’s often helpful to dive into some more quantitative criteria as well. For example, to measure product–market fit, you can look at factors such as adoption or usage rate within the account to determine how much value your product or service is actually providing to the client.

4. Anticipate future needs.

Finally, an effective key account management strategy brings it full circle by anticipating the future needs of each key account.

For example, if a client is purchasing more units than they did before, that may mean that there aren’t any more opportunities for volume growth — but it could still be possible that the average transaction size has room to increase. Similarly, there may be an opportunity to have the key account beta test a new product or offering that would align even more closely with their target market.

At the end of the day, I’ve learned that these strategies often boil down to keeping the account engaged (even beyond monetary transactions). Remember: Key account management is all about building and maintaining mutually beneficial relationships. So, be sure to think outside the invoice when looking for ways to strengthen these vital ties.

Key Account Management Plan Template

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The Key Account Management Process

According to the COO and co-founder of the sales software provider DemandFarm, Milind Katti, there are nine steps to take when setting up a key account management process. Below, I’ll walk through each step of this process, giving you the tools you need to get started on your own.

Step 1: Build a framework.

The first step Katti recommends is to build a key account management framework that will define how you move forward. This part of the key account management process is all about identifying your goals, targets, and needs, as well as documenting a roadmap that includes your major milestones and objectives.

Step 2: Segment accounts.

Next, use the criteria I described above to start to segment your accounts into different buckets. Rather than treating every customer as a key account, I’ve learned that it’s essential to come up with a consistent approach to identifying which clients are really your key accounts — and which can safely be considered lower priority.

Step 3: Define roles and responsibilities.

As with many business efforts, you’re unlikely to get very far with key account management if you fail to define clear roles and responsibilities. The specific organizational structure will vary depending on the unique needs of your organization, but it’s important to identify all the stakeholders that may be involved.

This will likely include functions such as Account Management and Sales Enablement, as well as departments such as Sales Ops, Revenue Ops, and others. To set yourself up for success, I’ve found that it’s critical to define each stakeholder’s role in the process, and to establish systems to ensure these teams and individuals can collaborate effectively with one another.

Step 4: Create a key account plan.

Once you’ve started thinking through the main building blocks of your key account management strategy, it’s time to put them together into a cohesive plan. This plan should include each account’s top priorities and needs, and it should also link to all relevant customer information. Then, make sure to share the plan with all relevant internal and external stakeholders, so that everyone can get (and stay) on the same page.

Step 5: Dive into the details.

To start diving into the details and putting your high-level plan into action, ask yourself the following questions:

What needs to be done?
When does it need to be done by?
Who will own the project, and who else needs to be involved?
How will the outcome be measured and communicated?
What happens if something goes wrong?

Then, use your answers to these questions to fine-tune your plan and ensure that you’ve accounted for every outcome and eventuality.

Step 6: Iterate, iterate, iterate.

I’ve learned firsthand that no effective plan can ever be set in stone. As Katti explains,

“Account plans are dynamic, and relationships keep changing.” Because of this reality, he recommends that “a vital part of the key account management process includes course-correcting plans along the way to ensure growth and progress in your accounts.”

Step 7: Communicate with all relevant stakeholders.

Of course, you can develop the best plan in the world — but if you fail to communicate it to the relevant stakeholders, you’re unlikely to get very far. That’s why it’s so important to map out all the internal and external stakeholders who will need to buy into your key account management plan.

Internally, you’ll need to identify all the team members who will have to be kept up to date on the status of your key accounts. At the same time, you’ll also want to define all the external stakeholders who should be involved. Then, once you’ve identified all of these stakeholders, make sure to communicate clearly and consistently to keep everyone aligned.

Step 8: Create an opportunity planning framework.

In addition to your key account management framework, it’s also important to develop a comprehensive framework for monitoring and taking advantage of new opportunities. By mapping key stakeholders and identifying potential challenges and opportunities as they arise, you can track your progress and proactively stay ahead of any changes.

Step 9: Track your progress.

Finally, once you’ve completed this entire process, it’s important to continuously track your progress and identify ways to improve. Metrics you may want to consider include profits, revenues, the quality of your customer relationships, and whether your team has achieved the other key goals and objectives you’ve defined for yourself.

Common Challenges of Key Account Management

Key account management can add substantial value to many organizations — but it’s not without its challenges. Here are some of the most common stumbling blocks that I’ve seen teams run into when trying to implement a key account management system.

1. Getting Stuck in Reaction Mode

One of the biggest challenges when it comes to managing key accounts is to avoid a reactive mindset. Take it from me: In our busy world, with constant emails and messages to review and never-ending to-do lists to complete, it can feel like there just isn’t time to be proactive.

