Key account management quarterly research 2011


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Key Account Management - Quarterly Research. In this research report, we review 3 case studies of key account management deployments and discuss various elements of success and failure. A presentation by Sales Benchmark Index.

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  • Key account management quarterly research 2011

    1. 1. Key Account Management<br />2011 Quarterly Research:<br />Key Account Management<br />
    2. 2. Key Account Management: Research Introduction<br />
    3. 3. Hypothesis<br />Does the benefit of a Key Account Program exceed the effort to implement one? <br />
    4. 4. Most Common Objectives of Key Account Programs: <br />Defend key accounts against competitive threats<br />Grow revenues received from key accounts via cross sell<br />Grow revenue received from key accounts via up sell<br />
    5. 5. Research Methodology<br />SMART – Identify KAM implementations whereby success/failure of the three objectives can be Specific, Measurable, Attainable, Realistic and Timely<br />Break down objectives into 4 levels<br /><ul><li>Inputs (key action steps)
    6. 6. Outputs (deliverables)
    7. 7. Purpose (program impact)
    8. 8. Goals (strategic intent)</li></ul>Data Collection - Interviews, Rep ride alongs, Data reviews, Surveys, Documentation reviews, Observation<br />Use of contrast method – Success vs. Failure<br />
    9. 9. Key Account Management: Case Study #1<br />
    10. 10. Case Study #1Firmographics<br />Industry: Software<br />Revenue: $337 million <br />Size: 960 employees<br />Region: North America<br />GTM: Multi-Channel<br />Age of Key Account Program: 27 months<br />
    11. 11. Results<br />Reduce churn by 50%<br />Result: Key customer churn reduced from 9% to 4.3% in 27 months<br />Grow key account client revenues<br />Result: Average account revenue up 6.1%<br />Increase penetration of software modules in use<br />Result: Average number of modules in use went from 1.4 to 2.3<br />Increase new module revenues<br />Result: Revenue generated from new module introduction within key accounts increased 13%<br />
    12. 12. InputsKey Actions Taken<br />Committed 19 Key Account Managers to Program<br />Key Account Manager to Key Account Support Ratio 1:5<br /><ul><li>1 Solutions Architect
    13. 13. 2 Solution Engineers
    14. 14. 2 Customer Service Reps</li></ul>Defined Key Account Selection Criteria<br />Focused Account Plans<br />
    15. 15. OutputsKey Account Team Structure<br />Corporate Functions – Professional Services, Product Development, Marketing, Legal, Finance, Etc<br />
    16. 16. OutputsAccount Attractiveness Score<br />
    17. 17. OutputsTotal Account Value<br />
    18. 18. OutputsQuarterly Account Progress<br />
    19. 19. OutputsMcKay 49<br />
    20. 20. OutputsStrategic Actions<br />
    21. 21. PurposeProject Impact<br />Specific: Reduce churn, Increase revenue per key account, Improve cross sell ratio, Up-sell new product offerings<br />Measurable: Churn reduced by 4.7%, revenue per account up by 6.1%, cross sell ration up to 2.3 vs. 1.4, and up-sell up 13%<br />Attainable: Deliverables/tools were simple enough that KAM’s adoption was not an issue<br />Realistic: Objectives of modest reduction in churn, revenue per account, number of products in use, and rate of consumption for new products introduced, were all set below industry benchmarks<br />Timely: Project duration is 27 months and counting; victories along the way; demonstrated organization patience<br />
    22. 22. GoalsStrategic Intent<br />Improved company revenue performance<br />Key customer receives differentiated attention<br />Account managers obtain success with less heavy lifting<br />
    23. 23. Key Account Management: Case Study #2<br />
    24. 24. Case Study #2Firmographics<br />Industry: Media<br />Revenue: $440 million <br />Size: 7,100 employees<br />Region: Global<br />GTM: Direct<br />Age of Key Account Program: 16 months<br />
    25. 25. Results<br />Drive key account win rates north of 90%<br />Result: Win rate declined by 21%<br />Retain key clients<br />Result: Renewal rate dipped below 80%<br />Renew at stable price points<br />Result: Annual Contract Value is down 6%<br />Increase Customer Lifetime Value<br />Result: Portfolio turnover is up to 27%<br />
    26. 26. InputsKey Actions Taken<br />Poorly constructed Key Account Recruitment Package<br />Impact: increased client leverage, forced price pressure, led to client shopping the offering<br />Account Planning Process all internal <br />Impact: increased bureaucracy and admin ‘cost’ to reps<br />Account decision makers decentralized<br />Impact: required rep-to-rep cooperation, which did not happen<br />Tried to automate in SFA first <br />Impact: Without running in ‘manual’ mode first the process was not tested and automation investment was wasted<br />Tried to go from launch to full roll out in 6 months<br />Impact: organizational burnout and turnover of key staff<br />
    27. 27.
    28. 28.
    29. 29.
    30. 30.
    31. 31. PurposeProject Impact<br />Specific: Win rates went down but no win/loss reviews are occurring to understand root cause<br />Measurable: Program was measurable<br />Attainable: Deliverables/tools were poorly designed, internally focused, difficult to use, and misplaced in their application. Result was poor account and rep adoption<br />Realistic: Objectives were not clear (examples: “own the account”, “get 100% wallet share”, “increase prices”)<br />Timely: Results were expected in an unrealistic 6 months<br />
    32. 32. GoalsStrategic Intent<br />Result<br />Drive key account win rates north of 90%<br />Retain key clients<br />Renew at stable price points<br />Increase CLV<br />
    33. 33. Key Account Management: Takeaways<br />
    34. 34. Key Account Program MetricsLeading Indicators<br />Metric name<br />World-Class<br />Wallet Share 76.5%<br />Program Recruitment Success 87.0%<br />Portfolio Value Improvement rate (quarterly) 13.3%<br />Account Attractiveness Score Improvement Rate 17.9% <br />Qualified New Candidate Member Rate 14.6% <br />
    35. 35. Key Account Program MetricsLagging Indicators<br />Metric name<br />World-Class<br />Accounts per Account Manager 3.4<br />Account Breakeven Rate 31.1%<br />Account Lifetime Value Ratio 2.6<br />Program Churn Rate 3.9% <br />Program Revenue Contribution 81.1%<br />
    36. 36. Top 10 Evidence-Based Best Practices<br />A Key Account Program should have all of these objectives: <br />Defense<br />Cross-sell<br />Up-sell<br />Program benefit for client must exceed program benefit for seller<br />Low breadth/high depth is the best approach<br />5 phased adoption takes an average of 13 months start to finish <br />Best selection approach is: <br />Account Attractiveness Score <br />Customer opt-in<br />
    37. 37. Top 10 Evidence-Based Best Practices<br />Build four-pronged risk mitigation approach into Account Plan<br />Execution<br />Operational<br />Talent <br />Deploy streamlined, value-driven Account Plans <br />Institutionalize the relationship through many-to-many contacts<br />Triangulate the review process to ensure continuous improvement<br />Client review<br />Account Manager audit<br />Peer review<br />Ensure the Program contains a process to exit accounts<br />
    38. 38. Hypothesis<br />Does the benefit of a Key Account Program exceed the effort to implement one?<br />Answer: <br />Yes -- if revenue concentration exceeds 80/20 rule (80% of revenue coming from 20% of accounts)<br />No -- if revenue is spread evenly across many accounts<br />
    39. 39. Learn More<br />Contact us to hear the rest of the story...<br />Email -<br />Phone - 1-888-556-7338<br />Web:<br />