Key account management!! How to develop a strategy?

Key account management
How to develop a strategy?

In this series of articles, I have been discussing key account management.  In the first part, I focused on identification of key accounts.  In the second part, I highlighted identification of strategic accounts and how to allocate resources for their management.  Now I will provide a step-by-step process for developing a strategy.

Now that we know who our key accounts are, we have to have a strategy to manage them so that not only will they stay with us, remain as “key,” but also grow in value for us. This is accomplished through a strategic plan, the main steps for which are shown below.

Customer needs assessment: Since I believe in basing your business model on unmet customer needs, the initial approach to a key account management strategy has to start with a comprehensive understanding of customer needs. The simplest way is to interview your customers, rather than rely on published reports or advice from outside agencies. Only your customer can tell you what they need from you.

Skills & Capabilities Development: Once you have an understanding of what your key accounts need, you must do an inventory of your in-house skills and capabilities. That would enable you to identify the gaps that you have. The result is a good list of what you need to develop through training, hiring, partnering, outsourcing, etc. Generally, these skills and capabilities can be divided into three distinct groups:

Products and services portfolio: This is the most basic requirement in order to serve a customer. You must have the right products and services in your portfolio to present the right solution. In many cases you may not have everything in-house, but as long as it is clear to the customer that you can be trusted to deliver it, they don’t care if you outsource it. Having said that, it is very important that if you plan to outsource or subcontract a specific product or service, it is your responsibility to make sure that your customer’s needs are met. There is no room to pass on the buck to another vendor.
Support and service: It is very ironical and frustrating to suppliers that they may receive no praise for excellent products but get into a lot of trouble for poor service and support. On the other hand, customers can be a lot more patient with not-so-good products as long as your service/support is unmatched. In summary, there is simply no room for compromising on support and service. With your key accounts, the best approach is to provide a single point of contact (with a backup) to them for all kinds of support and let this person coordinate internally how to gear up appropriate resources as and when needed. (Related article:  How to improve customer service?)
Customer value creation: While I have shown it at the bottom, it is probably the most important skill that you may need. In order to maintain your business relationship with the key account, you have to meet the requirements of the contract and provide necessary support and service, but what will really differentiate you from your competitors and shield you from future competition is how you create value for your customer. Let me explain. In today’s world, not many companies have offerings that only they, and no one else, can provide. Both direct and indirect competition is everywhere, but by creating value for your customers, you can differentiate yourself, and hopefully, expect long-term business and higher prices. Let me take one example to highlight how you can create value for your customer. When I worked at packaging solutions provider, we provided packaging equipment and materials to our customers. In doing so for thousands of companies worldwide, we accumulated vast amount of knowledge about packaging systems, package design, and inventory management. While we kept our promise to deliver highest quality equipment and material and backed it up with support and services, for our key accounts, we started offering package design to reduce the overall cost of packaging and packaging systems redesign to streamline their operations. We often saved millions of dollars for our customers by sharing our knowledge. In no time, customers valued that part of our offering more than our equipment and material. Indirectly, this goodwill helped us in our core business.  (Related article:  Customer service outsourcing