For many years I’ve helped professional services firms cross-sell and up-sell through key account management. Sometimes the advantages of key account management have delivered a revolutionary strategic impact with magnificent growth. But not always. Here’s my top tips (and the traps to avoid), when considering key client management strategy and the people needed to make it flourish.
I’ve had most success is where key account management has evolved from a purely tactical (and internal) focused on lists and process to a primary growth strategy to change how a firm goes-to-market.
Professional services firms focus on key clients is fast becoming a strategic ‘business imperative’, yielding many key account management benefits. So what does good key account management refer to?
- A One Firm strategic relationship with clients, driven by growth
- The ability to cross-sell / up-sell and stop business units dominating with silo activities (and draining BD & marking resource)
- Pinpoint accuracy to prioritise the most lucrative and innovative client opportunities
- Differentiated offers, delivered via winning teams and pitches
- Reduced exposure to commodity services and unsuitable contract terms
- Use of granular and tailored data driven client insight to focus efforts in digital channels
- Ensure the right, yet sustainable and profitable, pricing or service models are adhered to
- Focus on the clients that matter, as a priority, and without question.
Harvard Business Review (HBR) says that key account management is proven to improve client satisfaction by 20% and raise profit and revenue by 15% – and mature programmes of 5 years or more often see twice the increase (or more).
According to KPMG, leading customer-centric businesses could see their projected profit growth rates increase from 5.3 percent this year to 7.4 percent in 2020.
Deloitte says that companies that are strongly customer-centric are 60 percent more profitable than companies that are not.
The struggle is real. Firms that fail to evolve priority clients to higher-value services, run the risk of their partnership stagnating… not if, but when.
When that happens, flat-lining revenue will be the least of their worries. And if things like bulk discounts and higher cost of serving are managed properly, the benefits typically far outweigh the costs of key account management.
Key account management strategy
“the same old thinking yields the same old results” Dr Travis Bradberry
The question here is what is the best key account management in sales? This is an important distinction because it’s not about process as the leading priority.
I’ve spent years trying to refocus comments in meetings like “we don’t need key account management to cross-sell, people should just do it because it’s the right thing to do”. Ultimately if you’re not organised, people just do what they’ve always done once back at their desks – work in silos. Any firm that operates across capabilities and regions will suffer from limited key account coordination when targeting the biggest deals.
When thinking about key account management strategy, my biggest learnings are:
- Global or national key account management should directly link to One Firm strategy – if firms want to win bigger and better work than they’ve ever won before. And I don’t mean “we’re investing in tech” strategy. Key account management strategy is at its strongest when markets, segments, capabilities and solutions are all focused to bring the biggest bets to the surface and investing in them as a priority.
- I’ve also always struggled to deliver significant growth with let key account management programmes that have isolated client-by-client activity. This is where ‘what’ is prioritised is also by ‘how’ the firm chooses to go-to-market. Strategy can focus teams and stop the low hanging fruit from being too much of a distraction.
- I’ve learnt that key account management needs leadership involvement. A serious investment of time, energy and resource. The most successful key account management programmes I’ve been involved with have taken the concept of cross-selling and up-selling to be primarily about strategy, and process follows in the background.
This is not about adding a few top level clients to a list and continuing as normal behind the scenes. This is a strategy first approach – chasing the big hairy longer-term client opportunities that will give maximum growth and mobilising the business around success.
HBR recently published that changing a company is about people, not policy.
My philosophy is:
- Define the strategy collectively so everyone has input and feels invested in the new future AND be crystal clear on where you’re heading.
- Develop an infectious atmosphere that feeds cultural change AND change from the leadership, thru the whole business.
- Help your people change into what you need – inspire, coach, mentor, bust the myths, turn issues into opportunities (yes, have policies that define what good looks like) BUT recruit/buy/integrate anything significant that’s missing.
- Track the return on investment (ROI), celebrate and reward.
Note: I’ve purposely steered clear of the process (client plans and planning workshops, master services agreements, operating rhythm, relationship mapping, global service consistency, feedback etc) required to make key account management work operationally. This is obviously an important building block, but has historically been the primary focus of many firms to date.
Key account selection criteria
Considering Pareto, firms need to know if the 80:20 rule applies to their client base (80% of revenue comes from 20% of clients).
I’ve moved away from the classic maintenance and growth focused programmes, there simply ain’t the resource to properly do this.
