What is Account Management?
Account management is a collective strategic method that businesses follow to upkeep their best clients, all through their business journey. Account Management is a way for the account manager to think strategically and find business continuity opportunities with their key accounts. However, the objective of account management is not limited to just retaining the best clients.
A key account manager should have regular communication with all the internal teams to make sure the client's requirements are fulfilled and to continue an interdependent partnership a clear code is essential. In other terms, an account manager should also take the role of a client success manager.
Many-a-times, companies battle to upkeep their clientele in all possible ways. And more often, companies try to switch their focus from account marketing to sales process through customer services. But according to a study done by Gartner, customer service doesn't drive revenue, but customer improvement might do the trick.
And that is where account management comes into play. Adding to the build-up, a study by Global Partners Training says that 61% of companies report that strategic account management programs helped them to upsurge their revenue and customer satisfaction. This report attests to the relevance of a working account marketing program in every business.
In addition, keeping the best clients who can offer you a predictive revenue and promising profit source to plan business upfront. However, the process comprises a lot of activities and this guide leads you to have a clear understanding of - What is Account Management?
Key Components of Account Management
Account management is a collective process of overseeing the sales process, planning the business continuity, and managing client relationships coherently. By employing appropriate rapport-building strategies and innovative resource gathering practices, account managers strive to manage the best client accounts continuously.
The clients who have been with the company and take part in its successful journey are invaluable assets. Hence, building a winning relationship with them is the ingredient of success for businesses of all kinds. This subsequently implicates that your sales business cannot afford to miss a chance of developing an affluent account management strategy. In that process, a strategic account manager has to take the responsibility to shape the most customer-oriented business models with the best offers and resources.
This combined process is the definition of account management for business success. And thanks to technology, today we have plenty of account planning tools with multiple features to run an effective sales account management program, that can propel your business to new heights.
Why Account Management is the need of the hour?
According to one of the thought leaders in strategic account management, Olivier Riviere, the key thing you keep in mind to have a firm grasp on account management is “True key accounts have a special strategic meaning for the company, beyond their size. Make a clear distinction between large accounts and key accounts.” Observing the account management process for quite a while may not easily translate the process well enough in many cases.
It is a long and cyclic process that takes time, effort, and money. However, those value accounts are likely to depart from the business relation anytime. In other words, it may be snatched by any other business alternatives similar to you.
The client who has been with you for years would be a coveted lead for your competitors. Hence, the chance to lose them is high and it completely relies on how good your customer account management strategy is.
And the potential benefits it may impact on your business can vary, depending on the business proposition of the companies you might be engaging with. It is based on your B2B sales process, your selling models, scope, competitive advantage, and business capacity.
1. Building a Valuable Client Relationship
The importance of your sales process is far-reaching in terms of client relationships in account management. Suppose the sales strategy of a company does not require longer client relationships and fails to initiate customer interaction.
To illustrate, a customer service agency that creates new tickets for every customer inquiry is a business that has only a transactional relationship with customers and they don't prefer to keep their users in contact. In such cases, account management is not for them. Rather, account management is a continuous process that demands strategic business techniques.
Hence, to frame out an account management model for your business, you have to redefine the business strategically. For that, having diversified business models in strategic capacities is essential. This helps your business in discovering an even more diverse business scope for your key accounts.
Additionally, you need a unique selling proposition to formulate a better account management model. Companies may tend to follow a common business proposition, but with a unique business proposition, you can position yourself far higher than your competition in the long run.
2. Your Business USP, your asset!
Every business has unique selling propositions and has additional services/products to cross-sell. If your business cannot thrive in up-selling and cross-selling or the customer doesn’t have any intention to indulge in another deal, account management becomes pointless. So, growing your potential in multilevel selling propositions is necessary. A good account manager should utilize all the possibilities as soon as the client makes a transactional relationship.
If you can expand the business all through the different corridors of the clients' core and supporting business, your account management strategy can take home the trophy. Moreover, customers always seek the best for the best price and service. The quality of resources and advantages that you can provide for your clients is your business’s competitive advantage. A mutually benefiting, yet compelling account management program, can help you in making the customers' decisions inclined towards you more than your competitor.
