Strategic account management, also known as key account management, is a company-wide initiative that focuses on building strong and mutually beneficial relationships with a company's most important customers. Those relationships are important because, in many companies, 20 percent of customers account for 80 percent of revenue. The loss of just one major account could be potentially fatal to a small business.
Strategic account management focuses sales resources on retaining the customers most likely to generate high levels of revenue and profitability. To achieve this, the sales team adopts a consultative selling approach. Account managers build a detailed understanding of their customers’ requirements and help them reduce risk and improve their own business performance. This helps to make the customer dependent on the supplier and increases customer retention.
Companies adopting strategic account management achieve superior growth, profitability and customer loyalty, according to the Strategic Account Management Association. The strong relationships with key accounts help companies develop stable revenue streams because key customers typically place long-term contracts rather than ad-hoc purchases. However, the management consultancy Accenture points out that not all key customers are profitable. Account managers must continually review the profitability of strategic accounts. Accenture found that more than half of the companies it surveyed in a 2011 Insight study recognized that they needed improvement in selecting key accounts.
Strategic account management teams aim to build strong relationships throughout the customer organization, particularly at senior level. Dealing with key account at the highest level helps a business understand the customer’s way of taking decisions, its strategic plans and the way it evaluates suppliers. By demonstrating that they offer strategic benefits to key accounts, companies can strengthen relationships, increase account control and reduce the threat from other suppliers that only compete on price.
Strategic account managers focus resources across the organization to ensure that key accounts are satisfied with every aspect of the service they receive. To achieve this the strategic account management team must have commitment from senior executives and cooperation from all departments that deal with key accounts. By managing and coordinating internal resources, strategic account managers can ensure that an organization meets all the important criteria for customer satisfaction, including prompt delivery, accurate order fulfillment, rapid response to inquiries and efficient aftersales service.