Key accounts management strategy is what most companies that are struggling to get and retain profitable customers need in order to turn the business into a profit making venture. In this fierce competitive business environment of today, strategic stance is the key to any successful venture. Customer relation management (CRM) is not an exception. You either strategically manage your customers or watch them evaporate into the database of your competitor. Most bankers are having sleepless night over getting and keeping profitable accounts just because sound key accounts management strategy is missing in their approach to seeking customers. Bankers are not alone in this dilemma, all businesses are in fact affected by this, but many businesses are ignorant of the fact that accounts management is as important to their success as the overall management functions of the business entity and the business model of the organization.
Key account management as a concept might be new to some newly recruited marketers. Hence, it is right at this point to define and explain what key account management is before delving into strategic management of the concept.
WHAT IS KEY ACCOUNTS MANAGEMENT?
Key accounts management are those directed efforts made by managers to attract and retain the most profitable customers in the market. Managing accounts of customers has become a strategic key success factor in all forms or kinds of business. Gone are the days when only banks have designations called accounts managers. It is through accounts management that the profitability or otherwise of existing customers are established.
Through analysis or appraisal of revenues brought in by a customer and the costs attracted by that customer, a company can determine whether to continue keeping a customer or to just let go of the customer- yes, let go of the customer. You have no business keeping unprofitable customers as they will drain the company to death. Before dropping a loss making customer, attempt must be made to turn the loss making customer into profitable customer. Make sure that other non financial factors are considered before dropping an unprofitable customer as some customers (profitable or not) are kept to attract others.
HOW TO IDENTIFY KEY ACCOUNT
Identifying key accounts is the first step that is done in the bid to properly manage an account. Certain indicators are considered in relation to what is obtainable outside. The baseline should be the impact that an account has on the bottom-line of a company. Simple ratio in the form of cost-benefit analysis is all that is need for this exercise. It is not a rocket science; any account that consumes resources that is out of proportion in relation to profits added to the company’s coffers should be investigated. The mistake that most companies do is to allow their marketers concentrate on the big accounts at the detriment of small but profitable accounts. Being big is not synonymous with being profitable. What most wise businesses do is to fall back on strategic management accounting process to gather intelligence that would then be used to filter out non-key accounts. Too much freedom should not be given to frontline staff (marketers) to the extent that they would give terms that would at the long run be detrimental to the overall objectives of the company just to keep an unprofitable but large customer while carrying out their marketing ritual. It is a no brainer that requires simple planning to get result.
You may want to group the accounts according to their ages and the salaries paid to their respective managers and backstage staff that are linked to servicing the customer. If the cumulative profits that have been made from the customer over its life time is not commensurate to the costs it incurs, a reappraisal (which includes having a second look at the human resource management system) of the company should be inevitable.
HOW TO MANAGE KEY ACCOUNTS
After identifying those main customers that makes the foundation of the business, the next thing that be done is to make sure that the maximum loyalty is earned from those customers. Again, it all revolves around good customer service.
SEVEN (7) GOLDEN RULES OF KEEPING A HAPPY AND SATISFIED CUSTOMER
- NEVER LIE TO THEM
- DO NOT IN ANY WAY OVER CHARGE THEM
- BE PROFESSIONAL IN DEALING WITH THEM
- CONSTANTLY GET FEEDBACK FROM THEM FOR QUALITY CONTROL
- ESTABLISH A STRATEGIC ALLIANCE WITH THEM WHEN POSSIBLE
- CONSTANTLY EDUCATE THEM ON YOUR PRODUCTS AND/SERVICES
- PROVIDE A PERSONALISED SERVICE
As important as the above points are, an eye should always be kept on cost of providing these services so as not to create the problem that we are trying to avoid.
A CALL FOR ACTION
The Pareto theory or principles (commonly referred to as 80-20 rule in business jargon) holds 80% of an entity’s success comes from 20% of the activities going on in that entity. This principle of 80-20 also holds in accounts. Only 20% of the total customers of a company actually contribute to the growth of that company. This is why key accounts management strategy is an area that companies need to give due attention in order to achieve sustainable growth.
In as much as I have no grudges against business schools and MBA programs, I still could not understand why most so-called high notch MBA courses have not yet incorporated this vital topic into their curricular. Well, I hope one of those at the helm of affairs as MBA directors reads this and reactive positively. The few Business schools that manages to teach customer profitability analysis within an accounting course does that without attaching much seriousness to it.