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Key Account Management

Key Account Management

Key Account Management

Use this framework to manage strategically important customers

One of the first rules you learn in business analysis is the Pareto principle – the 80:20 rule. 80% of your revenue comes from 20% of your customers. These 20% of your customers are well worth looking after. A book by Malcolm McDonald and Beth Rogers – Malcolm McDonald on Key Account Management – provides an effective framework for driving efficient marketing practice within B2B companies.

The term key account implies that a customer is strategically important to a business. This may be because of their size, their profitability and also their future potential. Determining which customers are key accounts is fundamental to this framework. It presupposes that good intelligence exists on customers in terms of the products/services they buy, the revenue this generates, and the profitability or potential they yield.


Identifying which companies should be key accounts is the obvious starting point. It is then necessary to develop meaningful value propositions for each of these accounts. This is achieved by understanding the decision-making teams within the key accounts and what drives their selection of suppliers. This is not easy as the individuals in the decision-making unit of the customer may all have different drivers. It is why an intimate customer relationship is required with these key accounts.

There will be other customers that do not fit the key account category because of their size and potential. These smaller and major accounts must be serviced in some other way. Those that could grow into key accounts should be groomed while those that want to be serviced as a key accounts but which have no chance of achieving this status must be managed diplomatically. Are they worth holding on to?

In their book, McDonald and Rogers offer good advice on a framework for key account management (KAM). They emphasise that it is vital to choose a limited number of key accounts that are strategically important to your business. Then it is necessary to understand the needs of these customers and your ability to meet those needs. From this point you can set objectives and strategies to grow the accounts with a separate plan for each. Relationships are at the heart of delivering great key account services and for this you will need skilled and experienced account managers.

The principles of Key Account Management are designed to build strong, mutually beneficial partnerships with key customers. Here are some important principles of Key Account Management:

Customer-Centric Focus: Place the customer at the center of all activities. Understand their needs, challenges, and goals to tailor solutions that provide value and contribute to their success.

Strategic Alignment: Align the KAM strategy with the overall business strategy. Ensure that the goals and objectives of key accounts align with the organization's mission and vision.

Segmentation and Prioritisation: Segment customers based on their strategic importance to the business. Prioritize key accounts that have the greatest impact on revenue, profitability, or long-term potential.

Cross-Functional Collaboration: Foster collaboration among different departments within the organization to deliver a cohesive and integrated approach to serving key accounts. Departments such as sales, marketing, operations, and customer service should work together.

Customisation and Personalisation: Tailor products, services, and solutions to meet the specific needs and preferences of each key account. Demonstrate a deep understanding of the client's business and industry.

Relationship Building: Develop strong, long-lasting relationships with key stakeholders within the client's organisation. Building trust and rapport is essential for successful Key Account Management.

Continuous Communication: Maintain open and transparent communication channels. Regularly engage with key accounts to understand evolving needs, provide updates, and address any concerns promptly.

Value Creation: Focus on creating and delivering value beyond the product or service. Identify opportunities to contribute to the customer's success, whether through innovation, efficiency improvements, or strategic insights.

Joint Business Planning: Collaborate with key accounts on joint business planning. Establish clear objectives, milestones, and key performance indicators (KPIs) that align with both parties' goals.

Risk Management: Proactively identify and manage risks that could impact the relationship with key accounts. Develop contingency plans and strategies to address potential challenges.

Measurable Metrics: Define and track key performance indicators that measure the success of the Key Account Management strategy. Metrics may include revenue growth, customer satisfaction, and profitability.

Adaptability and Flexibility: Stay agile and adapt the KAM strategy based on changes in the market, industry, or the client's business landscape. Flexibility is crucial for navigating dynamic business environments.

Continuous Improvement: Implement a culture of continuous improvement. Regularly assess the effectiveness of Key Account Management practices and seek ways to enhance performance and outcomes.

Knowledge Sharing: Share insights and knowledge gained from key accounts across the organization. Ensure that the entire team benefits from the experiences and learnings associated with managing key clients.

Long-Term Focus: Adopt a long-term perspective in key account relationships. Recognise that sustainable success requires ongoing investment and commitment to building enduring partnerships.

Things to think about:

  • Do you use key account management? Which companies are on the list? Have you included companies that are growing and strategically important as well as those that are large?

  • Who within your company looks after the key accounts? What would happen if the key account manager was to leave and join a competitor? What back-up do you have?

  • What measurements (KPIs) are in place to ensure that the key accounts are being well looked after?

  • Looking through the principles of key account management, what improvements can you make?

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