How do you determine the Key Accounts for a program? How often should you re-evaluate current Key Accounts? The answer for most is by simply taking your top few customers by annual revenue, and calling them “Key Accounts”. If your analysis ends here however, you are leaving value on the table. You need to think in terms beyond just annual revenue to identify who your Key Accounts are. Constant evaluation and updating status are critical to maximizing the return on your Key Account program.
Download the Key Account Selection tool to help you score accounts based on multiple inputs.
Whether you have an existing Key Account program, or you are considering implementing one; it can be difficult to evaluate current accounts for Key Account status. The first step is to determine what criteria are most important to your company for a long term, strategic relationship. This will help you narrow your focus to a smaller number of accounts that really qualify as key. Examples of these criteria include: account potential, alignment in strategy, willingness to partner, ability to innovate, geographic alignment, industry leader, etc. Go broad and cast a wide list of possible criteria. You will then want to settle on 3-6 final key criteria to evaluate accounts on.
Next, select a pool of 15-50 candidate accounts to narrow down further, and see who is most aligned with your criteria. This is where heavy lifting is involved in gathering the information needed to assess each candidate account. It is critical during this evaluation of accounts to remain as outward>in (look at it from the customer’s point of view) as possible. You want cross-functional input, and not just the lead sales rep from each account weighing in. Expert panels, account interviews, surveys, and the use of a 3rd party can be integral in making an unbiased review of your key criteria. Included in this post is a tool that will help you score accounts based on multiple inputs. You can use this to help separate the accounts most in alignment with your criteria. The point is to make this custom to your business and what drives toward your targets.
Once you determine what accounts are most aligned with your key criteria, you need to segment these further. There is no hard and fast limit to the number of total Key Accounts you maintain. Depending on the size of your company, 3-50 accounts can be appropriate. Practically, most companies have difficulty resourcing more than 15 true Key Accounts at a time. To stratify further, think of them in 4 categories:
- Key Accounts – critical to achieving your future targets; these will be your obvious accounts and should make up 5-15 of your top aligned accounts
- Development Accounts – Key Accounts in the making, but need more time learning and possibly investing in
- Maintain Accounts – Steady contributors, but currently have a high % of wallet share and not likely to increase spend dramatically
- Opportunistic – These are accounts you serve when convenient
Now that you have selected your potential Key Accounts, you need to setup the environment for continuously updating your evaluation. There are a lot of resources you invest in 1 account, so it’s important to make sure you are maximizing the ROI. You should develop the process to evaluate Key Account status 2-4 times per year. Develop individual account scorecards, P&L’s, and SWOT reports to gauge changes in these top accounts. Investing the time and energy up front to establish a proper Key Account program will save you time and money in the long run. Continuous evaluation will ensure you are extracting as much value from each account.