Anyone in business will tell you that it is easier and cheaper to sell more products and services to an existing customer than it is to go out and find a new customer.
Key Account Management or “KAM” is all about focusing on your key existing customers – your very best customers. In theory, this is the perfect way to increase your profits and develop better relationships with your most valuable customers. If we apply the 80:20 rule then, in an average business, 80% of profits tend to be generated by the top 20% of the customers.
So, these key accounts are the most valued customers of a business. A KAM strategy is a marketing and business development approach which focuses on taking special care of these customers. Each key account should have a business plan, dedicated resources (such as an account manager or single point of contact in your firm) and should be identified throughout your business as being a strategically important relationship.
The most important thing here is to select the right customers for investment. Many businesses tend to underestimate the importance of this step and often show a casual attitude when it comes to selecting the right customers to develop. Some companies simply select all their big customers. There is nothing wrong with that strategy; however, they often fail to consider the potential to grow those particular relationships. After all, just because a customer is big doesn’t necessarily mean it is particularly profitable.
In creating a KAM strategy you should also consider resources. There is no point in creating a strategy to develop 60 key customers if you only have the resources to actively manage 10 key customers. These key customer accounts will need to be managed in an active way and this will require time and effort. Ideally, you will want to create a specific business plan for each key customer relationship and you will need to dedicate some financial and people resources in order to execute these business plans.
Key account management, if executed well, can be a very effective marketing strategy in that it focuses your firm’s business development and marketing resources on the targets where you are likely to make the biggest impact.
For more help and advice to establish your key customers call Mark Wrigley on 01733 372683 or email him at: mark@greenstones.co.uk