Besides, the business capacity of the company is another key determiner of successful account management. The staff capacity, supportability, scalability, and resource availability play a leading role to carry out an effective account management business model.
Account Management vs Sales
Is account management the same as sales?
The perspective differences between these two propositions are far and wide. The very difference between account management and sales can be illustrated with the example of a nomad merchant and an online global store. A nomad merchant aims to sell out the commodities through any means to the customers that he comes across and the merchant's sales proposition to achieve Sales intelligence, Sales Transformation, and Sales acceleration keeps varying.
The online store on the other hand reaches a far wider customer audience. The online shop owner equips the shop and supports the customer with all possible facilities. Likewise, account management finds the scope for future benefits rather than the benefit of a one-time deal. Not surprisingly, the art of account management and identifying key accounts is a complex process.
You have to carry out a broad business prospect to afford and manage such accounts because they are going to get the benefit of your time and effort in the long term. So, it is your responsibility to identify whether they deserve it or not.
The Account Management Process
1. Identifying Key Accounts
At the times, when you have a surge of amazing customers with great business potential, it is common to think that you can make them all your key accounts. But, not all of them are your key account partners. You have to strategically observe your customers and find - who is that few?
Tamara Schenk, research director of CSO insights commented; “Companies should focus on the current state of account strategy implementation and next steps, as well as any needed adjustments of the strategic account plan.” Analyze the ratio of revenue to the cost of your customer from the first deal itself and estimating the prospective benefits that you can acquire from them.
Picturize the growth curve that each of your customers can contribute to your business. Plus, the mutual benefits you can get in terms of revenue, profit and leads in the long run. Then finalize the partners that you would like to keep an extended relationship with.
Besides, in the process of identifying key accounts, there are a few factors that you can keep as a checklist. If you can match your customer with the list that helps you to understand the relationship, benefits, product and cultural similarity, future business prospects, business process, revenue, partnership, location, etc. The companies that meet most of the parameters in the list can be taken up into your key accounts list.
2. Developing the Relationships
Once you have identified your key account management partners, it's time to develop the relationship from a futuristic perspective. For that, a lot of strategic analysis and step-by-step orchestrations are involved.
Let’s deliberate it in detail
Unlike a sales process, account management is designed for a long relationship. So, it requires a meticulous understanding of the whole story that is going to happen between you and your key account partner. And from the analysis, you can figure out what kind of relationship you are supposed to have and now you are at what stage?
The account relationship status can be classified as follow, you can identify the stages from here, In this first stage, you have to be more tactical in dealing. Your customer probably has plenty of your kind to fulfill their requirements. Hence, you have to understand the business potential and formulate a tactical strategy to acquire a long-lasting partner.
The next step demands more involvement!
When the relationship grows into an operational level with mutual communication and frequent interaction about business cooperation, you can fine-tune your strategies. And that fine-tuning should please the customers to stick a little longer.
However, you have to keep analyzing the potential and the revenue to cost ratio at each point before being generous to acquire them. Then, when you and your customer come and agree with mutual consent to take forward the business you have reached a promising account management contract. Your business interaction would take off from the operational stage to a more functional base. Further, you can have a mutually beneficial future and potential growth with the account.
3. Nurturing the Relationships
For retaining and growing your existing key accounts, just developing these stakeholder relationships is not enough. You need to take a step forward and invest time and resources into nurturing the relationships with the people in your key accounts.
This would require you to ensure that they are happy even after the deal has closed by resolving any obstacles they might face with respect to your offering. Staying in touch with the stakeholders not only opens up avenues for upselling and cross-selling opportunities but could also provide your R&D team insights on any improvements that can be incorporated into your product/ service based on their feedback. The customer statistics report by Groove states that the probability of closing a deal with your existing happy client is 14 times higher than selling to an absolute new customer.
This can help you and your account to get into a long-term operational and functional understanding, thereby forging a strategic relationship.
In fact, nurturing these relationships will guarantee that your existing customers provide and keep providing references to other potential clients thereby aiding your business growth. The Gallup Poll reports that an engaged customer represents a 23% premium in wallet share and revenue growth over an un-engaged one.
As Shep Hyken, the customer service expert at Shepard puts it, “When a customer walks away thinking, ‘Wow! I love doing business with them and would like to tell others about it.’ is when you would have successfully completed your account management process.”
