How to manage key customers?
While most business executives want to pamper their key customers, the definition of “key” is often not clear. For salespeople who get compensated on a commission basis, dollar/volume sales is key. So they would sell even when the account does not turn out to be profitable for the company. Many senior level executives, who are responsible for P&L, also look at the bottom line, and that is why for them the profitability of an account is important. The CEO who is concerned about creating shareholder value may think of “key” as those customers that are strategic to the growth of the enterprise long term.
That is why it is important that companies have a clear and consistent definition of who is a key account. This can be done by taking a quantitative approach rather than let each executive decide what is key. To make this work, a company has to align its compensation and rewards structure to support it and produce no conflicts.
Several people had written to me asking me to provide step-by-step guidelines for key account management. Here are three articles that I have written and these should be enough for any company to get started with a proper strategy.
How to determine key and strategic accounts by segmentation?
How to develop a key account management strategy?
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