“My largest account is growing 6% year over year, at 19% of my revenue – I’m crushing it this year”. This was a recent comment from a customer explaining the performance of one of their key account managers.
2 problems with the above statement:
- The key accounts overall growth was 13% and the vendors product is directly tied to the key accounts growth
- The key account manager had not expanded the products within the account nor expanded beyond the existing business unit
“So what!” you might say. Well if the key account is growing at 13% and your product is directly tied to the customer’s growth, who’s supplying the product to support the growth gap between 6% and 13%?
After a number of questions, the key account manager realized the competition had captured a small piece of the accounts business right under his nose and was actually taking an increasingly greater percentage of the accounts core business.
Shame on the key account manager and his sales VP! For the sake of this discussion we’ll review some of the performance metrics the sales VP should have been analyzing.
- Rep contribution: The rep had not expanded beyond the existing product relationship.
- The account growth had nothing to do with the reps year over year contribution. He was simply riding the success of landing the original contract.
- The sales manager was not measuring year over year growth of the account verse the company’s growth. He was happy the account manager was hitting the numbers.
- The sales manager was not measuring:
- The amount of existing product expansion into other parts of the account
- The amount of new product being sold within the account
In this case the competitor worked their way into the account by starting with a small niche product. The key account manager had become complacent with the existing business success and wasn’t measured on expansion within the account. Instead of defending the account with a strong position; the account manager is now defending the account against a supplier who is also a certified supplier to the customer.
When measuring key account rep performance, it’s critical that the sales VP measure the actual contribution the key account manager is providing.
Key Takeaway: Analyze your key account score cards to confirm you’re measuring actual key account manager contributions. Does your compensation plan drive the desired behavior and results?