Key Account Management - Quarterly Research. In this research report, we review 3 case studies of key account management deployments and discuss various elements of success and failure. A presentation by Sales Benchmark Index.
3. Hypothesis Does the benefit of a Key Account Program exceed the effort to implement one?
4. Most Common Objectives of Key Account Programs: Defend key accounts against competitive threats Grow revenues received from key accounts via cross sell Grow revenue received from key accounts via up sell
10. Case Study #1Firmographics Industry: Software Revenue: $337 million Size: 960 employees Region: North America GTM: Multi-Channel Age of Key Account Program: 27 months
11. Results Reduce churn by 50% Result: Key customer churn reduced from 9% to 4.3% in 27 months Grow key account client revenues Result: Average account revenue up 6.1% Increase penetration of software modules in use Result: Average number of modules in use went from 1.4 to 2.3 Increase new module revenues Result: Revenue generated from new module introduction within key accounts increased 13%
21. PurposeProject Impact Specific: Reduce churn, Increase revenue per key account, Improve cross sell ratio, Up-sell new product offerings Measurable: Churn reduced by 4.7%, revenue per account up by 6.1%, cross sell ration up to 2.3 vs. 1.4, and up-sell up 13% Attainable: Deliverables/tools were simple enough that KAM’s adoption was not an issue Realistic: Objectives of modest reduction in churn, revenue per account, number of products in use, and rate of consumption for new products introduced, were all set below industry benchmarks Timely: Project duration is 27 months and counting; victories along the way; demonstrated organization patience
22. GoalsStrategic Intent Improved company revenue performance Key customer receives differentiated attention Account managers obtain success with less heavy lifting
24. Case Study #2Firmographics Industry: Media Revenue: $440 million Size: 7,100 employees Region: Global GTM: Direct Age of Key Account Program: 16 months
25. Results Drive key account win rates north of 90% Result: Win rate declined by 21% Retain key clients Result: Renewal rate dipped below 80% Renew at stable price points Result: Annual Contract Value is down 6% Increase Customer Lifetime Value Result: Portfolio turnover is up to 27%
26. InputsKey Actions Taken Poorly constructed Key Account Recruitment Package Impact: increased client leverage, forced price pressure, led to client shopping the offering Account Planning Process all internal Impact: increased bureaucracy and admin ‘cost’ to reps Account decision makers decentralized Impact: required rep-to-rep cooperation, which did not happen Tried to automate in SFA first Impact: Without running in ‘manual’ mode first the process was not tested and automation investment was wasted Tried to go from launch to full roll out in 6 months Impact: organizational burnout and turnover of key staff
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31. PurposeProject Impact Specific: Win rates went down but no win/loss reviews are occurring to understand root cause Measurable: Program was measurable Attainable: Deliverables/tools were poorly designed, internally focused, difficult to use, and misplaced in their application. Result was poor account and rep adoption Realistic: Objectives were not clear (examples: “own the account”, “get 100% wallet share”, “increase prices”) Timely: Results were expected in an unrealistic 6 months
32. GoalsStrategic Intent Result Drive key account win rates north of 90% Retain key clients Renew at stable price points Increase CLV
34. Key Account Program MetricsLeading Indicators Metric name World-Class Wallet Share 76.5% Program Recruitment Success 87.0% Portfolio Value Improvement rate (quarterly) 13.3% Account Attractiveness Score Improvement Rate 17.9% Qualified New Candidate Member Rate 14.6%
35. Key Account Program MetricsLagging Indicators Metric name World-Class Accounts per Account Manager 3.4 Account Breakeven Rate 31.1% Account Lifetime Value Ratio 2.6 Program Churn Rate 3.9% Program Revenue Contribution 81.1%
36. Top 10 Evidence-Based Best Practices A Key Account Program should have all of these objectives: Defense Cross-sell Up-sell Program benefit for client must exceed program benefit for seller Low breadth/high depth is the best approach 5 phased adoption takes an average of 13 months start to finish Best selection approach is: Account Attractiveness Score Customer opt-in
37. Top 10 Evidence-Based Best Practices Build four-pronged risk mitigation approach into Account Plan Execution Operational Talent Deploy streamlined, value-driven Account Plans Institutionalize the relationship through many-to-many contacts Triangulate the review process to ensure continuous improvement Client review Account Manager audit Peer review Ensure the Program contains a process to exit accounts
38. Hypothesis Does the benefit of a Key Account Program exceed the effort to implement one? Answer: Yes -- if revenue concentration exceeds 80/20 rule (80% of revenue coming from 20% of accounts) No -- if revenue is spread evenly across many accounts
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Editor's Notes
Contact us if you would like to understand how you can leverage benchmarking best practices in Key Account Management.Email - info@salesbenchmarkindex.comPhone - 1-888-556-7338Web: http://www.salesbenchmarkindex.com