Unfortunately, if you’re looking to delight your key accounts, a reactive approach just won’t cut it. That’s why I’ve learned that it’s essential to seek out opportunities to add value proactively rather than waiting for your high-value customers to come to you with complaints.

2. Focusing on the Product (Instead of the Relationship)

When I like the product I’m selling, it’s only natural that I tend to get really excited about it. But, I’ve learned over time that to manage key accounts effectively, it’s vital to focus on the relationship rather than getting bogged down in talking endlessly about the details of the product.

To be sure, it is still critical for key account managers to know their products and to be prepared to answer any questions their clients may have. But when it comes to how you frame your conversations, I always recommend prioritizing building a positive relationship over droning on and on about your product’s many features and benefits.

3. Struggling With a Difficult Client

Some clients are just difficult. When a customer is rude, unresponsive, or otherwise unpleasant to deal with, it can be a real challenge.

To address this, Deloitte director Swarna Renu reminds us that “difficult clients are difficult for a reason. Either they never saw the value of the connection, or they have had a tough time with some of your peers. It is absolutely critical to do your homework to find out. To find what will work, either have a clear agenda or have a way to address the concerns they have had.”

If you find yourself struggling with a difficult client, ask yourself what the underlying cause might be. Then, you can start to figure out whether you can address their concerns or whether they’re just not a great fit for your company’s products.

4. Balancing Multiple Key Accounts

Finally, one of the things I struggle with the most when managing my own key accounts is how to prioritize between multiple clients. After all, I want to deliver my best to each and every client — but there are only so many hours in a day.

Account coordinator for the international firm Orica, Valentina Barreno recognizes that “managing multiple accounts with varying needs, expectations, and deadlines is indeed a multifaceted challenge.” Barreno recommends several strategies to navigate this.

“I prioritize getting to know each client and their specific needs, ensuring to address them in the best possible way, recognizing that each client is unique,” she explains.

In addition, Barreno notes that “maintaining a clear overview of goals, tasks, and progress for each account is crucial. [In addition,] effective communication with clients and my team ensures we establish realistic expectations and boundaries, fostering a collaborative environment.” And finally, she suggests that “leveraging tools and systems for organization and automation is fundamental to optimizing workflows and efficiency.”

Ultimately, there’s no getting around the reality that your time and energy are limited. To manage your key accounts successfully, it’s essential to think strategically about how you will balance all their needs — without burning out yourself.

Is Key Account Management the Right Strategy for Your Business?

Personally, I’m a big fan of key account management. But despite its many potential benefits, it’s not a good fit for every organization. So, before you go all-in on this approach, I definitely recommend that you consider the following factors.

1. How transactional your current sales process is.

If your sales cycle is relatively short and your sales reps have minimal interaction with prospects, key account management probably isn’t the right choice. After all, key accounts require consultative selling techniques, and it will be hard to convince your salespeople to adopt entirely new processes for just a few clients.

2. Whether your product has upsell and cross-sell potential.

There’s little point in continuing a relationship with a customer after the sale if they’re definitely not going to buy more. Obviously, you should still provide excellent customer service and support to promote positive word-of-mouth. However, if upsell and cross-sell potential are limited, key account management may not make as much sense.

3. Your ability to “land and expand.”

The above rule has one exception: Even in situations where you can’t upsell your client directly, key account strategy may still be a good investment. That’s especially true if getting your foot in the door of the prospect’s company creates the opportunity to grow the account by selling to other departments.

4. The competitive landscape.

In some cases, a key account program can serve as a major competitive advantage. For example, imagine your customer has narrowed down their choice of vendor to you and one other company. If you can promise to make them a key account — and your competition can’t do the same — it could help you win the deal.

5. Company capacity and resources.

Time and time again, I’ve seen that successful key account management is only possible with company-wide support, executive buy-in, and a dedicated key account team. You’ll also need enough runway to cover an investment that might take 12, 24, or even 36 months to recoup.

According to Mike Schultz, co-founder and strategic advisor of RAIN Group, the most significant difference between high-performing companies and everyone else is an effective account planning tool. Schultz argues that a key account plan helps you identify the most significant possibilities for growth, potential roadblocks, threats from the competition, and more.

Indeed, an analysis from RAIN Group of more than 370 companies found that high-performing companies were almost three times less likely to struggle with maintaining an effective account planning tool.

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As such, an effective plan should consider your company’s capacity and resources by addressing the following four areas:

Relationships

First, as part of the process of putting together your key account plan, it’s critical to map out every customer stakeholder. This information will help you figure out which relationships you need to build and maintain — as well as anyone who could potentially derail your plans.

