Not All Customers Are Created Equal: Strengthen Key Account Management

With Sales Forecast Software

Key account management focuses your business on customers who represent significant volume. Use sales forecast software, and input from your sales team or global or national sales group, to build your sales action plan.

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Sales Forecast Software Can Help Build Strategy

Do you practice key account management strategies in your business? Do you know what key account strategies are; and why, when, who and how you should you manage them?

Managing your sales team or national sales group to focus your business on those accounts that represent a large percentage of your overall sales volume will help you to grow key accounts.

Effective account management can help your business succeed.

If your business has customers who individually represent a significant sales volume, then you have key accounts.

For example, if your business sells to a customer who buys 10% of your volume that account is likely key to your business. If that customer only buys 1% or less of your volume they are still important to your business but that customer is not a key account.

What is Key Account Management?

Key account management focuses on the overall value the customer or account brings: it is important to note that it is not only sales volume and profit that is important, but the long-term volume and relationship growth potential, the geographical closeness (if your customer is your next door neighbor it is easier to build a strong relationship), the simplicity, or complexity, of providing a service, and more.

Not all customers are equal ... in the volume that they buy from you and/or the profitability that they bring. Key accounts have a good deal of power in any relationship with their suppliers. It is up to you to manage that power, and build a relationship that is more of a partnership.

When you build your strategic plan checklist and your sales plan, you will need to include key account strategies.

Use sales forecast software, and input from your key account managers and sales representatives (and global or national sales group, if applicable), to build an effective sales strategy and an effective account management program.

Also consider modeling a sample sales plan through your sales forecast software - it will help you see the strengths and weaknesses of your sales and customer mix.

Build a sales plan and/or sales forecast that includes a worst case scenario: the loss of one or more of your key accounts. How will your business survive? Developing a scenario plan and a scenario analysis will help you address that outcome.

It is difficult to replace a key account on short notice (I know this from personal experience). But it is not impossible. However, it is better to focus your sales strategies and sales plan on building strong key account programs and on building strong exit barriers (customers will stay with you for a long time if you build the right program).

Let me state the obvious: it is better to keep your key accounts and grow them, then it is to lose them.

Key Account Management Value To Build Into Your Program:

1. Volume discounts or rebates, or other price incentives (this is kind of the standard – everyone does it; everyone expects it).
2. Build a priority ordering program for your key account(s), such as restricted access to your online order system.
3. Build an exclusive order status reporting program for your key account(s).
4. Develop specific inventory programs; created and managed for key accounts.
5. Customize your product or service for the key account (branding, labeling, or actual features of the product or service changed/customized for the key account).
6. Set up a single point of contact for the key account: the key account manager (you dedicate internal staff for the key account; e.g. the customer service representative; or shipper, or scheduler; or inventory manager; or whatever is required and have that staff report to the key account manager).
7. Matching your sales relationship with key account (if key account sells by the piece, carton, etc. your system should allow the same units of sale (multiplied if necessary).
8. Provide access to senior management and/or the business owner.
9. Set up cross-business teams and initiatives, such as quality improvement teams, product development teams, branding efforts, etc.
10. Provide integrated delivery, fulfillment, re-order points, inventory, and invoicing.

The value, other than the tangible price value, for your customer will be in receiving and benefiting from a very customized, service-oriented offering.

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Focus Your Sales Team or National Sales Group on Key Accounts

The business to business selling environment is different from the business to consumer selling environment. It requires even more flexibility and agility; that requirement is magnified in a key account program. Meeting your key customers' needs is a driving force for your business. Remember to build exit barriers so that your key accounts find it hard to leave.

Effective account management programs often are developed to improve efficiency; for example, improved sales efficiency (which might even encourage sales outsourcing for account managers), focused processes, improved communication, optimized order scheduling and inventory management, and a detailed sales plan (that might even include a global account management program or a national sales group focus - there are efficiencies to be gained in this type of relationship).

The challenge for business owners is not to 'give back' those efficiencies in price reductions. Is the goal of key account management only to keep the account or is it to earn a reasonable profit from the account?

Many businesses are afraid of the key account relationship; they fear the 'big stick' that the key account wields. But if you build a strong key account management program that benefits both your customer and your business, there will be nothing to fear – your key account will not want to leave (and take his/her business) because s/he will lose too much perceived, and real, value.

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