Key Account Management (KAM) is crucial for businesses, focusing on strategic relationships with significant customers to optimize value creation and competitive advantage. While KAM requires substantial resources and may not be economical if product life cycles are short or markets are commoditized, it offers benefits like improved coordination, higher profit margins, and stronger customer relationships. Selecting key customers should involve assessing potential profit, compatibility, and investment willingness, with regular portfolio reviews to identify future growth opportunities.

1. Key Account
Managemenet
Shahnam Taheri
Management Consultant
4/2/2023​
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2. KEY ACCOUNTS
 Strategically Managing Accounts is a key requirement to achieve competitive advantage and
succeed in business
 Key customers accounts are those which make up a significant proportion of revenue and a
large percentage of the company’s profit
 Definition of Key Account Management( KAM):
KAM is a process for a successful design and implementing a customer – centric plan for
optimization value creation.
Suppliers need strategies to deal with the large & powerful customers to deal with them
adopting new practices across a number of domains: operational, rational and commercial.
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3. SITUATIONS NOT TO HAVE KAM
KAM is a resource – intensive and significant endeavour for any business.
 Investment in KAM become heavy and unjustified when the product life cycle is short. When
innovation and investment in R & D are not required to develop offerings that meet customer
requirements, price is likely to be the driving factor in supplier selection.
 In markets characterized by undifferentiation and over – commoditization the substitution of
suppliers is often easy for customers. Transactional behaviors in the customer often driven by
short term gain, possibly resulting in the decision to switch to cheaper suppliers.
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4. IS KAM ECONOMICAL?
KAM programmes will pay off when there is alignment of expectation between supplier &
customer: when there is a commitment to a relationship that transcends quick gains and
advantage, and a desire to build new long – term capabilities through a partnership
relationship.
Remember these investment should not increase the risk of over-dependence on a small
number of customers.
Key accounts should be seen as part of a wider portfolio, where clear difference is made
between transactional, large , and strategic customers.
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5. KAM Benefits
KAM helps in restoring coordination efforts between different department and getting the
voice of customer in to the organization.
 KAM prioritize of efforts and investment of time and resources in line with customers’ needs
and satisfactions.
 KAM increases profit margin by customers’ relationship improvement, greater customers’
satisfaction.
 KAM is a future oriented strategy that depends fundamentally on achieving coherent between
the supplier and customer expectations.
KAM helps suppliers to get closer to strategic customers as business partners
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6. Selecting key customers
Only a small number of accounts will be viable.
The number of customer may vary from sector to sector but typically a given organization will
have between 5 and 20 key customers.
The criteria for selecting a key account depends on:
 The degree of potential profit for company in future .
 The degree of compatibility of policies, process and practices between the supplier and the customer
The supplier has to define a mechanism to select key accounts.
Once the customer with a “ key account “ status have been identified, suppliers need to decide
the kind and the amount of investment they are willing to make in each key account relationship.
We need to review the account portfolio regularly and consider the customers who creates a small revenue now but
promising a potential growth revenue and profit in future as key accounts
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7. Investment in KAM
Allocation of dedicated personnels for key accounts
Training for customer relationship management & developing customer centric culture
Time commitment of senior management for key accounts management
Design custom design products
Adopt new technologies and communication channels
Design a new organization structure
Redefine performance metrics
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8. IMPLEMENTING KAM
If you are interested how to implement KAM in your company, you can contact my email:
shahnamtaheri@gmail.com
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