Article Contents
The ability to influence a key account is different from having the ability to lead the solution development process. Effective account management leadership involves the strengthening of the relationship in the pursued of shared values, vision, and ideals.
This ability to influence has the ‘power’ to create added value for any system stakeholder. However, it often faces challenges inherent in the business model. An imbalance in power can weaken the relationship.
How leadership is evaluated, and its ability to drive value, is often determined by its ability to drive shared benefit. Placing too much emphasis on demand when developing a business model can overlook issues that impact key value drivers, impacting:
- Alignment
- Cost, &
- Quality
Resource starved businesses face increasing risks. They pursue goals with diminishing returns. This occurs in their efforts to attract more customers and retain them.
When this happens, business model and supply chain alignment are affected. Cost vectors and quality drivers strain the business resources. The strain also impacts strategies and efforts. The result is often that teams work harder instead of smarter. Product and process outputs are increasingly delivered out of scope.
Evaluating Account Performance
Unfortunately, the scenario just described is all too common. Efforts to delay a crisis often include:
- Emphasizing some metrics while de-emphasizing others
- Ignoring slippage in core drivers and performance areas
- Maintaining the appearance of output alignment which interferes with the business’ ability to deliver decisive corrective responses
The following according provides quotes from actual companies regarding how they manage performance within the following (KPI) areas.
Touch Analysis
Managing an enterprise account is like managing a large, long-running project. There are deadlines, tasks, owners, milestones, and most importantly, a lot of communications between the teams.
The most important questions to ask right now about your accounts is “where is it at?” and “who has the ball?”; if the answers are unclear, there is some work to do.
(Will Cheung | Sep 26, 2016)
Risk Analysis
While managing customers, various events can cause risk. These include dislike of service and product, spikes in support tickets and emails, and customers not responding. Sponsors leaving and other issues also contribute to risk.
Many Customer Success tools help to measure quantitative metrics. These metrics include support tickets and renewal dates. However, we measure engagement and the quality of the engagement throughout the organization.
A risk in our system is essentially any of the metrics above mentioned in the text of an email. The risks tell us what needs immediate attention. They also provide a benchmark analysis showing how particular accounts compare to others.
(Will Cheung | Sep 26, 2016)
Key Activities
A key activity is a milestone or customer interaction tagged as important. Typically, it is something more granular than the CRM “Stage”. One of our customers uses it as a metric. They track the number of “key activities” to determine account health. It also helps assess the risk of slipping deals.
Internally at ContextSmith, we use key activities to separate signals from the day-to-day noise, such as customer status and updates. For example, how many “key activities” does it take to close an account, complete onboarding, or renew? A screenshot below shows how key activities are tracked.
(Will Cheung | Sep 26, 2016)
Opportunity
The Board needs to set corporate objectives in the light of the opportunity available to it. Key customers represent a major opportunity that should be reported to the Board and monitored.
The size and nature of the opportunity should be detailed in the strategic account plans (McDonald and Woodburn, 2007)..
Customer Asset Value
Customer lifetime value is the net present value of individual customers. It represents the net present value of the key customer portfolio. This value is calculated over the lifetime of the relationship. Lifetimes are difficult to assess. As a result, a fixed term can be adopted. It could be three or five years. Alternatively, the term could be longer, depending on the business.
The Board should assess the worth of these customers as assets. It should also monitor the growth of their value (McDonald and Woodburn, 2007).
Return on Investment
This measurement can be extracted from the strategic account plans for individual customers. This is possible if they forecast several years ahead. They must also include the costs of the resource required to achieve the forecast. The Board can then make decisions on where to invest, like any other investment decision (McDonald and Woodburn, 2007).
KAM often emphasizes several core drivers. These are considered when evaluating how to influence constructively (Woodburn & McDonald 2011, p86 ). The importance of these areas is not limited to external key account management but also incorporates internal business processes and efforts to support business model integration and alignment:
The following template can be used to evaluate core performance drivers (alignment, cost, quality) fit with the following business vectors. Business strategy and goal alignment between the customer and seller is essential for an effective, and successful, relationship to exist.
Most deliverables and improvements require involvement from both the buyer and the seller. If the buyer is unable to participate the deliverable needs to be evaluated for fit before the seller commits.
| Rating (1 worst – 5 ideal) | Alignment | Cost | Quality |
| Policies & Procedures | |||
| Culture | |||
| Regulations & Laws | |||
| Structure | |||
| Relationships, Roles, & Job Descriptions | |||
| Coaching, Training, & Communication | |||
| Teams | |||
| Values, Mission, & Vision |
The Customer Relationship Development Model
The following model is often used to evaluate the stage of the relationship between the buyer and the seller. The higher stages include more opportunities for the relationship to be strengthened. Key accounts are identified when the buyer and seller relationship contains characteristics and opportunities available at stages 4 and 5.
Seller’s need to be clear on how the buyer evaluates the current relationship and their goals for the future. Establishing goals not supported by the buyer can prove not only ineffective but costly.
Understanding the Customer’s Business Model
Although not all accounts will provide the opportunities available to the higher stages they can still create value. Understanding the customer’s business model is crucial towards identifying the necessary tools, strategies, processes, and solutions needed.
Business model misalignment, and the deterioration in outputs, can no longer be ignored. It costs the country millions (and more in the public sector) in lost productivity and cost overruns. The following questions are often used in change management efforts and can be useful tools
for increasing engagement, business model alignment, and process performance evaluation:
- What is our vision for the future?
- What is the gap between now and the future?
- What do we need to do to close this gap?
For some businesses the following questions may also be useful:
- Why do we do ‘this’ this specific way?
- Is ‘this’ approach still valid? Or have requirements changed? What is your company’s commitment to supporting project success?
The last question should be used cautiously. It can surface vulnerabilities in the buyer’s business model and organizational structure. This can potentially alienate the seller. But it can also provide significant insight into the buyer’s company’s inner workings and capabilities. It reveals their commitment to the growth of the buyer-to-seller relationship. Red flags should be evaluated carefully.
The biggest enemy of performance and requirements deviation is transparency. Information is no longer the tool of just the corporate suite and needs to be debated openly. For example: An international retailer was targeted as a potential key account. They published an RFP for a senior project manager. The project manager would need to complete 140 sites in 13 months. An existing vendor would usually deliver 3+ projects at a time. If the vendor understood the new contracting model, they would need to finish everything simultaneously with a contractor. The key account management approach and status would need to be evaluated.
Account Management Interactive Planning Tool
The following documentation is available. The planning tool can be used to draft out the team’s initial strategies. These strategies are aimed at improving management of key accounts.
Check out the interactive article, Knowledge Management in Sharepoint!
Travis Barker, MPA GCPM
Innovate Vancouver
Innovate Vancouver is a Technology and Business Innovation Consulting Service located in Vancouver, BC. Contact Innovate Vancouver to help with your new project. Innovate Vancouver also gives back to the community through business consulting services. Contact us for more details.
Resource:
Meeken, Z. (2017, October 10). 5 Traits of a Good Account Manager.
Wilson, K., Ph.D. (n.d.). Managing Customer Relationships. Retrieved February 17, 2018, from https://www.questteam.com/resources/article.html?id=wilson_article_1
Woodburn, D., & McDonald, M. (2011). Key account management: the definitive guide. Chichester: Wiley.