What Constitutes a Successful KAM Programme?

In Beth Rogers’ third blog in the series on the evolution of Key Account Management, she points out the factors that need to be in place to deliver successful outcomes.

Success Factors in Key Account Management

“Key Account Management initiatives may fail when they are conceived as isolated and discrete events rather than a combination of interrelated resources and capabilities”

Gueselaga et al, 2018, p170 (1)

Key account management (KAM) has been a major strategic undertaking for companies. In order to appreciate just how much change it can mean across the whole company, not just sales and marketing, two leading academics (Peters & Waterman) mapped the features of successful key account management on to the popular McKinsey 7S model (2).

Figure 1: the McKinsey 7S Model of Change.

Supplemented with other research sources, this section discusses all that constitutes a mature and successful key account management programme.

Strategy

A successful KAM programme starts with strategy. A particular consideration for company strategists is how they will use KAM to differentiate the business development approach. It must be something that customers can admire and competitors can envy. In this sense, although business consultants can generalise about “best practice” KAM, benchmarks can only help a company to keep up with the pack, and their aim should be to go further. The 7S model offers a framework from which a strategist might find an angle of superior performance for their organisation, e.g. skills or systems.

The strategic essentials in a KAM programme start with appropriate key account selection, which should be an iterative process. It is prudent to start with a few and scale up. A company cannot really have more key accounts than its management has time to sponsor. Selection is done in the context of balancing the customer portfolio, as described above. Resources must also be allocated to find the key accounts of tomorrow and opportunity spotting in smaller and “mid-tier” customers.

Another balance to be struck is between long-term and short-term objectives. Many management thinkers, including the widely quoted Peter Drucker, have talked about delivering value and service first and then thinking about profit. Long-term benefits certainly have to be dominant in key account management. It is where design thinking, innovation and value co-creation with the customer is supposed to happen, so the projects undertaken with key accounts are expected to have a multi-year outlook. In some sectors, value co-creation may be confined to relational advantages. In others, the business case for KAM involves co-measurement with the customer of “value capture” – the return on investment over time for both parties.

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Design thinking in key account projects

  • Empathise – with the end-users of the solution (perhaps the customer’s customers)
  • Define – the users’ (and other stakeholders’) needs and problems in depth (the whole supply network may need to adapt)
  • Generate ideas – challenge assumptions and reach for innovation
  • Prototype possible solutions
  • Test and evaluate possible solutions

Adapted from the design thinking principles of the Hasso-Plattner Institute of Design at Stanford University.

Style

KAM rarely works unless there is widespread buy-in for a long-term customer orientation, which should underpin a consistent approach to key accounts across the supplying company.  All companies extol the importance of customers in their annual reports, but what really happens when a customer reports an under-delivery? Is the call-handler empowered to replenish now and diagnose later? Do all members of a key account team listen to customers and jump at the chance to investigate non-standard problems?  A consultative and participative style, understanding risk and failure as opportunities of learning are characteristics of successful KAM programmes. However, we should also note the relevance of the customer’s style. Can a customer be “key” unless they also have a long-term partnership orientation and/or share an entrepreneurial style with a preferred supplier?

Structure

High-functioning teams are important in all aspects of successful organisations, and key account management is no exception. Some companies have formal key account divisions, others have matrices of customer-led, product-led and country-led functions and others have less formal teams with membership varying according to the projects in progress. Typically, key account teams are cross-functional, including operations and finance. They can also involve contacts from the customer and channel partners. They are led by the key account manager, and should have a Board member or senior manager as a sponsor.

Skills

The skills level of a key account manager is set very high. They are expected to be a brand ambassador, a “boundary-spanner” with deep knowledge of both supplying and buying companies, a value-creator and someone who gets things done. These are interdependent skills sets; for example, it is the analysis that a boundary spanner can do which positions them to create value.  Some things need to be delegated to key account team members, and to some degree all team member need some of the characteristics expected of the team leaders, although there is more focus for them in demonstrating functional expertise.

Systems

None of the investments in any of the other “S”s would count for much unless the systems which support KAM are comprehensive and robust. All enterprise systems are relevant. For example, HR processes such as performance measurement/reward, training/development and recruitment/on-boarding are important, as are accurate financial records which encompass customer profitability and value analysis.  However, the system which is most relevant to key account management is sales enablement.  Of course, the system must provide an infrastructure of information and activities that make business run smoothly, but if it is a real enabler, it is also proactive.

Proactivity starts with the conversion of data on markets, customers and products into insight that can drive key account plans. Data can be drawn from customer-facing systems, web-crawlers, sensors, cameras and telephone calls. A sales enablement system must flag up changes in the business environment, competitive landscape, key account buying behaviour and product/service performance. In short, it must prompt ideas. If it is not anticipating the future, it will stall and become just another internal bureaucracy.  A key account management system should be able to identify and analyse everything from a one-off negative critical incident (NCI) to a subtle change of trend. As discussed in a later section, both the key account team and the key account should be able to identify inspirational benefit from the sales enablement system.

Staff

Staff essentially need to be able and willing to both take on the broader selling skills and competences. Not only is product and application knowledge essential but also the project management skills. The customer often has to be organised to plan and manage both the purchasing decision and the implementation of any solution, and the supplier organisation has to deliver as promised. It is often said that the biggest inhibitor to success is not factors in the client, but conflict in the supplier organisation.

Shared values

All these factors are interlinked by the shared values of key account management, which are teamwork, customer focus and innovation. To make your key account management distinctive, the recipe of shared values may favour one or another, but all three are essential.