Key Account Management (KAM) is a comprehensive approach that underpins successful business strategies. This page introduce three critical aspects of KAM: what it is, why it matters, and the importance of implementing it effectively. By understanding these elements, businesses can optimise their customer relationships and drive sustainable growth.
Key account management does not mean selling to big customers. It is not just a higher form of sales or a synonym for sales to the C-Suite. While KAM may engage with the customer’s C-Suite, the process involves much more than the relatively straightforward sales element.
If you are an experienced key account manager, you likely already know this. However, if you are new to account management, a senior manager without experience in this area, or a manager from a supporting department, this may be news to you – and important news at that.
Sales typically begins with a focus on what the supplier wants to achieve. Establishing a sales target is a common first step, often driven by internal goals. The CEO or CFO may set the overall sales target, which is then allocated by the Sales VP. Salespeople are given targets, usually expressed in revenue terms. They may also have margin targets, though their ability to influence margin is often limited, requiring managerial approval for price changes.
In contrast, KAM starts by evaluating the measurable opportunity to grow the business with a key account. This avoids setting unrealistic growth targets, such as aiming to double business where no further opportunities exist or allocating minimal growth targets where significant potential lies. Realistic targets ensure the right level of resources is allocated to each account.
Sales is a linear process aimed at achieving a specific sale. In some organisations, the process begins only in response to a request, such as an RFP or tender. Steps may include:
Customer needs analysis
Confirmation of needs
Sales presentation
Handling objections
Closing the deal
The focus is short-term, concluding when the deal is won or lost. If successful, the customer may be handed over to another team to implement the agreement.
Account management is more iterative and long-term. It involves continuous learning about the customer’s business, developing relationships, and identifying opportunities to add value. The process doesn’t start or end but evolves over time.
KAM is proactive. Unlike Sales, which often reacts to customer requests, account managers identify and present opportunities to the customer, leveraging a deep understanding of their business. This proactive approach positions the supplier as the single preferred partner.
Sales and KAM serve different purposes:
Sales focuses on short-term sales targets, often trading volume for margin and responding to customer requests.
KAM aims to develop long-term relationships, adding value to the customer’s business to win and maintain desired business at high margins.
KAM is resource-intensive and suitable only for high-return customers. Sales remains appropriate for the majority of customers, addressing short-term operational needs.
While reality often blends elements of sales and KAM, treating KAM as an extension of sales can lead to disappointment. The two approaches require distinct strategies and mindsets to succeed.