Role of Account Managers
You can plan the account Management program in a whole lot of ways. As per your business proposition and prospects, it can be shaped accordingly. Plus, to win the account management program you have to equip your business with the right talent resource and adequate facilities. An account manager is an important resource that you require to carry out an effective strategic account planning program.
An account manager is exclusively designated to handle and maintain the most precious clients. They strive to manage valuable accounts and build and keep sustainable relationships with clients. Also, the account manager has to take the responsibility to mitigate the challenges, solve the problems and find new opportunities to enhance client relationships. But, it is not their job to deal with the problem encountered by the clients or their business operations.
Essential Skills of Key Account Manager
Key account managers foster valuable clients and help to find more opportunities to build the relationship. They play a prominent role in the business process to enhance business prospects with the best clients with long-term engagement.
- They work with the accounts to find new opportunities and evolving challenges
- They take part in the problem-solving process with strategic solutions
- They employ innovative techniques to build rapport with the potential customers
- They serve as a representative for the key accounts and contact point for the clients
On the go, to perform all these tasks and excel in account management it is essential to have some skill sets. You cannot afford to make anyone an account manager, they should possess some sort of account management skills. Few of them are listed below.
- Good listening and understanding capacity
- Collaborative and Customization ability
- Leadership and Ownership capability
- Management and Business expertise
- Dynamic Business Analytical knowledge
- Excellent Communication and Accounting skills
Problems faced by Account Managers
The account management role comes with its own set of challenges as well. Few are discussed below.
- When the Statement of Work (SOW) in terms of resources and efforts required for a certain task is not understood properly which in turn inhibits customer success which is the top priority for account managers. According to Forrester Research, 72% of account managers have reported that customer success is their top priority, and not being able to manage that can be a bit frustrating.
- When the project deliverables for an account are not being met with the changing customer needs. Sometimes the software features are not in line with what the customer wants and the offering needs to be optimized to provide a complex solution. A UserIQ study reports that efficient account management is feasible through customer alignment and 49% of respondents felt that it was aligned to user feedback.
- When the number of deals being handled by the key account manager increases, and multiple deals are being executed at the same time, it becomes difficult for the right person to be at the right place and at the right time resulting in loss of business thereby straining the relationship with key accounts.
- The deals tend to get extended due to various reasons internal to the account and can result in loss of time and revenue.
- Loss of mining and other business opportunities because of not being physically present on the client's site.
8 Best Practices in Account Management for B2B Sales
The necessity of an effective account management process only looks great when you know, over 80% of your sales is generated from 20-30% of your clients. Thus, it demands greater care for these accounts that add value. So, the best way to keep such clients is to have an outstanding account planning program. Hence, let’s check some of the best account management practices.
1. Deploy dedicated account managers to set the focus on relationship building. Set them with definite objectives to follow that aligns with the business process.
2. Develop key accounts identifying parameters to pick the right accounts that fit and bring promising benefits with potential growth prospects to your company.
3. Draft a transparent account transition policy from sales to accounting customers and make the move from the departments smooth.
4. Draw a detailed customer profile to understand the customer and their business value. Also, markup the goals and points.
5. Drive a need assessment run with the data you have and find out the opportunities to expand your and your client's business to new verticals.
6. Design a proposal with a detailed plan to define the best resources and offers that you have for the accounts and approach them upfront with benefits and benchmarks.
7. Dedicate an account calendar to follow up with your accounts regularly. Get them into the loop to exchange resources, update offers, and communicate business.
8. Demonstrate periodic Performance Analysis and upkeep a policy to measure the goals with your Account management KPIs.
Benefits of Sales Account Management
As a mutually beneficial relationship program, account management offers numerous benefits. It is not limited to good rapport and revenue, but it can beget several productive and profitable growth prospects as well.
- Effective sales resource utilization can enhance your revenue and profitability exponentially
- Opens new doors of opportunities to grow customer loyalty and revenue stream
- Builds strong account relationships and thereby strengthens account control
- Improved customer satisfaction with strategic account operation and customer service.
The benefits of an efficient key account management program are not limited to any of these points. It offers surprising advantages with a comprehensive account management strategy. Companies can use this to reap greater profitability and gain exponential growth with steady revenue.