With a globalised and increasingly competitive business world, sales teams have progressively understood the value of major accounts. What may have once been a significant local account can now be a substantial global account. A few major accounts can easily contribute to 60-80% of the company turnover. These accounts are hard to retain and even harder to replace. The retention and growth of major customers often makes the difference in the success of the business.
The implementation of a Key Account Management (KAM) program will probably not be easy if the full potential is to be realised. Here are some of the common challenges and disadvantages of key account management.
- Failure to get senior management buy-in
- Too many key accounts
- Lack of focus and communication
- Your chosen key customers don’t want it
- Lack of organizational alignment for key accounts
- Difficulty developing empathy with the customer
- Time management issues
- Inconsistent corporate culture
Lack of senior management support
KAM is implemented as a sales initiative and often does not have senior management’s understanding and support. Expectations for a quick return on investment are unrealistic. Some businesses have just a few very large customer accounts, whereas others have too few account managers and too many key accounts.
Too many accounts
Key Accounts are often selected on one criterion – the $ value of the account. This will usually be revenue or occasionally profit. For many companies, a typical approach will be to set a revenue limit (say $1m) and label all customers who generate more than $1m p.a. as key customers. The Key Account Manager is then typically allocated 20, 30, or even more ‘key customers to look after. This is nonsense.
If key customers are key, then getting into double figures is probably too many for one Key Account Manager. It is impossible to gain the extent of knowledge, develop the necessary relationships and integrate the supplier’s resources to deliver business results with more than a dozen key accounts.
The selection of key accounts should be rigorous. As well as revenue, other factors should be considered. How the client buys, growth potential, market position, global coverage, market influence, criticality for production plant loading, and customer dependency on supply may all be relevant. The selection of key accounts should be done on a strategic basis.
The consequence of too many accounts is the ineffective Key Account Manager. The clients see nothing different from the supplier than when they were looked after by a local account manager. In some cases, it is less. Sure they may get someone with more authority in the hour of need, but from a long-term business growth perspective, not much happens!
Lack of Focus and Communication
One of the biggest key account management challenges is lack of focus and communication.
With so many accounts to manage, it’s easy to lose sight of who’s responsible for each one and where they are in the process. To address this, some organizations use automated tools or platforms to keep track of activities on an ongoing basis and ensure that tasks aren’t getting lost in the shuffle.
Effective communication within different parts of your organization is essential for success in key accounts management.
The chosen key customers don’t want it
From the customer’s perspective, the seller is not a key supplier in many cases, so why should they commit the time, resources, and levels of access the seller is asking for? Suppliers have limited capacity to truly manage key accounts, so do buyers have limited capacity to manage key suppliers and allow them to integrate with their business.
This is one of the biggest challenges of KAM that will be encountered. It stems from a poor selection of key accounts. Announce to these customers that they are key customers, and the glazed ‘so what’ or ‘that’s nice’ look will be common.
Lack of organizational alignment
The organization is not sufficiently well aligned to deliver the full value of solutions to the client and manage the raised expectations. This can be more evident in organizations with a funnel or silo functional structure. If the whole company cannot see past departmental objectives and embrace the concept of helping clients succeed, then it is perhaps best not to start with KAM.
Some degree of resentment and lack of ownership from regional salespeople can also become apparent. The situation arises when a national client is moved into the key account portfolio. The regional salespeople consider they have lost their local account to a national Key Account Manager and no longer support the customer’s local branch. In these situations, account management responsibility and incentives need to be carefully managed.
Companies with autonomous lines of business and separate sales teams can encounter difficulty when a client is selected as a key account by one line of business but not the other. From the buyer’s perspective, very mixed and confusing messages can be received from the seller’s representatives. These will be to the detriment of the efforts of the Key Account Manager.
Difficulty developing empathy with the customer
Building empathy with customers can be daunting, especially when you provide a generic service or sell a product across multiple industries. This is a common challenge in key account management, and finding ways to inject emotion into the conversation while remaining professional is important. One way to do this is through creative storytelling that allows you to share your company’s values and how they affect customer experiences. Additionally, key account managers should strive to listen as much as possible and ask questions about the customer’s needs to gain better insight into what makes them unique.
Customer-facing support people struggle
Other people in the organization can be placed well and truly out of their depth when asked to join meetings with the customer. Any customer-facing person should be given adequate awareness training on the sales methodology and develop the skills to be credible and add value in client meetings. You may even need to start with the Chief Executive!
Time management issues with juggling multiple tasks
One of the most common challenges key account managers face is the difficulty of juggling multiple tasks and accounts simultaneously. With so many tasks involved with key account management, it’s important to stay organized and prioritize duties to make the best use of time. Setting deadlines for each task, delegating tasks whenever possible, and breaking down tasks into small manageable chunks can help ensure that each task is completed on time and that customer needs are addressed quickly and effectively.
Inconsistent corporate culture and practices across teams and regions
Key account managers often face a barrier when attempting to build strong relationships due to an inconsistent corporate culture, processes and practices across teams and regions. This challenge can be difficult to overcome, given the size of some key accounts.
To combat this issue, key account managers need to focus on building trust with their customers by demonstrating empathy and understanding customer needs on a deep level, as well as being flexible enough to adapt to different approaches and cultural expectations.
Today data drives business and data-driven insights are crucial for customer discovery and adaptation to change. It is data-driven insights that serve as a crucial tool for key account managers in understanding their customers and predicting future needs or trends.
With the vast amount of data available from social media, market research, and analytics tools, key account managers can gain an in-depth view of their customers and make calculated decisions that lead to successful outcomes.
Additionally, key account managers must be agile when adapting to change. As customer preferences evolve and markets shift rapidly, being able to act quickly is essential. Therefore, staying up to date with market trends can give key account managers the edge they need to keep customers satisfied.
KAM can be challenging and can significantly impact how you do business with your clients. It must be more than a sales initiative. By making it a company wide long-term business strategy, being realistic with selecting key accounts, and using the right people in the role the rewards can be worth it.