Key account management is a fixture in sales. In recent years, the existing models have hardly developed further. This is surprising given the numerous changes in practice. On the basis of our sales consulting, we have developed the Zurich Key Account Management Model. This new model takes up the current developments in sales and offers a new system for improving key account management in a targeted way. The model builds on our Sales Excellence Model and is divided into two levels. The upper level addresses the different activities in key account management. Starting from valuable customer insights through to a differentiating playbook, the central activities are steered systematically. This is a clear added value compared with existing approaches, which understand key account management less as a sales activity than as an organisational unit. On the level below, the organisation needs to be transformed systematically so that key account management can adapt to changes in customers’ purchasing behaviour. This clear separation and systematics is unique and has proven distinctly superior to existing approaches in our training courses, seminars and consulting projects.
Level 1 of the Zurich Key Account Management Model
The upper level of the Zurich Key Account Management Model comprises six stages. These are not to be understood as a linear sequence, but as integrative sales activities.
Stage 1: Value Insights
Fundamentally, Sales Excellence focuses on improving information management in sales. This is especially true in key account management. It is important to understand the value of the company and its solutions from the customer’s perspective, and the financial value of the customer for the company (customer value). The better the information basis, the greater the chances of successful KAM. Besides understanding value, it is also important to have insights for applying modern sales approaches, such as Challenger and Insight selling.
Stage 2: Structure
Once value insights are available, the customers need to be structured optimally. How many and which customers does the individual KAM manager look after? How are the customers segmented? What content is communicated, and which price models and discounts are used? Since key accounts usually account for up to 60% of revenue, it is especially important to keep developing pricing further every year.
Stage 3: Solutions
Key accounts buy fewer and fewer individual offerings and more and more comprehensive solutions. That’s why it’s important for companies to develop solutions, or service building blocks, to support the individual KAM manager. Here, value insights again play a central role. How great are the chances for the individual cross-selling offerings? Which value-added services offer optimal added value for the customer and strengthen differentiation? Since the individual KAM manager cannot dive into the depths of all offerings and develop service building blocks spontaneously, the focus is on enablement.
4. Sales Tactic
The sales tactic, or sales approach, represents the operational core of the Zurich KAM Model. Four dimensions need to be considered: (1) the negotiation process as such; (2) the relevant service building blocks; (3) optimising the customer’s business model; and (4) supporting the changes — usually necessary — in the customer’s organisation. There is still too little awareness that comprehensive training on these four dimensions is needed at least every 3 years, so that every KAM manager is also up to date.
5. Pricing
As already mentioned, it is precisely in KAM that a customer-centric pricing approach should be used. In price negotiations, loyalty, cross-selling and customer-value increases should be supported systematically by pricing. In addition, pricing should be linked to the bonus system. Increasing revenue while simultaneously reducing the margin has crushing consequences for quite a few companies. Pricing in KAM should also be optimally linked to pricing for A/B/C/D customers, so that no contradictions can arise in the market.
6. Playbook
Key accounts will hopefully not be contacted by email just once a year. A playbook, or support plan, needs to be developed that takes the various interactions into account and enables employees, as a guideline, to improve their negotiating position — systematically and based on the relevant information from the first five dimensions.
The focus on the central activities in key account management is unique to the Zurich Key Account Management Model and makes it so valuable in practice.
Level 2 of the Zurich Key Account Management Model
The lower level of the Zurich Key Account Management Model focuses on transforming the organisation entirely in the spirit of Sales Excellence. Six elements are considered.
A: Strategy
KAM in particular needs to be embedded in the corporate strategy, and a concrete plan developed for improving the individual building blocks of key account management. What will be done in the area of value insights over the coming three years? How will pricing competencies be improved, and so on? Even though many companies hold the belief that no strategy is needed in sales, in key account management it pays off in particular.
B: Processes
Customer interactions need to be understood as processes. These need to be continuously analysed in terms of performance and, if necessary, improved. In addition, automations are still hardly found in sales. Successful KAM uses automation optimally so that employees gain more time for value-creating activities.
C: Digitization
The central weak point in sales. Although KAM employees enter, time-consumingly, little relevant customer data into unhelpful systems, the added value for the customer and the company usually still falls by the wayside. Digital tools, such as AI, need to be used much more strongly so that, besides automation, these tools also support employees more.
D: Enablement
A central building block in the Zurich Key Account Management Model is enablement. Marketing, customer service, finance and product management are called upon to enable the KAM optimally. How do new technologies affect the customer’s cost structure? Which customer visited the website? These are examples of how important it is for the entire organisation to rally behind the KAM and enable them optimally to maintain a valuable, long-term relationship with customers.
E: Skills
Enablement is closely linked to skills, or competencies. In KAM, a regular competency analysis is needed and, where necessary, competency adjustments or improvements. Since KAM is responsible for a large share of revenue, enablement should be given great importance here. Data management, negotiation management and customer-centric pricing are currently still non-existent in many companies. This underlines the high importance of skills.
F: Alignment
For KAM to be successful, it needs to be optimally embedded in the organisation via the structure and the information and decision processes. But the controlling of KAM activities should also be improved systematically, so as not to stare only at revenue year after year. Thus enablement and alignment, or integration, are closely connected.
The Zurich Key Account Management Model comprises two levels, each with six dimensions. This model is unique and covers the requirements for modern key account management holistically. We use it successfully in our seminars and in-house training courses, and will develop it further in the coming years. More systematics in KAM pays off!
