The one common mistake many organizations, both small and big tend to make and repeat, is to treat all their accounts the same. It is never too late, however, to correct the situation and start looking at your account types more closely. You will notice, there is a key difference in the account types, organizations like yours, have in their portfolio.

Largely, accounts can be divided into two key categories-  the Key Accounts and the Regular Accounts. Each of these two categories needs a different management style, system, and people. An Account Management process is required to manage Key Accounts, which require more nurturing and attention than normal accounts.

Let’s look at why these two categories are different and to be treated differently.

What is Key Account Management?

Key Account Management is a strategic approach to managing and nurturing business relationships with the most important customers of an organization. These key accounts are typically a small group of customers who contribute significantly to the company’s revenue and long-term success.

The purpose of Key Account Management is to maximize the value of these key customer relationships by providing personalized and tailored solutions that meet their specific needs. This helps in building strong, sustainable partnerships that can lead to increased sales, higher profits, and better customer retention.

Furthermore, Key Account Management is not a one-time process but an ongoing one. It requires continuous nurturing and adaptation to changing market dynamics, customer needs, and business goals.

What is Regular sales?

Regular sales is a common criteria of selling products or services that has been used for many years. It involves the direct interaction between sellers and customers, often through face-to-face meetings, phone calls, or cold calls. Traditional sales also rely heavily on advertising and promotional activities to reach potential customers.

Key account management vs regular account management : Key differences

High-Value and High-Volume

Your Key Accounts are the high-value accounts. So, the number of projects or tasks or transactions you win from each of these accounts may be small, but the value of each of these transactions is big. Whereas your regular accounts, maybe many in number, and each may give you, a large number of projects or transactions, but the value from each is smaller. Such accounts are therefore popular for their volumes.

What is important is to remember that both types of accounts are important to your business, only that, you need to manage both differently.

Customer-centric and Transaction-centric Accounts

The high-value accounts are your customer-centric account, that is, the focus is on building a long-lasting relationship with the customer. These accounts usually have a longer buying lifecycle and hence, repeat orders may be fewer; but the value for each of these orders makes up for everything. The customer becomes the key here and more so, your relationship mapping with him.

Trust is never easily won and needs to be maintained and built upon. These high-value accounts are important to your overall business plan. The other type of accounts is the transaction-centric accounts, where each transaction is important. Here, the transaction is not high in value, but the number of transactions is more important. Repeat business takes center-stage and that is the sales team’s objective.

For effective key account management, your brief to the sales team should be to nurture the relationship of your KAs (Key Accounts) and in the transaction-centric accounts, your brief should be to increase the value of each transaction.

Personalized and Automated Accounts

Automation is the name of the game today and helps your transaction-centric accounts when it comes to being regularly updated about their purchases, stocks available, lead time and service issues if any. These are RAs (Regular Accounts) who have established a certain sense of comfort and rhythm for you and with you and can be managed through an automated system with minimal personal interaction.

On the other hand, are your KAs who need personal and personalized interaction at all times and at every stage of your journey together. They should also be on your automated system but only so long as it helps them to function uninterrupted in matters that are more operational. Key Accounts need to be handled with TLC of the professional kind; you need to invest in the relationship by meeting them personally, understanding their needs and exceeding their expectations. Key Accounts need frequent and regular personal attention; if you take this as a non-negotiable in your business plan, you will go far with your KAs.

F2F and F2A Accounts

Face2Face or F2F is the nature of the interaction with your KAs and F2A (Face to Automated System) is the nature of your RAs. The main objective of your KAs needs to be personal and interactive in almost real-time; whereas the main objective for your RAs needs to be largely data-based. The course of your interaction with your RAs will be decided on the numbers that the automated system throws up, but your KAs will have to be more qualitative in nature. KAs is about managing relationships and RAs are about managing numbers.

80-20 Accounts

The famous management rule applies in this case too, where 80 % of your profit will come from 20% of your accounts, which are your KAs and 20% of your profit will come from 80% of your accounts, your RAs. What resources to invest and how and where, are the key questions you have to handle. Automated systems will work best for the 80% of your accounts – RAs, whereas, you can safely invest and focus your personal time on 20% of your KAs.

Knowing and serving these two different account types is the key to maximizing the potential of your sales force. It will pay to look at specialized Key Account Management Softwares to help you mine your Key Accounts and enrich your relationship for the long term.

Read our blog on Strategic Account Management or Explore the complete guide to Cross-selling and Up-selling to identify unexplored opportunities for your business as well as your clients’ business and grow better in 2021.

The Importance of KAM for B2B and Sales Teams

Building Strong Relationships

In B2B, client relationships are everything. KAM allows businesses to build deep, meaningful relationships with their most valuable clients. This not only ensures customer loyalty but also opens doors for future opportunities and collaborations.

Enhancing Customer Retention

Retaining key accounts is often more cost-effective than acquiring new ones. KAM strategies focus on understanding client needs and exceeding their expectations, leading to higher retention rates and long-term partnerships.

Driving Revenue Growth

By focusing on high-value clients, businesses can drive significant revenue growth. Key accounts often lead to larger transactions, cross-selling and up-selling opportunities, and referrals, all contributing to the bottom line.

How does Key Account Management differ from traditional sales?

Key Account Management (KAM) is a more strategic approach to selling compared to traditional sales strategies. While traditional sales focus on short-term goals and individual transactions, KAM focuses on building long-term partnerships with key clients. This means that KAM requires a deep understanding of the customer’s business needs, industry trends, and market challenges.

What are the benefits of Key Account Management?

• Increased customer retention: By building strong relationships with key clients, KAM helps to increase customer loyalty and retention. This leads to long-term partnerships and reduced customer turnover.
• Higher revenue potential: Key accounts tend to have higher purchasing power and are willing to invest in products or services that meet their specific needs. As a result, KAM can lead to higher revenue potential compared to traditional sales process .
• Improved efficiency: With a focus on maintaining long term relationships with key clients, KAM allows for a more efficient use of resources as time and effort are directed towards the most valuable customers.
• Competitive advantage: Implementing an effective KAM strategy can give companies a competitive advantage by establishing strong partnerships with key clients and differentiating themselves from competitors.
• Build strong relationships: The success of KAM relies heavily on building strong relationships with key clients. This requires regular communication, listening to their needs, and providing exceptional happy customer service.
• Set achievable goals: It’s important to set realistic and achievable goals for each key account. This can include revenue targets, customer satisfaction metrics, or cross-selling opportunities.
• Regular reviews and adjustments: KAM is an ongoing process and it’s important to regularly review the progress of each key account and make any necessary adjustments to the business strategy.

Conclusion

In conclusion, Key Account Management skill is a more strategic approach to selling that focuses on building long-term partnerships with key clients. Its benefits include increased customer retention, higher revenue potential, improved efficiency, and a competitive advantage.

By identifying key accounts, developing a dedicated team, creating customized approaches, building strong relationships, setting achievable goals, and conducting regular reviews and adjustments, companies can successfully implement KAM and reap its rewards. Therefore, it is important for businesses to consider implementing KAM as part of their sales tactic