Co-Founder & Chief Executive Officer at DemandFarm
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.
Take a look at the top Account Management KPIs that require focus for long-term success.
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 an idea of the amount of time that account managers spend with their customers. Long gaps in customer interactions can be a signal of poor relationship mapping and management. Measuring this requires the tracking of both inbound and outbound touchpoints. A high rate of reaching out to key account managers and a low resolution time is ideal for increase in client’s trust and in driving the CLV.
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. Key indicators here can include percentage of sales via references, percentage of repeat customers, percentage of customers likely to cross-sell/up-sell and the ratio of new to repeat sales.
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
This represents the number of present customers from the total pool of customers who have either canceled their contracts voluntarily or not renewed them by the last date.
Customer Churn Rate = (Total customers lost over a specific period) / (Total customers at the beginning of the period)
This provides an insight into performance levels and can impact decision making.
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.