Any business organization that interacts directly with customers and services their needs, mandatorily has to carry out this interaction on a regular basis. Take the example of an advertising agency, and the concept of key account management becomes clearer. The agency will function to fulfill the needs of all their clients, and there will be a team that dedicates their time to regularly meeting their clients and ensuring that all their expectations are met.
Now, there will be some high worth clients who will have a history of bringing in more business than the others. This will either be a direct result of a very high marketing budget allocated by them, or it will be because the client has been a customer with the agency for a very long time. This client will get preferential treatment in most cases, and the agency will ensure that they work twice as hard to service their requirements. As a result, this client will be known as a key account, and the process of meeting its expectations will be Key Account Management (KAM).
What Do Account Managers Do
The tasks that account managers are expected to perform are not clearly defined, but it should suffice to say that they are expected to ensure that the clients who bring in greater business, are happy. Each organization will ask its account management team to perform different functions, but the primary goal will be the same: to please the client.
This will include administrative functions when there is a meeting with the client, it will include understanding the client's needs, and communicating them to the rest of the organization. It will include measures to ensure that the client stays loyal and finds value in the organization, and it will also include any other task that ensures that the client is never disgruntled or dissatisfied with the organization.
When it comes to key accounts, these functions become all the more important and intense. Losing a key account could affect an organization's finances adversely, so it is essential that these key accounts are kept satisfied with the help of a structured account management plan. Most organizations will not say it directly, but it is understood that key account managers will go to any lengths to achieve this purpose.
However, key accounts are not just restricted to advertising agencies and similar businesses. Every single business organization has a customer, or a set of customers, who are more valuable to the organization than others, and as a result of this, they will work extra hard to satisfy these customers. Any task that the organization undertakes for this purpose will be included in the process.
The Purpose of KAM
Account management is usually considered to be a part of the marketing department in business organizations, but it is a fact that account management is so much more than just selling something. It involves building a strategic partnership with a customer who can bring immense profits to the business, so its importance can never be argued against.
Business analysts say that around 20% of any organization's customers bring 80% of their revenue, so it is very important to ensure that this 20% is happy and satisfied. This will ensure that they always come back to the organization for further business. Some other studies also show that retaining around 10% of one's customers will boost profits by anything between 20 - 30%, so the primary focus is to increase the profitability of the business.
Customer retention is something that every organization strives for, since this is what keeps a company ahead of its competitors. Key account management works towards improving customer retention and increasing their loyalty, and this is done by building many barriers to keep rivals out.
This can either be done by making sure that the lowest prices and the highest quality is offered to the customer, and it can also be achieved by taking care of any other needs and meeting any other demands that the customer may have at any point in time. An account manager, by default, needs to be someone who exudes charm and hospitality and possesses other management skills, and shows a willing desire to take care of the customer, no matter what.
There are several other strategic tools that key account managers make use of in order to ensure that their customers never feel let down. At the end of the day, the organization that understands key account management the clearest and serves its high worth customers the best, will retain them and reap higher profits in the future. This is the underlying truth about it, and this is what ultimately makes the difference between a successful organization and a mediocre one.