Milind Katti
COO & Co-Founder, DemandFarm
Complete Guide to Key Account Management (KAM)
Learn the A to Z of Key Account Management or KAM in this Complete Guide to Key Account Management created by DemandFarm. Use the table of content to easily navigate through the topics covered within the article.
KAM Glossary: Crucial Account Management Terms Explained
What is Key Account Management (KAM)?
KAM is the process of managing and growing a company’s most important B2B customer and large accounts in a systematic way to maximize value for both organizations. This involves strategic efforts to deeply understand client needs, forge long-term loyalty beyond transactions, and strengthen relationships over time.
Key Account Management (or just “KAM”) is about unlocking the potential of your best 20% of customers, driving 80% of your revenue.
So, what does KAM do? It does quite a few things:
- It sets up a clear method to look into, plan for, and manage these key accounts organizationally.
- It helps put together strategies that work, by getting everyone involved, both inside and outside your company.
- It’s great for strengthening your relationships with the most important people, helping you find more opportunities to sell more or sell different products.
- And it makes a big difference in turning potential sales into actual sales and in making better predictions about future sales.
In practice, it’s smart for companies to have different plans for managing their key accounts based on how much money they bring in. So, you’d treat your top 20-30% of accounts differently from your mid-tier ones (the middle 50-60%) and your bottom 20-30%.
An exciting new trend is identifying “greenfield” key accounts even before they become customers. By mapping their acquisition journey and growth potential, you can align your sales and marketing to a“land and expand” approach. This focuses on getting a foot in the door with a small deal at first, and then growing the account over time.
In the past three years, “land and expand” has emerged as the go-to model for making the most of your key relationships over the long term.
Download Now: 9 Steps to Build a Rock-Solid Key Account Management Process
Why Key Account Management?
“How many accounts should one account manager handle?” Well, without a solid Key Account Management (KAM) strategy, we usually see managers juggle anywhere from 20-50 accounts and valuable clients.
And here’s the catch—with a packed roster like that, managers spend all their time reacting to opportunities at play. They rarely get to step back, build deeper relationships, or craft more strategic plans that boost growth within accounts.
Now, key accounts tend to be huge complex organizations—think multiple subsidiaries, offices, and buyer groups. It takes a special approach to handle ecosystems like those. In some cases, we’ve even seen companies assign multiple account teams just for mega-giants like Amazon. You might have a Global Key Manager, then Regional Managers drilling into specific areas.
When account volumes are crazy high, setting goals across different internal teams also gets tough. How can you team up to better serve key accounts when everyone’s underwater already?
When Key Account Managers have just ~5 accounts max, that finally allows them to get hyper-focused. They can build trust, spot new opportunities, and grow sustainably.
The other piece is leadership oversight into KAM. You have to implement rock-solid governance processes—how else will execs know what’s working and what’s not? Sales ops and enablement teams depend on those insights to properly support account management strategies.
So in plain terms, by focusing your best players on just a few VIP accounts, you make big gains possible. But it only works if there’s discipline around goal-setting and performance tracking too.
Whitepaper: The Impact of Digital Key Account Management on Sales Enablement
What is the difference between Key Account Management and Sales?
Sales is all about winning new opportunities. Enterprises usually ask their Salespeople to follow a particular methodology or process to close large deals that span multiple quarters/years. The most common methodologies are MEDDIC, SPIN, and Challenger Sales, among others. Organizations need a strong Opportunity Management framework to track gaps in their opportunity life cycle and enable their sales teams to sell better.
On the other hand, successful key account management is not just about winning opportunities but also about looking at the big picture for large complex accounts. Key Account Management involves creating growth strategies that should result in the following:
- Identifying growth whitespaces
- Improving relationships with key stakeholders
- Increased collaboration between internal and external stakeholders to create actionable plans
Each organization strives to position itself as a partner rather than a vendor to its enterprise customers. Key Account Management guides Account Managers to think strategically at every step and brings them closer to achieving this goal!
In Sales you ‘sell’. In Key Account Management you help customers ‘buy’.
Read more: Sales vs. Account Management: The Relationship between Sales and Account Management
4 Important Key Account Management Stages of Relationship (with Key Accounts)
Key account management (KAM) is very much concerned with managing relationships with your valuable customers. It is important to understand these relationships, which vary from simple, transactional forms to intimate and complex liaisons. Both the key account manager and the supplier organization need to know what kind of relationship they have with each customer and, therefore, what they can and cannot do with it.
1. Tactical Relationship
Think of this stage as the early days of getting to know someone. It’s new, maybe a bit transactional, with conversations mainly revolving around pricing. You’re just one of the many options they’re checking out. Communication is usually between one person from each side, and things are pretty casual. Exiting the relationship? Not a big deal at this point.
It’s fine if some accounts love to stay in this casual phase. Some just aren’t into long-term commitments or don’t see a big future. But if you sense there’s potential for something more, it’s worth exploring ways to deepen the connection.
