What Makes an Account Key

Not simply the largest

Key account management is a significant investment — senior time, dedicated resource, executive attention. It only pays back on accounts where the return justifies it, and revenue alone is a poor selection criterion. A large, low-margin, demanding account that will never grow consumes more than it returns.

Selection criteria

• Current and potential revenue — particularly the gap between what they spend with you and what they spend in your category overall. An account where you hold five per cent of a large spend has far more potential than one where you already hold ninety per cent of a small one.
• Profitability, not turnover. Cost to serve varies enormously and is rarely measured.
• Strategic value — market reference, entry into a sector, learning that transfers, or a relationship that opens others.
• Fit — do they value what you are genuinely good at, or are they buying on price and will leave for a cheaper option?
• Mutual willingness. A partnership requires two parties. An account that treats you as an interchangeable supplier will not become a partner because you decided it should.
• Risk — over-concentration in a single account is a business risk as well as an opportunity.

Tiering

Segment the customer base deliberately: a small number of strategic accounts with full account management; a larger group of key accounts with structured but lighter coverage; and the remainder served efficiently through standard channels. Trying to treat everyone as strategic dilutes the effort until it is worthless everywhere.

Review the tiering annually. Accounts move in both directions, and demoting an account that no longer justifies the investment is as important as promoting one that does — and considerably harder to do.

The role of the key account manager

The role is closer to running a small business than to selling. It involves:

• Understanding the customer's business well enough to be useful to it.
• Coordinating everyone in your organisation who touches the account.
• Managing the commercial relationship, including profitability.
• Building relationships broadly and at senior level.
• Identifying and developing growth opportunities.
• Managing risk, escalations and difficult conversations.
• Representing the customer internally — which is frequently the hardest and most valuable part.