Note each person’s title, role in the decision-making process, how much contact you’ve had with them, and how “friendly” they are.

Customer’s Business

Next, to provide value to the account and find mutually beneficial opportunities, you’ll need an in-depth, sophisticated understanding of their business. Stay up to date on their key business goals, financial health, and current initiatives, and regularly run a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.

Account Goals

This section of the plan should cover how much this account is currently worth, which opportunities you’ve lost and won with them, where you see potential revenue growth, and your projected value for those opportunities.

It should also outline your short-, mid-, and long-term goals, as well as the owner of each. For example, maybe your sales engineering team is responsible for getting a meeting with the CTO by January. A nearer-term goal might be getting 60% of a new department using the free version of your tool, but your ultimate objective is to transform the entire department into paying users.

Account Strategy

Finally, this section of the plan is arguably the most important. It takes your goals (in other words, your account wishlist) and breaks down the actions you need to take to reach them.

Use the same structure you used for your objectives: short-term, mid-term, and long-term. For example, the key goals you’d set for your January meeting with the CTO might be:

Strengthen relationship with VP of Engineering.
Develop a compelling value proposition for meeting with the CTO.
Ask a VP to request a meeting with the CTO on your behalf.

The more specific and actionable these goals are, the better. After all, strategic account management involves juggling numerous initiatives, priorities, and campaigns all at once. Without clear direction, your team is liable to go off in a thousand different directions. Plus, with this approach you can also continuously adapt your strategy down the line if something changes.

Key Account Management Best Practices

Over the course of my career, I’ve learned that there’s no one solution to account management that will work perfectly for everyone. That said, there are several best practices that I’ve found can be effective in many situations. Below, I’ll share some of my personal favorite key account management best practices.

1. Select the right accounts.

A winning strategy hinges on being selective. So, make sure that you pick the right key accounts — and that you apply the same criteria to each one.

Relatedly, I always recommend regularly reviewing your key accounts to verify whether they still require additional time, energy, and resources. If their performance justifies the resource allocation, then continue on. But if they are underperforming, or if the account no longer feels like a good use of additional resources, you may want to consider scaling back.

It’s also important to keep track of non-key accounts that may one day become key accounts. For example, if a smaller customer is about to experience significant growth, they may qualify as a strategic account. Courting them now will earn you their loyalty before any other company in the space.

Finally, ensure that you periodically assess your selection criteria. Are your current key accounts generating as much ROI as you anticipated? If not, it could be a sign you’re using the wrong measures when determining which clients should be your key accounts.

2. Build a dedicated team.

Even the best KAMs can’t get the job done alone. Each key account manager should have a cross-functional support team to assist in the proper execution of deliverables related to the client’s account. To serve your clients well, these teams should include a range of skills, disciplines, and expertise.

In addition, if possible, I have found that it can be helpful to name an executive sponsor for each account. These sponsors can play a significant role in getting the necessary resources, connecting with the C-suite at the target account, and providing high-level guidance.

3. Consistently measure account performance.

What gets measured gets done. As such, staying on top of account performance is critical for success. Set a cadence for internal account reviews: Depending on your team’s size, the account’s value, and the relationship’s dynamic, it might make sense for these reviews to be weekly, monthly, or quarterly.

At these meetings, KAMs should report each account’s engagement and loyalty (both should trend upward). From here, you should also schedule recurring check-ins with the client to get their feedback, address any issues, and find areas for improvement.

4. Invest in the right tools.

Having the right tools in place can make the job of a KAM a lot easier. For example, a CRM can be a great way to keep track of your communication with the account stakeholders, give everyone on the account team visibility into what’s happening, and minimize duplication of effort.

Similarly, if you are having a hard time getting responses to your emails, an email tracking and notification tool can help. This type of tool can let you know precisely when your recipients open your emails and click any links.

In addition, you can use LinkedIn (either the free version or LinkedIn Sales Navigator) to monitor changes in your account’s market and industry, strategic shifts, hiring and firing decisions, and more. I’ve also found that a meetings tool can make the meeting scheduling process much more seamless for attendees by eliminating back-and-forth emails, and you can try investing in a video platform such as Loom to create personalized prospecting videos.

Grow Your Business With a Key Account Management Strategy

In my opinion, a well-planned, comprehensive key account management strategy won’t just keep your best customers satisfied. It will also provide opportunities to grow these vital relationships exponentially. With the key account management framework I’ve outlined in this article, you’ll be set up to add substantial value to your most important accounts — and both your retention rates and bottom line will benefit as a result.

Editor’s note: This post was originally published in March 2020 and has been updated for comprehensiveness.