What is KAM?
While there are many definitions of Key Accounts in the literature, there is very little on Key Account Management itself, which is a crucial omission. However, it is clear that, while many companies claim to be pursuing KAM, in reality they often are not, and their practices lack critical components which mean that they will not reap the rewards they anticipate. It may be several years down the line before they realise that, and then they may blame KAM rather than their execution of the approach.
In this definition AKAM states what KAM is and what are its essential components, combining research with a broad range of practitioner experience to bring clarity to what KAM means.
What is Key Account Management?
Key account management is a supplier-led process of inter-organisational collaboration that creates value for both supplier and strategically important customers by offering individually tailored propositions designed to secure long-term profitable business through the coordinated deployment of multi-functional capabilities. (Woodburn & Wilson, Handbook of Strategic Account Management, 2013)
A key account is a customer which is individually of strategic importance to the supplier.
A key account manager is responsible for the supplier’s business with at least one key account (and less than 5).
Customers need expert suppliers to solve their complex problems and to help them develop opportunities; such support provides high value and is worth the customer’s investment.
Such challenges call for the delivery of solutions including services, products, consultancy, advice and other kinds of support. Since business environments change, such solutions are required continuously.
Only by building collaboration across the businesses, involving different functions and management levels, can suppliers gain the deep understanding of their key customers required to coordinate their own capabilities to optimise such solutions.
This depth of relationship, tailoring of solutions and long-term approach separates key account management from traditional sales approaches that largely push an organisation’s products and services without focusing on individual customer requirements, payoffs or future status.
Key characteristics of KAM
• The supplier has a strong customer orientation, focusing on best serving strategically important customers that are key to its success.
• The number of a supplier’s key accounts is limited and their identity is clear.
• A key account manager will manage one or two accounts and a maximum of five.
• Key account managers have a broad and deep understanding of a key account’s business, well beyond purchase decision-making.
• Key account managers understand their own business, its strategies, processes and capabilities.
• Activity with each key account is supported by a consistently-involved team from different functions, levels and areas in addition to the key account manager.
• Individually-tailored strategic account plans exist for short to long-term business with each key account.
• The focus is more on increasing profits and margins than sales revenue.
Requirements for success
• The KAM programme has active engagement of cross-functional senior management
• Targets and rewards are not heavily focused on short-term sales results: there is a balance between today and the future; internal and external relationships; and demonstration of skills.
• Multi-skilled, trained people drive success, supported by processes and enabling technologies.
• Processes are specifically adapted for key account management.