If you would like to know the secrets to having a successful Account Management team that will build long term sustainability for your company, then this is the post you must read. What I am going to share in this post are what I have learned from more than two decades of B2B selling. Some of these skills are learned when I was an Account Manager or Account Director serving key corporate customers but some of the skills are learned from observing professionals succeeding or failing in this area. This post will give you practical and valuable insights that you will not learn from any textbook. In this post, I will provide the answers for the following questions:
- What are Key Accounts and Strategic Accounts?
- What is Account Management, why it is important and does your company needs that?
- Why the Account Management is a separate function from the Sales function?
- How to hire and train Strategic Account Managers and how to set up an effective Account Management department?
What are Key Accounts?
Key Accounts refer to customers who make substantial amount of repeat purchases and these customer accounts contribute to the bulk of your company’s revenue. Hence they are your company’s most valuable assets and you would not want to lose them due to neglect or mishandling.
What are Strategic Accounts?
Sometimes, companies use the term Strategic Accounts interchangeably with Key Accounts. However, in my opinion, there is a slight difference between Strategic Accounts and Key Accounts. Key Accounts refer to your companies existing customers, contributing substantial amounl to your annual income and these are profitable accounts. However, a Strategic Account may not necessarily be an existing customer, or may be a customer but not yet contributing substantially to your revenue. However, your company may have identified that company account as a Strategic Account for one or more of these reasons:
- That Strategic Account has the potential to grow to be a Key Account;
- The Strategic Account is currently a Key Account of your competitor;
- By having the Strategic Account will bring about some benefits to your company, e.g. ability to enter new markets, strengthen your company’s branding, or some other strategic partnership that provide mutual benefits.
A Key Account can be a Strategic Account but a Strategic Account may not necessarily be a Key Account.
What is Account Management?
Whether it is a Key Account or a Strategic Account, the process of serving and building long term relationship with the customer to build trust in the customer, to delight the customer, to achieve customer loyalty and hence increase long term sustainable sales growth or reach mutually beneficial goals is what is known as Account Management.
There are two important aspects needed in good Account Management:
- First, is the ability to delight the customer in order fulfillment, i,e. on time delivery, zero defects, proper management of the customers’ expectations, handling of customers’ complains, cancellation, waiver, etc.
- Second, is the ability to identify and generate sales leads. This means to be able to network at every level within a customer’s organisation to identify the challenges faced by the customer and how your company’s products and services can help your customers overcome their challenges.
Secrets to Successful Account Management?
Achieving the first item listed above require team effort. The Account Manager has to communicate the customers’ requirements to all supporting departments involved in producing or delivering the products and services to the Key Account customer. All supporting departments have to work in tandem with the Account Manager in achieving the goal of meeting the Key Account customer’ requirements and delighting the customer. However, there are times when not all backend department are competent and that is when the Account Manager plays an important role:
A real-life experience:
As an Account Director, you would probably imagine that I would place more emphasis on closing sales than managing projects for customers as the latter would rightly be the tasks of Project Managers. However, I would say, that is not true all the time. In another situation, one of my Account Managers closed a sales deal where we have to install equipment in thousands of buildings. It was a mega project and it was the first of a series of upcoming projects. If we implement well, we will likely be the supplier for subsequent phases. However, having closed the deal, the Account Manager was busy scouting for new sales and left the entire implementation to the Project Manager. Our customer became extremely worried when she saw that the Project Manager from my company does not seem to be a person who could articulate issues well. When I came to know about this concern, I made it a commitment to attend all their weekly project review meetings. Why do I do that? To give confidence to our customer that there was commitment from our company’s management to ensure the project run smoothly. This is good order fulfillment. It is Account Management 101. When we did well for the first project, we are assured of more repeat purchases.
To achieve the second item listed above–to identify and generate sales lead, the Account Manager has to have a solid understanding of their customer’s organisation goals and to look at every part of the customer business and ask, how can your company’s products and services help them succeed.
Another real-life experience:
Let me share with you a real life example. When I was the Account Director in a Service Integration company, I had a client who was a fresh graduate given the task of organising a workshop for their users. Being new in the industry, he did not know the technologies well and so he called my staff for advise. Seeing that this is a non-revenue generating task (and hence is a zero commission activity), my staff was not interested to help him. When I came to know about his challenges, I told him not to worry and that I will gather the industry experts and help him work out the agenda for his workshop. The workshop went smoothly and that client and his management were extremely grateful to my company. So here lies the magic of Account Management. Each time they have a procurement to make, they will always remember our company.
The above examples illustrate how to succeed in Account Managmeent. It is about selecting the right account, identifying areas of needs, investing resources to help your client succeed, over and over, so that your company is remembered as a trusted partner that they would like to do business with.
What Account Management is NOT?
As you can see from the real life examples that I have cited, good account management is building trust and achieving customer loyalty. While achieving sales is our final goal, Account Managers have to be careful not to overlook building customer relationship. Account management is not just selling more stuff to Key Accounts and earning more commission. If your Account Managers are only motivated by closing more sales and earning more commission, then they are puting your company at risk of losing the Key Account customer and ruining your company’s long term sustainability. That makes it more difficult to set targets and measure the performance of Account Managers compared to Sales Managers. We will address this.
When is Account Management important and does your company need an Account Managment team?
There are at least two scenarios where Account Management will be important for your company:
- If your company has a few accounts that make up most of your revenue and profit, then it is crucial to have a competent Account Management team to ensure long term sustainability.
- For large organisations where there are many departments and each specialising in very focused area, it is important to assign Account Managers to serve respective sectors of customers so that customers will not be going from pillar to post and not finding what they need. Having good Account Managers will help to grow your sales and build your company brand image.
Competent Account Managers command high salary. Moreover, serving customers mean having to set aside entertainment budget and these means high operating cost to your business. To decide whether your company needs a Key Account Management team requires careful computation of the operating cost versus the projected long term revenue. If your company is serving the mass market or when each of your sales value are small and could not cover the account management operating cost, then a better solution may be to leverage on marketing automation technologies to serve your clients.
What are the qualities and skills needed for an Account Manager?
If you have read my earlier paragraphs and the real-life experiences that I have cited, you would have realised by now that the skills required of Account Managers is different from that of Sales personnel. When we choose candidatets for Sales position that requires hard selling, we pick people who are numbers driven, we enjoy the thrill of closing sales deals. These are the people who are likely to be successful in a Sales position. However, if we have Account Managers who are only motivated by closing sales and earning commission, they will likely not succeed as they will not be motivated to help customers when a task does not lead to a direct sales. Having such Account Managers may cause your company to miss many opportunities of building trust and long term relationships with customers.
There are 5 essential qualities and skills that an Account Manager needs to have to succeed in his job:
- Listening and Communication Skill – the Account Manager should be patient to listen carefully to the customers and understand the gist of what the customers require. As he is the person representing the company, fronting the customer, he is the key messenger to bring back to his company the requirements of the customer, he needs to get the information right. If this starting point goes wrong, he will be conveying the wrong information to the supporting departments. The result will be disastrous. On the other hand, if his listening skills can enable him to pick up signals of what are important to help the customers, he will be able to bring back very useful information that can even help his company compete effectively against competitors. Communication skill in this case refers to the ability to articulate clearly and also tactfully. Often, Account Managers have to explain difficult situations encountered by his company and to appease an angry customer. Being able to communicate tactfully is crucial.
- Conscientious and responsible – the most important thing to a customer is that they receive their products and services according to what they expected, e.g. on time delivery, smooth implementation, complete and in order, in good condition, etc. A good Account Manager is one who work closely with the Project Manager to ensure that the project deliverables are completed on time and should there be any obstacles, the Account Manager will carefully manage the expectations of the customer. If the customers make any changes, he will ensure that the change is carefully communicated to the project team. If the customer requires information that he does not have, he will bring the respective experts and or persons in-charge to help provide the answers to the customer. In essence, he is a responsible employee with a conscientious attitude in helping the customer succeed.
- Courageous but courteous – the role of an Account Manager is like a “spy” sent to the customer company. The Account Manager is supposed to identify areas of needs where his company’s products and services can support. By identifying the areas of needs, he can propose solutions and in turn increase sales. However. to “spy” requires the Account Manager to be able to network at every level within an organisation. That is, to be courageous enough to network at the CEO, CMO, CIO, CTO , all the management level. Very often, potential sales lead can come from working level. Hence, the Account Manager should also be able to network with any functional departments and at any level. A courteous, friendly and humble personnel that is not status conscious, is an ideal person for such task.
- Enjoy socialising -very often, Account Managers may be dealing with just one contact person in the customer’s company, e.g. the Procurement personnel or the IT Manager, etc. This one person might not reveal all their future project requirements or may not know every potential upcoming projects. For example, the user department for a Customer Relation Management system may be the Sales and Marketing department but the acquiring of the system may be the IT Procurement Manager. The IT Procurement Manager may not necessarily know what the Sales and Marketing department needs. If you are the Account Manager of a Marketing Software company, it will be useful for you to get to know and influence directly the Directors of the user departments, i.e, the Sales and Marketing departments. However, if you are not already acquainted to them, how are you going to connect to them if the IT Procurement Manager is not introducing you to his users? A competent Account Manager will know how to leverage on social events and networks to reach out to the Sales and Marketing departments.
- Leadership – an Account Manager has to work with many departments across his company and harness their support to serve customers. These departments are usally headed by Senior Managers who do not report to the Account Manager. These Senior Managers can be defensive, especially in cases when the fault lies in their department. A good Account Manager is one who is able to harness the support of people who do not report to him and yet willing to help him serve the customer well.
How to Set Up an Effective Account Management Team?
To set up an effective Account Management team, you need to execute the following steps well:
- Identify the customers to be considered as Key Accounts or Strategic Accounts and segment them accordingly, e.g by industry, by service type, etc. This segmentation will help you select the most suitable personnel to the Account Manager for that segment. For example, if you segment by industries, then when you are selecting the Account Managers, beside the above 5 essential skills, you may want to pick Account Managers with the relevant industry/ domain knowledge to serve a specific segment.
- Hire and train the Account Managers. It can be difficult to hire an Account Manager with all the essential skills and qualities as well as the industry knowledge. Hence, training is important.
- Work out performance targets that are measurable and reasonable.
How to set Targets for Account Management?
Unlike Sales function where revenue, number of customers, churn rate and commission can be easily work out as performance targets, it is not very easy to set performance targets for Account Managers. The reason is because you need them to perform duties that may not lead to an immediate sales win. Hence, for Account Managers, the targets to be set should be more activity related. Nevertheless, you will still need to set revenue numbers for Account Managers. The targets should be set to meet your objectives.
Some targets that can be set for Account Managers are as follows:
- Revenue growth for a group of Key Accounts
- Number of visits to each customers and detail report of visit
- Identify the organisation structure of the customer’s company and how many the Account Manager has managed to reach out to
- Sales pipeline
- Sales lead generated for the week/month
- Conversion of sales lead to customers
Succeeding in Account Management can bring long term sustainability for your company. However, to succeed in managine Key Accounts, you will need to hire competent Account Managers, train them, carefully select your Key Accounts and work out the relevant strategies for each account. In this way, your Account Managers and all supporting departments can be well aligned to achieve your long term sustainability objectives.