You are a Solutions Engineer of an aspiring software company. You have a mature product and stabilized your position in the market. Your customers get bigger; you start selling to enterprises. Things are running smoothly.
Imagine that, at some point in your journey, your iPhone vibrates. It’s your manager.
“We decided to launch our first key account. You did a brilliant job over the last year. We want you to be the lead SE for that account. What you say?”
You nod. You don’t know what that means. But it sounds great. Positive. “Yes! That’s amazing. When do I start?”
This blog is about what happens after you say yes.
First things first: What is Key Account Management (KAM)?
Let’s start with what KAM is not. KAM is not just managing a larger account. KAM is its own microcosmos in sales. With own rules, own particularities, and own challenges for SEs.
BCG defines KAM as “an enterprise-wide initiative to develop strategic relationships with a limited number of customers in order to achieve long-term, sustained, significant, and measurable business value for both customers and the provider”.
What does that mean?
KAs are enterprise-wide: key accounts are served by an inner circle of named professionals (the core team) that usually comprise sales, presales, and customer success. Often, the core team is dedicated to this single key account exclusively.
An extended team supports the core team. The colleagues work on more than just this account. For example, specialized SEs or AEs that focus on specific products. The extended team can also comprise functions like professional services, marketing, and partner management.
KAs are strategic: there is the vision to develop a fruitful long-term relationship with this particular customer. In other words, the key account team shall grow revenue on this account in breadth and depth, leveraging a multi-year plan. Members of a key account core team usually stay on the account for several years.
KAs are special: there are only a few Key Accounts in a company. They are connected to a great revenue upside, an existing executive relationship, a first installed-based – and a significant quota.
Why Key Accounts?
The impact of key accounts on a company’s top-line is significant: McKinsey found that KAs contribute “30 to 50 percent of revenue and margin” for many companies. How so? Obviously, it’s less costly to sell to existing customers than acquire new ones. That is especially true in our as-a-service world, where we focus on customer lifetime value (LTV), and the lion’s share of revenue is generated after a first contract a closed.
KAs are special because they provide even more revenue upside. Maybe because you just cover a small portion of their addressable business or are set for further growth, you could both help them realize and benefit from yourself.
Retaining large accounts and keeping them engaged is another goal of KAM. Just maintaining such accounts is an opportunity missed. Instead, such relationships are to be strengthened and intensified. Equally important is addressing the negative risk of such large customers taking their business elsewhere.
In fact, a Gallup study found the following benefits of an engaged KA customer:
Sales experience matters. As every SE knows: knowing your customer impacts sales success. Knowing their industry, their business, their language. Especially knowing their people, the pains of their daily work, and your product’s potential value, which might lift that burden. McKinsey argues that sales experience is of even greater importance to your customers than they admit: sales CX drives 31% of a buying decision.
Key account management is the way to professionalize a company’s enterprise business. Done right, it can be a massive driver for growth.
What does KAM mean for you?
Back to our scenario at the beginning. You accepted the role of Key Account SE. You now have an idea about what KAM is and why it’s essential.
How is your work going to differ from your previous SE role?
- Higher expectations. Since the nature of KAs is to generate significantly more revenue than regular accounts, the sales team carries a respectively higher quota. Higher expectations apply to any type of work to be delivered.
- More stakeholders to satisfy. You will have more colleagues being interested in your account: specialized AEs that would like to sell their specific product to your customer; your senior management that would like to meet customer executives and need to see the needle moving; partners that seek insights from your and would like to team up; many customer stakeholders from various IT and business domains to which you need to connect.
- More orchestration, less doing. You will face many opportunities running in parallel on your KA. You will not be able to support all of them yourself. Like the specialized SEs, you enable your colleagues to drive their specific opportunities on your account as well as they can. That means you need to onboard them to the account by explaining the structure, context, strategy, and customer key players. You coach them on what jargon to use, what customer references to avoid, how to deal with specific contacts.
- More strategic, less transactional. It has been your job to help close deals. Transactions. Now it’s different. Your job is to deeply understand your client’s strategy and your KA Manager’s account vision and sales strategy on a KA. Your job is also to craft a technology and innovation strategy that substantiates the sales strategy aligned with your customer’s strategy. Think of yourself as the account CTO. Such an integrated strategy will lead to a prioritization scheme. All initiatives, opportunities, and activities are matched against that scheme. Everything you do has to support the account vision as prioritized in your system.
- More cross-functional activities. There is no “it’s not my job” on a key account. You will find yourself digging for a lead, presenting a pure sales pitch, researching a support fix for customer success, and supporting marketing activities. Think of a KA as a start-up.
- Longer sales cycles. On KAs, the average sales cycle takes three times as long as on regular accounts, according to Gartner. Often, this is by design. Because you want to identify, discover, and address the unconsidered needs of your customer. Work with multiple stakeholders, educate them, generate demand that might end in a direct sale. This way of selling takes time.
- Fewer guardrails. As you discover strategic initiatives and unconsidered needs of your customer, you will meet many people along the way. The way you work is not facilitated by procurement anymore. You build relationships, deliver insights, earn trust. You put pieces of information together, get an idea where you could add value, work with sales to generate an opportunity. There is no script, no blueprint. Start exploring!
- More buyer roles involved in the decision process. There is no single decision-maker to convince, no single meeting you have to rock to get the order form signed. You will iteratively work with more and more senior executives from multiple domains (usual suspects: IT and line of business). Each set of new faces will require discovery, due diligence, preparation.
If you take the role of a Key Account SE, your job will be much different. To look further at what you can do to take this opportunity to pivot to the next level of your SE check part 2 of this article: