Key account management is a strategy used by suppliers to target and serve high-potential customers with complex needs by providing them with special treatment in the areas of marketing, administration and service. In order to receive key account status, a customer must have high sales potential. A second characteristic is that of complex buying behavior; for example, large decision making units with many choice criteria are often found in dispersed geographical locations. The decision-making unit may be located in different functional areas and varying operating units. Third, key account status is more likely to be given to customers willing to enter into a long-term alliance or partnership.
Such relationships offer buyers many benefits including reliability of supply, risk reduction, easier problem-solving, better communications and high levels of service. Key accounts that are geographically widespread are often called national accounts.
Key account management has three features. First, key account management involves special treatment of major customers that is not offered to other accounts.
This may involve preferential treatment in the areas of pricing, products, services, distribution and information sharing. This may take the form of special pricing, customization of products, provision of special services, customization of services, joint co-ordination of distribution and workflow, information sharing and joint development of business processes and new products. Second, it is associated with dedicated key account managers who typically serve several key accounts.
They may be placed in the suppliers’ headquarters, in the local sales organization of the key account’s country, or sometimes on the premises of the key account.
Third, key account management requires a multifunctional effort involving, in addition to sales, such groups as engineering, marketing, finance, information technology, research and development and logistics.
- Integration of the key account programme into the company’s overall sales effort;
- Senior management understands of, and support for, the key account unit’s role;
- Clear and practical lines of communication between outlying sales and service units;
- Establishment of objectives and missions;
- Compatible working relationships between sales management and field salespeople;
- Clear definition and identification of customers to be designated for key account status.