Triaging Key Account Management
The Free Dictionary explains Triage as, “A system used to allocate a scarce commodity (food / medicine), only to those capable of deriving the greatest benefit from it. Triage is used in hospital emergency rooms, on battlefields, and at disaster sites when limited medical resources must be allocated” I will excuse you if you thought we were going anywhere near the above situations. That isn’t the case. The focus remains Key account management (KAM). Triaging is useful in addressing the ambiguity associated with Key Account Management’s critical first step i.e. selecting key accounts.
Identifying Key Accounts
Successful strategic account management requires a strong start. Identifying key accounts is one of the first critical steps. There are several ways to approach this of course. A good starting point would be to locate the stage of Key Account Management the organization is at. Is it an advanced practitioner of KAM/ Just getting started? Somewhere in the middle? Here are some more considerations
- Offer – Wouldn’t you differentiate key accounts from the rest of your customers?
- Lifetime Value – Key accounts should not only show revenue potential but also margin expansion. The existing current contribution will also be key.
- Service complexity – Key accounts have custom requirements that warrant varying degrees of service.
Defining a key account, is well, key. Often, it isn’t clear and leads to ambiguity.
Determining shortlisting criteria for selecting key accounts isn’t straightforward. Some factors are black and white, making for clear decision-making. Given the inherent complexity in key accounts, ‘grey’ is what will confront decision-makers, often. They would be lucky to get away with less than 50 shades of ‘grey’. To deal with this, university researchers in the strategic account management space were quick to start a ‘Science’ vs ‘Art’ debate. While the debate continues, triaging could help cut through some of the ambiguity.
Prioritizing key accounts is necessary, but not sufficient. Triage is vital. During natural disasters and medical emergencies, teams have to decide – who really needs help, who doesn’t need it at all and who can wait. That also means the very difficult decision of deciding to give up on those who can’t make it. True, it does not entirely solve the ambiguity problem in selecting key accounts. But, it does move the needle forward in sticky situations.
DemandFarm proposes a ‘triage framework’ for key account teams who are still deciding which accounts to include as part of their key account management strategy. The framework is not recommended to decide on existing key accounts. ‘Demoting’ key accounts is a sticky subject and beyond the scope of this article. Key account teams would appreciate how easy it is to include companies as key accounts compared to managing and growing them – or worse, ‘demoting’ them.
The DemandFarm ‘triage framework’ is best suited to helping KAM teams answer the following question.“ Who should not be a key account?” It is one way of approaching the meaningful identification of the most valuable accounts
Table heading – Triage Framework
(sumender to make an image of the below table)
Broadly, there are 4 factors categorized as external and internal. The above table is a suggested triage framework that will guide organizations in answering the question, “Who should not be a key account?”.
External are those factors that are dependent on the business environment and market conditions. These are as under.
- Market Position – Rate your account on the basis of its current market position and its future potential. Is the market growing? Is the company account growing its market share? Is the account lagging competition?
- Innovation Orientation – How is the account responding to innovation? According to the theory of ‘Diffusion of Innovations’, where does the account fit? Are they innovators, early adopters or laggards? Are they ahead of the curve or prefer to follow?
Internal factors are those that are deemed to be under your control when dealing with the account.
- Strategy Influence – Do we have enough control to influence the current and future business strategy of the account? Will they take and value your opinion for key business decisions? Would we be a vendor or a strategic partner to the account?
- Operational Complexity – Will the account management be transaction-intensive? How easy is it to get approvals? What organization do we need to develop to deliver on the scope? What is the intensity of the existing relationship mapping with stakeholders and their colleagues? Do we see opportunities for margin expansion?
Scoring the Framework
The triage framework also contains scores and weights for scientific decision-making. The following scale is suggested.
- Score from 1 to 10 (1 – least favorable; 10 – most favorable)
- Weights or Percentage should not exceed 100% for all the 4 factors combined
It is pointed out again that this score is only to help identify a “non-key account”. It is suggested that organizations pursuing key account management, should clearly define a threshold score below which an account would be rendered as a “non-key account”. At the same time, a score above the threshold will not necessarily make an account ‘key’. Finally, this is just a starting point – getting into the exercise, one will find several relevant variables to add to the grid.
Will a key account management software help?
Thanks to big data engine and predictive analytics tools, the white space opportunity exists to make the ‘selection’ and ‘triage’ steps, a bit scientific. Automatically capturing quality data and developing scoring mechanisms (similar to the above framework) to identify key accounts could make key account management methodical and predictable. Have we arrived there, yet? You could try triage to answer that question. If you liked the blog, you can also read an Interview with Adrian Davis, President- Whitestone Inc.
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About the Author
CEO & Co-Founder, DemandFarm
Milind is CEO & Co-Founder of DemandFarm. Having practiced and evolved the ‘account farming’ principle for over a decade he established DemandFarm and is passionate about delivering the best B2B key account management tool to serve the needs of key account managers. Milind also serves on the Board of LeadEnrich & is a Strategic Adviser.