By: Kyle Johansen
Account management may seem self-explanatory on its face. But organizations that do not fully understand or take advantage of strategic account management put themselves at a severe disadvantage compared to their competition. By successfully leveraging account management, an organization will retain its best customers and continuously increase production from each of its clients.
So what exactly is account management, and why is it so important? This article will begin to answer those questions by covering account management’s role in an organization, how it relates to sales and challenges that must be overcome. To finish, we will delve deeper into the role of strategic account management and how to identify key accounts.
What is account management?
The central goal of account management is building relationships. Good business, at its core, is about cultivating relationships for mutual gain. Therefore, an account manager’s primary goal is to nurture customer relationships, keeping clients happy, and discovering new opportunities for growth.
The first step towards successful account management is maintaining client loyalty, an ever-challenging task given the continuously rising tides of competition. As your clients are inundated with new offers from competitors, keeping their business becomes even more critical. Long-term business relationships tend to lead to increased sales over time, so building and maintaining those relationships is the essence of account management.
Why is account management important?
Without clients, you have no business. This means that client retention is a vital factor in maintaining a thriving company. Account managers not only keep your clients happy, but they also look for new avenues of mutual growth through strategic partnerships.
If you are like most businesses, the bulk of your profits come from a handful of your clients. Identifying and nurturing these clients is the basis of strategic account management, which we will get into below.
What are the five principles of account management
An account manager’s role is all-encompassing and goes far beyond what we will get to in this article. But those that do the job successfully likely follow these five principles:
- Nurture client relationships. This is the underlying principle of account management. The most important factor for an account manager is keeping the client happy and moving the relationship forward.
- Under promise and over deliver. An account manager should never make a promise to a client that cannot be kept. Failing to deliver on a promise is a definitive way to lose trust. And once trust is gone, so is the relationship with your client.
- Continuous improvement. Whether it is striving to utilize new account management tools or implementing a new strategy, you should always be looking to improve your processes. This principle also extends beyond your organization, as account managers seek to discover long-term growth strategies for key clients.
- Accountability and transparency. Accountability and transparency are two primary principles of trust, and therefore, they are essential building blocks of successful account management.
- Always put the client’s interests ahead of your own.The only way to build trust is to repeatedly show that you are looking out for your client’s best interests, even if it comes at the expense of your bottom line. The lifetime value of a client relationship is much more valuable than the short-term gains of a few extra sales. Never sell something or take any action towards a client if you are not sure it is in their best interest.
Now that we’ve covered what account management is, why it’s important, and what the five core principles are, let’s five in an account manager’s role in an organization.
What is account management’s role in an organization?
An account manager is critically important to an organization because they are the primary conduit between your business and its clients. While traditional salespeople view their roles in the company through a short-term lens, your account managers look at long-term ways to improve client relationships and discover new opportunities for growth.
When a client has an issue, they will come to the account manager to fix it. The most effective account managers will ideally fix a client’s problem through a new service or product that your company is offering. As the client’s personal liaison into the company, an account manager must maintain effective communication throughout multiple departments, including product development, customer support, and sales.
What is the difference between sales and account management?
The main difference between salespeople and account managers is the divergence between short-term and long-term results. While sales management is focused primarily on delivering their numbers in a given month or quarter, the account manager must maintain a macro-level view of each business relationship.
As a post-sales role, effective account managers understand the context of their relationship with the sales team and can work together cooperatively. In some companies, account management is combined as part of the sales department.
Although the roles are related, salespeople are viewed as “hunters,” while account managers take the approach of a “farmer.” A salesperson has the end goal of selling a product, while an account manager is planting seeds and nurturing them to their fullest potential.
What is the importance of strategic account management?
Strategic account managers identify the clients who bring the most current and potential revenue into an organization and discover new paths to mutual growth. For most businesses, the old adage holds true that 80 percent of your sales come from 20 percent of your clients. Strategic account management is what you do with that 20 percent.
Account managers must identify more than just the companies that provide the most revenue. One of your largest customers might be in a segment filled with high demand, making them more easily replaceable than another client. A less easily replaced client has a lower threshold to meet when it comes to the current and potential revenue they can provide.
What is key account management?
Key account management is another way of describing strategic account management. The accounts identified as having the most current and potential value to a company are classified as key accounts. While no client relationship should be left unnurtured, key accounts take top priority when delegating resources and planning future product offerings.
A savvy account manager pays attention to the circumstances surrounding all of their accounts, not just the ones currently classified as key. Ideally, non-key accounts will be prioritized in order of their potential growth. If you discover that one of your customers is about to see a significant increase in growth, they may soon become a key account. Nurturing your relationship in advance of this growth can pay substantial dividends down the road.
You may also see the potential for a non-key client to grow into a more significant partner as long as the right strategic plan is implemented. Having the tools in place to evaluate a client’s prospects remains a top priority to ensure that you are extracting every drop of value from your partnerships.
What are some account management challenges?
Highly effective account managers have a more difficult job than one may imagine. Juggling various client-side factors, such as a never-ending list of new contacts to please and contracts to execute, is only the tip of the iceberg when it comes to strategic account management. Compounding the issue can be a lack of account management tools to help execute strategic plans.
1. Implementing strategic account management plans
There are times when a strategic plan is simple to execute, and you are left wondering why you hadn’t implemented it earlier. However, those moments of clarity are the exception when it comes to pulling off brilliant new strategies. Typically, strategic account management plans can only be carried out with quality account management tools.
2. The pressure between short term and long-term results
The most fundamental challenge faced by account managers is prioritizing long-term results over short-term profits. Executives, and especially investors, are wired to focus on current results. But an account manager must not succumb to these short-term pressures. A customer for life is much more valuable than sealing a one-time deal, even if it means making less money in the short term.
3. Having the right tools to determine key accounts
What happens when the accounts you have identified as “key” fail to deliver the results you anticipate? If your return on investment is lower than expected, you could be using the wrong metrics. This is when having essential account management tools becomes crucial.
4. Extracting the most potential production from an account
Let’s say that you have recently revamped your internal numbers and are confident in your metrics. If you still see a lower ROI than you had hoped for, you may not be extracting the most possible production from that account.
What can be even more challenging is if you see the results you had hoped for but fail to realize that there is a more significant amount of untapped potential that you haven’t yet discovered. The only way to overcome this challenge is to invest in quality account managers and provide them with the tools to perform their jobs at the highest level.
[vc_row][vc_column][vc_cta h2=”Free Webinar” txt_align=”center” style=”outline” color=”blue” add_button=”bottom” btn_title=”Download Now ” btn_color=”warning” btn_size=”lg” btn_align=”center” btn_link=”url:https%3A%2F%2Fwww.mindjet.com%2Fen%2Fresources%2Fusing-a-visual-dashboard-to-work-faster-better-connected%2F%3Fsource%3Dwebsite%26type%3Dmjblogcamp%3Dgatedwbr|||”]
Using a Visual Dashboard to Work Faster, Better, Connected
Visual dashboards are one of the most effective ways to manage information overload. Watch this webinar to learn what a visual dashboard is, and how to build your own.