What are Key Accounts?
Key Accounts are customers who are making repeated purchases from your company and are contributing sustantially to your revenue. In managing Key Accounts, the objective of customer retention is far more important than milking more sales from these accounts.
What is Account Management?
Account Management is the process of building long term fruitful relationships with customers with the objective of retaining customers, achieving customer loyalty and growing sales from existing customers. It involves understanding the customer’s business objectives and finding ways to help the customer succeed, delighting the customer in service delivery and eventually building trust in the customer.
Although the long term goals of Account Management includes growing sales from existing customers, Account Management activities may not necessarily lead to immediate sales revenue contribution. For example, a customer may approach your company to sponsor them with some prize items for the Dinner and Dance event. Sponsoring the prizes may not lead to an immediate closure of sales, however, it will build long term goodwill.
Why is Account Management important?
Account Management is very important because it contributes to a company’s long term sustainability. It is especially important when the majority of a company’s revenue is derived from a few Key Accounts. Losing any one of such Key Account can mean substantial loss in revenue.
How is Account Management different from Sales?
Many companies have different definition and concept about Account Management. Some companies equate it to Sales. That, in fact, is a very big management mistake. When you have an Account Management function in your company, the purpose is to defend your market, i.e., to retain your Key Account customers so that your revenue do not get eroded. If your Account Managers are doing hard selling to existing customers, they will not be interested in helping customers in activities that do not contribute to their revenue target and commission. By trying to sell more stuff to existing customers instead of helping customers and building trust, your company face the risk of upsetting existing customers and eventually losing them. The objective of Account Management is to serve the customer well so that they are delighted with your products and services and make repeated purchases. The sales growth, therefore is a result of customer satisfaction and loyalty through good Account Management. The sales growth is not a result of hard selling.
The Most Common Mistake made in Account Management
Many companies would assign their Account Managers to manage specific industry sectors. For example, an Account Manager may be assigned a Finance sector. Any companies from the Finance sector will be handled by that Account Manager. This is not Account Management. This is Customer Service. If an Account Manager is busy handling enquiries from new customers of their sector, they will not be spending time visiting the Key Accounts. There is therefore no Account Management. Such companies face the risk of neglecting and eventually losing their Key Accounts.
Read more about common mistakes made in Account Management.