How to select key accounts? This question came to me for the first time very recently. For decades, I have only known of companies segmenting their corporate customers by industries and having account managers to manage respective industries. In fact I recall that when I first became an Account Manager in a large multinational company, we had 18 account managers, each serving about 60 clients within an industry. Some industries generate a lot more revenue than others, some industries have a lot more events and large scale projects and the account managers serving those industries will be the busiest. If I reflect back, was that the correct way to segment and manage customers for future growth?
I doubt so. For an account manager to serve 60 customers with quantity of activities not within his control may end up causing the account manager to perform badly and in turn offend the customers. If your company is a monopoly, that may not be disastrous. However, if your company is surviving in a competitive environment, not having successful Account Management may have detrimental impact on your company’s profitability and long term sustainability.
Manpower resources are costly. It is not advisable to simply segment your customers by industry and assigning Account Managers to manage respective industry. You either end up under utilising some Account Managers or overloading some, without ever achieving your company’s objective of long term sustainability.
How to Select Key Accounts
If you are a CEO, my suggestion is this:
- First, calculate how many Account Managers you can afford base on your operating budget. For example, if your operating budget allows for $200,000 as annual salary for Account Managers, and if each Account Manager’s average annual salary is $50,000, then you can hire 4 Account Managers.
- Second, identify what is the role you need your Account Manager to perform. You can refer to my post on “Secrets to Successful Account Management”, to understand the function of Account Management. Base on the role and job description, estimate how many customers do you think each Account Manager can optimally serve. Then compute the total quantity of customers your company can give the special attention to and define them as Key Accounts. For example, if you require your Account Managers to meet the customers at least once every month, and assuming that they meet one customer a day, leaving the rest of the day for other follow-up tasks, then each Account Manager can serve about 25 customers. With 4 Account Managers, you can only pick 100 customers to be classified as Key Accounts.
- Third, select the Key Accounts base on your company’s strategic objectives. Examples of strategic objectives are:
- You may have 80% of your revenue contributed by 20% of your customers. Then these top 20% customers must be carefully managed. Losing any one of them will have major impact on your company’s sustainability; or
- You may want to grow specific segment of customers, e.g. the Grocery industry. Recognising that the Grocery industry is dominated by a few key supermarkets, having a major player in the industry may help you win over many companies in the industry. In this case, you would want to pick specific companies as Strategic Account even if that company is not contributing substantially to your revenue right now.
How to Serve Non-Key Accounts?
If you are having thousands of business customers, then you will be wondering who is going to serve the remaining customers who are not classified as Key Accounts? All customers are important and you want them to be served well. The solution lies in the following:
- Leverage on call centres (customer service agents) – for many customers, all they need is to have their questions answered. They do not need an Account Manager to serve them as they do not have that many purchases. Hence, having a customer service centre is a cost effective way to serve the customers well.
- Leverage on Customer Service tools to effectively serve the customers. For example, tools such as Zendesk enable you to build a knowledge base, chatbot and dashboard to effectively help customers navigate your website and get the right information.
Managing customers require careful strategy so you can optimise your limited manpower and achieve your long term goals. Effective Account Management requires careful segmentation and working out the job description and measurable targets. Finally, leveraging on business tools to manage customer communication, conduct surveys and get feedback from customers will help to improve your customer service.