Key Account Management can be a difficult process. The biggest challenge to selecting the right account management strategy is focusing on too many things too soon. Ideally, the focus should be on only a few impactful components or Key Performance Indicators (KPIs) that can set you apart from your competitors. This has the potential to grow your key accounts exponentially.

What are KPIs in sales?

Key Performance Indicators, or KPIs, in sales, are measurable values that demonstrate how effectively a sales team is achieving its key business objectives. By using KPIs, organizations can assess their sales performance, identify areas for improvement, and make informed decisions to drive growth. KPIs can cover various aspects of the sales process, from lead generation to closing deals, and provide valuable insights that help teams strategize effectively and gain customer retention.

Sales KPIs can vary widely based on the specific goals of the organization, but some common examples include:

Sales Revenue: The total income from sales, which reflects the effectiveness of the sales team in generating profit.

Conversion Rate: The percentage of leads that are converted into actual sales, indicating the effectiveness of sales tactics.

Customer Acquisition Cost (CAC): The total cost spent on acquiring a new customer, which helps in understanding the return on sales investment.

Average Deal Size: The average revenue earned per deal, useful for setting sales forecasts and targets.

Sales Growth Rate: The rate at which sales revenue increases over a specified period, providing insights into business health and market demand. By carefully selecting and monitoring relevant KPIs, sales teams can enhance their performance, optimize processes, and achieve greater success in their endeavors.

Take a look at the top 11 Account Management KPIs that require focus for long-term success.

Key Account Management Glossary: Crucial Account Management Terms Explained

1. Customer Lifetime Value (CLV)

Customer Lifetime Value is the total revenue that a business can generate from a single account in the entire course of the arrangement. It is calculated by: Customer Lifetime Value = (Customer Value) x (Average Customer Lifespan)

Importance of Customer Lifetime Value

• Instantly tells your most revenue-generating buyer personas.
• Gauges the potential of individual key accounts.
• Identifies common factors that drive the most profitable customers.
• Analyzes the ability of account managers to engage existing clientele.
• Lowers customer cost per acquisition and maximizes profitability.

2. Referenceable Clients

How likely are your clients to refer you to their professional network? When quantified, this is directly proportional to the performance of your account managers. There are three primary ways to track this KPI:

• Monitoring social media mentions to understand the consensus about the performance of account managers.
• Directly asking current customers by including a question in key feedback surveys
• Adding a field like “how did you hear about us?” in inbound contact forms.

3. Customer Satisfaction

Customer Satisfaction scores (CSAT) is one KPI that can explain a lot about the performance of account managers. They can be easily captured via customized surveys across multiple channels. Net Promoter Score (NPS), is one of the best ways to calculate Customer Satisfaction. NPS asks clients about how likely they are to recommend the services and products to their colleagues and quantifies the result. Clients are then divided into Promoters, Passives, and Detractors.

4. Customer Outcomes

Customer Outcomes is a function of customer-centricity. It involves tracking the achievement of customer goals to analyze and arrive at the performance of the account managers. Such tracking can be achieved by looking at:

• Leading Indicators:
  Forward-looking indicators that look at and anticipate future outcomes and events.
• Lagging Indicators:
  Backward-looking indicators that analyze whether the desired outcome was achieved.

If any discrepancy exists between the inputs and outputs of Key Account Managers, the problem can then be diagnosed accordingly.

5. Customer Interaction

Customer Interaction provides valuable insights into the amount of time that account managers dedicate to engaging with their customers. This engagement is crucial for building and maintaining strong relationships. Long gaps in customer interactions can signal inadequacies in relationship mapping and management, potentially leading to decreased client satisfaction and loyalty.

Measuring this engagement effectively requires a thorough tracking of both inbound and outbound touchpoints. This includes monitoring phone calls, emails, meetings, and any other forms of communication. An ideal scenario involves a high frequency of reaching out to key account managers coupled with a low resolution time for any issues or inquiries. Such practices are essential as they foster increased trust from clients, contributing to a stronger relationship. Furthermore, these efforts are instrumental in driving the Customer Lifetime Value (CLV), ultimately benefiting both the client and the organization in the long run in terms of business relationship.

6. Organic Growth

When clients are satisfied with the product or service, they are more likely to scale their engagement, even when it comes to premium offerings. This satisfaction can lead to increased trust and loyalty, Customer Retention Rate, encouraging clients to explore more advanced or additional options provided by the company.

Key indicators here can include the percentage of sales generated through references, which often signifies client satisfaction and trust, the percentage of repeat customers, showcasing ongoing client loyalty, the percentage of customers likely to engage in cross-selling or up-selling opportunities, reflecting their willingness to invest further, and the ratio of new to repeat sales, indicating the balance between attracting new key clients and retaining existing ones.

These metrics are crucial for understanding client satisfaction and potential business growth opportunities.

7. Client Acquisition Rates

This KPI represents the number of customers that account managers actually reach out to. This is the first step of a client relationship and may explain the discrepancies between your highest and lowest performers. Acquisition rates can differ for different outreach methods such as cold calling, emailing, or face-to-face interactions. It is imperative to find the ideal number of touchpoints beyond which conversion rates begin to plummet.

8. Employee Satisfaction

This might seem an odd KPI, but it makes sense considering how demanding the role of an account manager can get. Internal surveys and interviews to ensure employee satisfaction translates to satisfied customers.  A happy team ensures that a robust account management culture can be built within your organization.

9. Up-sell and Cross-Sell Rates

There can be 3 ways in which the revenue of a business can be increased:

• Up-selling: Boosting the overall value and cost of existing services.
• Cross-selling: Selling a similar and complementary product in the same vertical.
• Renewal: Contract renewals of present clients.

Tracking the rate of each of these for every existing account will shed light on how well your current expansion strategies are working.

10. Touches to Closure

This involves how well Account Managers are bringing new business. A touch can be defined as any contact with the prospect in the form of a video meeting, email, or phone call. Ideally, the aim should be towards a low-touch approach. Analyzing the number of touchpoints per closed-won deal document the strategies that are working.

11. Customer Churn Rate

Customer churn rate is a crucial metric for businesses, representing the number of existing customers from the total pool who have either voluntarily cancelled their contracts or opted not to renew them by the last date of their agreement. It is an important indicator of customer satisfaction and loyalty.

Calculating the customer churn rate involves using the following formula:

Customer Churn Rate = (Total customers lost over a specific period) / (Total customers at the beginning of the period)

This metric provides valuable insights into a company’s performance levels and can significantly impact strategic decision-making. A high churn rate might indicate underlying issues, such as dissatisfaction with products or services, increased competition, or inadequate customer support. Understanding and addressing these factors can help companies retain more customers and improve their overall growth and sustainability.

By regularly monitoring churn rates, businesses can identify trends, predict future challenges, and implement strategies to enhance customer retention and satisfaction.

Bottom-line!

Focusing on the right Account Management KPI is the initial step. Creating actionable plans and tying the KPIs to specific goals are also important. In the digital era, such account management translates to tracking and mapping key data-driven review, feedback and inspections.

For successful account planning in the long term, automated workflows, simplified frameworks and greater visibility into strategic actions are vital.