2. Cooperative Relationship
More people from both sides start working together to fulfill orders, so there’s some operational chemistry building. But the client still compares your prices to competitors and could leave if they find better deals. You’ve invested time and effort but haven’t seen major account growth or cost savings yet.
It’s ok to remain at this stage if the ‘account’ is low to medium potential. If the ‘account’ has high potential, evaluate the effectiveness of the previous investments & fine-tune the investments to build better relationships. The returns on these investments might not be evident yet, but you should be on the path to realizing the returns in terms of cost savings, more business, or both.
3. Interdependent Relationship
The client only buys your type of product/service from you and starts involving you in their planning. Your teams collaborate openly. You understand and meet their needs so well they’d struggle to replace you. The effort pays off with rising revenue and profits. Sweet!
The account is now very profitable & you can also forecast sales acceleration or increased business in the medium to long term. If the account does not have high potential, you may want to relook at the investments being made & recalibrate.
4. Strategic Relationship
This is the highest stage of a relationship where you and the account have arrived at a win-win, long-term key account management strategy together. The exit barriers to the relationship are very high & exit will be traumatic. The interactions between you and the account are at all levels & very open.
The account is very profitable & you have long-term visibility of business growth. If the account has high potential, then this is the ideal stage. If the potential is not high, you may want to rethink investing in building this relationship.
What is the role of a key account manager?
Key account managers are like relationship superheroes for a company’s VIP customers. Their main gig is to maintain strong, trusting connections with those top-tier clients. These precious accounts deserve special handling and tons of TLC!
Savvy companies recognize the need for key account management consulting to ensure their program gets off on the right foot. By tapping external expertise, they benchmark best practices for training their key account managers, drafting strategies, building governance protocols, and focusing on customer satisfaction.
On any given day, a key account manager may:
- Check in regularly with important customers and decision-makers at their designated key accounts to address needs and concerns. They’ve got their finger on the pulse!
- Face down issues head-on to keep their clients happy. Whether tackling challenges, solving problems, or finding growth opportunities, they’re on it.
- Coordinate with sales, service and operations teams internally to deliver on promises made to their accounts. Can’t drop the ball with high-stakes clients!
- Brainstorm innovative solutions to help their clients achieve business goals. Their success fuels key account success.
Key account managers have to juggle two huge priorities:
- Building rock-solid, trust-based relationships so clients never want to leave for competitors.
- Expanding on those relationships by continuously implementing value-driving solutions. More goals met = tighter bonds!
Great key account managers thrive on forging invaluable partnerships between their company and privileged clients.
Top 4 Key Account Management Best Practices
Key Account Management or Strategic Account Management is the most effective, profitable management of your most important assets. It drives the profitability of B2B companies, and having a Key Account Strategy is the heart of any successful business in this sector.
One should remember the following best practices to succeed with their Key Account Management strategy.
Watch Now: The Changing Role of Technology in Key Account Management
Smart suppliers are keen to implement KAM., Sadly, however, many KAM implementations fail and are abandoned.
The following are the top 4 things to keep in mind when it comes to your Key Account Management strategy.
1. Focus on the customers that matter most
Identify your cream-of-the-crop accounts with the biggest growth potential. We’re talking maybe 50-100 enterprise customers max. Resist tagging every big spender as “key”—it’ll spread your team too thin.
As per an HBR report, Corporations like Xerox keep the number of true key accounts below 100, and they have far greater resources than most and have been practicing KAM for years.
To get started with the Account Planning template, you need to identify some key accounts and develop a criterion or model that differentiates them from the rest of the customer base.
Download Now: Key Account Management Scorecard Template to Identify Key Accounts
Use a framework to map accounts based on relationship strength and revenue opportunities. Prioritize those classified as ‘Strategic’ and ‘Rising Stars.’ They represent future profit if you tend them properly now.
- Strategic: Invest in mindshare and ensure profitability
- Star: Invest time & money. Need not be profitable yet.
- Status: Maintain the status quo.
- Streamline: Manage for profitability.
Key accounts need not necessarily be the customers who are paying you the most. They are usually the customers with the maximum potential to buy new and additional products or services in the future. The customers are most likely to be consistent and loyal and so represent significant value in the long term.
2. Relationship is the key
KAM is really about relationship-building with your key customers. Get to know key clients’ structures, pain points, and priorities at multiple levels. Become their trusted advisor, not just another vendor.
Tools like org charts and white space analysis uncover chances to resolve issues through better solutions. This strengthens loyalty and partnerships. KAM wishes to see buyers consider the seller a skilled partner, not a vendor. To be a skilled partner, understanding the client is of utmost importance.
Knowing the organization hierarchy of your client helps you learn about the internal hierarchies of your customer. Using a tool like Org Chart (Salesforce-native) can be an efficient way to understand such internal dynamics within your client organization.