Instead I’ve come to realise that firms need to create a highly tailored approach. This means prioritising the right accounts, based on future potential for significant growth. Growth could be split over large, medium and small clients. Declining or stagnating clients that cannot be turned around should be ignored here.
The structure, categories and focus all need careful planning to ensure the programme is manageable and balanced. I’ve struggled in the past when there’s been too many ‘key’ clients to properly manage. I’ve really gotten into deep water when the programme is overly complex and no one but me knows how to use it. And I’ve always struggled when people are allowed go off-piste and ‘give everyone a chance of being in the programme’. There has to be strategic growth focus.
Partners: focused on client-centric value and innovation
People are at the center of this working. A top-level individual revenue generator doesn’t always have these essential skills to lead an account and should probably focus on participating in (and not leading) these initiatives. I’ve literally spent years chasing lead partners, who are brilliant sales people, participate in our key account management meetings or to do their actions. They hate it and so do I.
So, the answer is to look for the right skills – financial, consultative, strategic, innovative, planning, interpersonal, team building and influencing. Teams that engage a Strengths Finder approach are more successful at putting the right talent in the right roles.
Likewise, white-space analysis of the financials and capabilities reveals the opportunities for account growth, but if there isn’t the right talent to convert it, a key account management programme is useless. By looking at the credentials of who you want to plug into the white-space will quickly show you if they have a right to be in the room with the client. This can be a simple as asking, do we have the right ‘rockstars’ in their own field that the client is going to want to replace the incumbent and pay more for it? if you answer no to both of these questions you need to wait until the client is unhappy or go in cheaper. That’s not a growth focused strategy, it’s ambulance chasing.
Interestingly, and I could be biased, but Strategy& research suggests that women are somewhat better at this than men. The report also recommends that firms should hire for transformation. I wholeheartedly agree, but sadly I’ve seen firms hire for transformation, fail to integrate them and then proceed to ignore their ‘new blood’ viewpoints with the ‘old guard’ remaining dominant. What a monumental waste of time and money.
Client-needs have shifted from price to value, so define what’s expected via a job description, training, mentoring and clear key performance indicators (KPIs) that reflect the recognition and reward beyond sales top-line.
There are 3 things that will then help partners be successful:
- Be clear on the level of partner time investment require, train them to be good at it and measure both growth and value.
- Construct the optimum partner network and determine where decision-making authority lies (and change it if it’s not working).
- Give them the right support to spend maximum time with clients, rather than tied to internal activities.
BD and marketing: strategic, digitally driven and commercial
MarketingProfs says that aligned sales and marketing teams deliver 208% more revenue.
Bain published that very few B2B organisations zero-base their market opportunities account by account, leaving sales executives flying blind when it comes to planning their route-to-market. They don’t know where to invest or how to win. The leading companies we’ve seen actually know how to get the right offering to the right buyers at the right place and time.
From the sales perspective, key account management support costs can run out of control. If properly managed it should have a direct relationship to margin in order to be financially self-sufficient.
Many firms are moving away from purely internal business development resource, to externally aligned Director grade teams that make a commercial contribution. But to make this work a suitable administrative function should be provided as well, offering reporting, proposals, planning and coordination. Commercial Business development is not about bag-carrying.
Strategy& thinks the distinction between B2C and B2B is no longer useful, it should be B2I (business to individual).
Salesforce also researched nearly 7000 customers and found that consumers (84%) and business buyers (83%) wanted to be treated as individuals not numbers.
From the marketing perspective, now is the era for marketing functions to help account awareness flourish, and generate relationships and leads within 1-to-1 key account management programmes. It’s early days for professional services firms to enable and prioritise their marketing functions in this way. But there is change at foot.
Account Based Marketing (ABM) is just one example of the emerging ability to shorten and focus the sales cycle on specific client needs. For some firms, this is becoming a primary strategy in marketing departments, if they have the technology and digital know-how to do it.
Firms can use this to get up the food chain and properly target the whole prospect organisation. B2B Marketing posted a brilliant article on how to target the c-suite with ABM. Their awards also promote regular examples of the fantastic ROI it can achieve. For example Couchbase implemented an ABM campaign. They spent $150k and generated $1.5m pipeline. That’s a $10.5 : $1 ROI.
Feel lost on making an initial step into KAM or want to hear how leading firms are evolving their KAM programmes into their primary go-to-market strategy for growth? Contact Edler Consulting for an initial conversation so you can better help the right clients flourish in your firm.
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