Key Account Management (KAM) is a process that helps sustain and expand relationships with important Key Accounts. It involves working closely with multiple business departments to maintain and further develop relationships with key accounts. Key Account Management, also known as strategic account management is responsible for achieving sales quota and is assigned key objectives/metrics relevant to Key accounts.

Key Account Management is a strategic approach distinguishable from account management or account-based selling and should be used to ensure the long-term development and retention of strategic customers.

The one common mistake many organizations, both small and big tend to make and repeat, is to treat all their accounts with the same business model. It is never too late, however, to correct the situation and start looking at your account type and process more closely. You will notice, that there is a key difference in the account types, organizations like yours, have in their portfolio.

A Key Account Management Process is required to manage Key Accounts, which may require more nurturing, different skills, and utmost attention than other accounts.

Download Now: 9 Steps to Build a Rock-Solid Key Account Management Process

The famous management rule applies in this case too, where 80% of your profit will come from 20% of your strategic accounts. What resources to invest and how and where, are the key questions you have to handle. Automated systems and processes will work best for 80% of your accounts, whereas, you can safely invest and focus your time on the sales of the rest 20% of your Key Accounts.

Knowing and serving these two different account types is the key to maximizing the potential of your sales force. Hence it does make sense to look at a specialized Key Account Management Software to help you mine your Key Accounts and enrich your customer relationship for the long term.

• Key account management is strategic in nature with high RoI but challenging to institutionalize.
• Key account management is appropriate to several types of relationships but most clearly manifests when suppliers and customers have a mutually recognized partnership and a degree of trust.
• There are often mismatches between the way suppliers and customers perceive each other and their relationship, so careful communication and vigilance are vital.
• Regular monitoring of the profitability of individual customers by suppliers provides crucial information but is quite rare because customer profitability is difficult to measure.
• Strategic account managers need a broad portfolio of business management skills to deal with interdependent or integrated customer relationships.

Why Key Account Management?

We are familiar with Sales Funnel. Marketing generates thousands of leads & passes on the qualified leads to sales who in turn win deals. So far so good. But for B2B companies who offer multiple solutions with long-term engagements with their customers, winning the first deal is only the beginning of the process. You then farm and mine those key accounts for more revenue. You LAND and EXPAND.

A traditional sales funnel can be extended by adding an inverted funnel at its bottom into an ‘hourglass’ shape. Images are a powerful means to drive home a point – in this case, Key Account Management is a critical component of revenue generation for B2B companies.

Here is the sales hourglass model for Key Account Managers:

For most B2B companies, the bottom half of the ‘hourglass’ generates 80%+ of the revenue in a given year. The most commonly used nomenclature is ‘Hunting’ & ‘Farming’. Hunting is acquiring new customers while demand farming is growing business from existing customers.

A hunter sells, while a farmer helps the customer buy.

The ‘hourglass’ also helps in organizing various functions and processes in a B2B company. As you can see in the diagram it will be easy to define the roles of marketing, inside sales, sales & strategic account management in the revenue lifecycle.

Thus, the role of software/tools for each function becomes clear. Account planning tools, tools for marketing automation, inside sales, lead qualification, sales process automation, and finally Key Account Management.

What is the difference between Key Account Management and Sales?

While ‘Sales’ is an overarching process across industries, Key Account Management is specific to existing customers in B2B companies with complex solutions, multiple offerings, and long-term repetitive engagements. Key Account Management requires a deep understanding of the customer domain, situation, and challenges, and then stitching a solution. In Sales, one would be offering a suite of products already available.