3. Look for opportunity
The best way to help key accounts expand is through upsells or new offerings. Closer bonds give insights into the challenges they face. Address those, and you’ll organically grow deal size over time.
To make the most of the potential to cross-sell existing Key Accounts, you need a strong strategy and strategic account plans to bring best practices to your Key Account Managers and salespeople.
An additional focus should be about providing customers with something that will benefit them. You might be disappointed if you push unrelated products.
Use the relationships you have already established with your clients to ask questions, find out about the issues they are encountering, and look for ways to resolve those by making improvements to your existing products or developing new ones.
White space analysis can help you in white space mapping to find opportunities and improve sales intelligence.
4. Choosing the right solution
Choosing the right digital account planning solution to implement these Key Account Management best practices is also a crucial aspect.
Here are a few things to keep in mind for the ideal digital account planning solution
- Visual heat maps
- Relationship intelligence
- In-App account reviews
- Opportunity planning
- Reporting and insights
- Communication trend reports
If one decides to adopt these Key Account Management best practices, then knowing its business impact is important.
Guide: 7 Must-Have Features To Look For in an Account Planning Tool
Business Impact of Key Account Management Consulting
Implementing a solid key account management (KAM) program has major perks – we’re talking big revenue gains and tighter customer bonds.
But pulling it off isn’t easy. Many leaders realize they need key account management consulting to help get set up for success. External experts bring best practices for identifying VIP accounts, training account managers, and tracking growth.
The core benefits of seasoned KAM ultimately boil down to:
1. Key Account Retention
Losing a key account can seriously sting! We’re talking about major dents in revenue and piles of cash spent replacing them. Strong KAM nurtures your most precious B2B relationships to avoid nasty departures.
Key Account Management helps you identify and nurture your most important client relationships, hence ensuring their retention.
2. Increased Revenue
By truly understanding key accounts’ needs, you uncover upsell and cross-sell opportunities at every turn. Meet those needs, and you organically expand dealings over time. Ka-ching!
While it may seem like Key account management is a long and cumbersome process, there are ways to kickstart your journey. Having a step-by-step approach to managing your key accounts and building them up can positively impact your revenue in the long run. Not to mention, customer retention increases significantly.
A few important parts of implementing a key account management process include –
- Identifying key accounts
- Finding the right key account management champions
- Setting the right metrics and goals for the short-term and long-term
- Lay out clear plans of action
1. Getting Started:
In this state, you have impaired relationship intelligence. Your primary focus should be knowing who to look at and which key accounts to consider. You don’t have visibility into client organization, hierarchy, or power. So, you can’t leverage decision-makers in your biggest accounts.
2. Nascent State:
You might already have relationship intelligence but lack standardized account planning in this state. Your data is still in silos, and you don’t have a lot of visibility into it. Planning across the organization is disparate, leading to growth bottlenecks.
3. Budding State:
In this state, you already have a mature practice of account planning, and you wanna get more from digital account planning solutions. This may include monitoring competition and building proactive plans to counter threats.
4. Blooming State:
Although you have matured account planning in this state, you lack focused opportunity planning. Prone to improper prioritization, you have no standardized opportunity management practices in place, which makes wins more unpredictable.
Being aware of your experience and maturity level helps in having a phased approach to key account management in your digital transformation journey.
Learn More: Opportunity Planner by DemandFarm boosts tracking capabilities in 65+ opportunities for Dairy MAX
Being aware of your experience, and maturity level helps in having a phased approach to Key Account Management in your digital transformation journey.
Key Account Management Strategy Analysis
Crafting killer key account management plans takes some strategic jujitsu. You need to get inside the minds of your key customers to understand their goals and frustrations. What do they want? How do they desire for you to collaborate? Look beyond the sales numbers to nurture trust and loyalty over the long haul.
And your approach cannot become stale over time. Client priorities evolve, so your playbook has to keep up. That is why regularly reviewing and reinventing your KAM process matters. Identify what is clicking with key accounts and what is falling flat so you can adjust the course.
This is where tapping external key account management consulting experts pays off. They benchmark your program against leading practices, highlighting gaps and opportunities. An objective outside perspective lends clarity.
You also must regularly track progress against both short and long-term performance targets. Monitoring metrics like deals closed or account growth spotlights how well the relationship is working and when to pivot. The ultimate reward? Building key partnerships where both sides mutually gain over the years.
But do not just measure financial figures. Also, gauge the strength of connections through surveys and one-on-one talks. At its heart, KAM succeeds by making accounts feel understood and valued. This lasting trust makes weathering market squalls easier.
Closing notes
In summary, key account management requires mixing the hard facts with the soft stuff – crunching numbers AND taking the relationship’s pulse. Adjust the formula based on what key accounts want to stay satisfied. Happy selling!
Watch Now: Anees Merchant, EVP, Global Growth from Course5i sharing their experience around building processes & strategies for Key Account Management.