With fewer customers generating more of our revenue, we need to get better at managing our strategic relationships. Whether we call this Strategic Account Management or Key Account Management, we must get better at managing the customers we can’t afford to lose.
There is good news and bad news about managing these strategic relationships.
Let’s start with the good news. A 2014 article, The effectiveness of Key Account Management practices, explains that if we manage strategic relationships well there are some great benefits. Iain Davies and Lynette Ryals explain that a sustained program can:
1. Increase customer satisfaction
2. Increase shared investment
3. Increase share of key customer spend
4. Grow revenues from key customers faster than for non-key customers
5. Increase profit margins on key customers
6. Improve relationships with key customers
7. Increase word of mouth promotion by key customers
8. Improve retention of key customers
Having read this list, I am sure you are asking, “If the good news is so good, then why doesn’t everyone do this?” Well simply because of the bad news…
The bad news is it’s hard to do. To deliver results, you need to do many things right. Conversely, there are many things that can go wrong for you. For example, to get results some things you need to do well: pick the right accounts, create individual account plans, get buy-in from senior management and deliver different services to key accounts. If this was not enough, it takes years for you to see some of these benefit. So, the worst news is that you need to invest in one financial year for a benefit in another financial year.
None of this bad news is insurmountable. Just get the right expertise and experience. The essential lesson is it’s tough to do.
It’s bad news that managing strategic relationships is tough. But, that’s good news because if you can manage strategic relationships well, then it will give you a competitive advantage. And give you a competitive advantage that can be sustained too, because it’s so hard for your competitors to copy.