How to drive exponentially greater returns from key account management
Key account management has become a particularly important tactic for professional services firms, seeking to build loyal client relationships and win repeat work in a complex B2B environment. The prospect of avoiding long sales cycles and securing business based on trust and track record over price is seductive. But does a KAM approach add up?
The cost of servicing major clients has jumped significantly in recent years – driven by the rising amount of senior, non-billable time spent servicing and winning business, and huge investments in client suites, training programmes, events and so on. Combine this with the unbundling of B2B services – reducing the value and scope of work – and we’re shelling out huge sums at a time when unlocking repeat revenue from top clients is tougher. At a recent event, Professor Malcolm McDonald, an expert on marketing strategy at Cranfield University School of Management, estimated that in the last 15 years, the largest 10% of clients have gone from contributing about 15% of total company profits to -3%.
While most KAM programmes have done a great job in increasing client satisfaction, few have been able to point to the same levels of success when it comes to winning profitable work consistently. The unfortunate truth is that satisfied clients don’t always buy more. Because while you’ve been investing in KAM programmes, so have your competitors. When any one of you could do a good job, and you’re all offering additional value in some form, it becomes easy for prospects to put work out to tender and wait for a good deal.
So what to do? CEB B2B research shows that showing clients new ways to make money, reduce costs and mitigate risk that they have yet to identify themselves, is the single biggest thing that drives repeat purchase in more than half of cases (53%) – compared to brand (19%), client service and product delivery (19%) and price (9%). You read it right. Fewer than two in five clients rate service delivery as their lead factor in buying from you again. Doing a good job and being good people is not enough to win more work – and even expensive but generic value-add programmes won’t tip the scale.
There is a compelling case for refocusing KAM on the 53% – relevant, evidenced and informative thinking that truly tells clients something new and makes them want to buy. But providing key clients valuable insight is only half the battle when it comes to unlocking new opportunities. You need to create a scenario that benefits you as well as clients – a win/win. Because unless you are uniquely placed to deliver the solution and that solution can be delivered profitably, you are still neck and neck with competitors in a race to the bottom.
Generate demand for your offering specifically – not competitor solutions – by articulating what it is about your service, experience, reach and approach that is uniquely valuable. Clients often see little difference between what you’ll deliver and what competitors do – a big source of frustration for professional services firms – so finding distinct capabilities that really matter to them takes a focussed process and lateral thinking. But it's worth it. Then you can create a pipeline of new opportunities that only you can win.
Further reading on how to create a differentiated sales proposition is available on the Fast Thinking blog.