Key Account Program Watchouts

Three key account program elements that require constant measurement and management.

Key accounts are a sizable and important segment for most mid-sized and larger distributors. While the exact definition of key accounts differs depending on the distributor, we’ll define key accounts as large volume customers with multiple locations (e.g., branches, dealerships) that span multiple sales territories or regions. Key accounts often involve multiple buyers and influencers at the headquarters, region, district and local levels. For some distributors, key account sales volume can make up 80% of total sales volume, but there is no set rule around this. Sometimes, key accounts are referred to as strategic, enterprise or national accounts.

When managing a key account program, distributors must ensure that they receive higher than market growth from the key accounts to justify what typically is a high-cost model. Done right, key account programs create longstanding strategic partnerships between distributor and customer. Managed incorrectly, however, key account programs gobble up revenue-generating resources from other growth initiatives and increase cost to serve for the entire sales model.
There are three key account program elements that require constant measurement and management.

1. Sales Accountability
2. Coordination Through CRM
3. Digital and Remote Channels

Element 1: Sales Accountability

When Alexander Group works with distributors with key account programs, the first question asked is, “Who on the sales team is ultimately accountable for the sales volume for the entire key account?” Most often, the accountable party is a single key account manager (KAM) that is compensated based on the aggregate volume (across all localities) of that key account. Sometimes, however, that accountability is spread across multiple sellers, sales managers or executives. The Alexander Group’s data backs up the notion that, “When everyone is in charge, no one is in charge.” Without a single individual managing the performance of a key account, funnel size shrinks, win rate drops, and service requests take longer to be resolved. In short, growth slows when one person isn’t directly responsible for the growth in a key account “logo.”

Recommendation: Select one individual (KAM) to be accountable for a key account’s revenue/GP$/sales performance; make the main measure in that individual’s sales comp plan reflect that accountability.

Element 2: Coordination Through CRM

In most key account programs, a single account will be covered by several marketing, sales and service resources spread across geographies. Providing a seamless and consistent buying experience for key customers requires a high degree of coordination. Part of the coordination process rests with the KAM―he or she is the individual that typically sets the strategy for the key account at the corporate level and works with sellers covering branches to create an execution approach.

To effectively manage the plan, KAMs should have a well-established reporting and communication cadence that features standing calls to review CRM outputs. All customer-facing resources (e.g., sales, marketing, service, project management) should attend these calls and the agenda should include the following topics:

1. Sales performance update (% to YTD goal, annual goal)
2. Update on issues requiring immediate resolution or escalation
3. Pipeline review (based on CRM reports) to discuss new, existing and lost opportunities (with post-mortem/loss discussion)
4. Marketing and business development update
5. Corporate update on people movement, strategic changes, M&A
6. Voice of the field including updates from branch, region and district offices

Nothing erodes the confidence of executives at the customer level when a KAM does not have the most up-to-date information on the account. Implementing a weekly CRM-based account review meeting is the first step in preventing this risk.

Recommendation: Task KAMs with setting up a weekly standing call with all relevant teammates; ensure team has access to CRM system.

Element 3: Digital and Remote Channels

Just because key accounts are considered “high touch” models does not mean that engagement should be exclusively face-to-face. Based on changing buyer needs and preferences, incorporating digital and remote resources and tools can help drive closer partnership at an advantageous cost to serve. Examples may include:

• Digital account-based marketing that uses corporate or industry triggers to send specific messages or content
• Automated CPQ tools or digital sales resources able to assist customers with configuration, price and quote workflow
• Access to digitized product information for use in building information modeling (BIM) and computer-aided design (CAD)
• Access to an online marketplace where customers can buy products from a network of the distributor’s strategic partners
• Inside or remote sales roles to provide dedicated coverage to branches in hard-to-access geographies
• Customer-exclusive webinars or virtual training
• Dedicated customers success representatives

Distributors have a growing toolkit to provide customized and flexible coverage to customers. Digital tools and remote resources come at a cost, so distributors should first understand how their key accounts want to virtually interact before implementing large scale technologies.

Recommendation: Conduct buyer research on key accounts to understand the viability of digital and remote channels; create a technology roadmap to enhance connectivity and collaboration with key accounts.

Key account programs offer distributors the ability to build strong partnerships with their most important clients. To prevent going down the path of becoming a high cost-to-serve sales model, it is imperative that the three key account program elements are being managed and measured consistently and properly.

For more information on Alexander Group’s Distribution practice, please contact a practice leader.

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