KAM Definition – Key Account Management is a strategic approach distinguishable from account management or key account selling and should be used to ensure the long-term development and retention of strategic customers. The acronym used by professionals in this industry is KAM.

Past

What the customer thinks he is buying, what he considers “value” is decisive – it determines what a business is, what it produces and whether it will prosper’ – Peter Drucker

Origin of KAM

The origin of KAM lies way back in the era of Peter Drucker. A learned man, he understood the concept of customer dynamics and forecasted the change during his time. It was then that organizations realized the concept of soft selling, and started focusing on relationship mapping with their customers. According to research, companies that focused on long-term relationships with customers generated more profits than the companies that focused on short-term customer goals. Hence maintaining long-term happy relationships with customers became a ritual with practices like contact management, behavior-based loyalty and reward programs, etc. Organizations began to develop separate teams of ‘Account Managers’ that were solely responsible for looking after and managing the company’s larger and more valuable Accounts. Special teams were even developed to manage ‘high potential’ Accounts that needed to be nurtured and developed over time for a potentially rewarding relationship.

Pareto Principle

As the markets evolved, customer – buyer relationships evolved. The Pareto Principle was a defining observation – 80% of revenues came from 20% of Accounts or Customers. Those Accounts were later referred to as ‘Key Accounts’. Organizations started focusing on resources primarily on Key Accounts. However, Strategic Account Management was still an underserved opportunity. The people responsible for managing Key Accounts were in reality ‘Key Account sellers’, managing opportunities rather than the relationship.

Present

It is only in the recent few years when companies have started realizing that when buyers and sellers share a collaborative, interdependent relation, productivity increases in the long term. Looking at the current market scenario, there seems to be a rise in overall KAM technology adoption and awareness across industries globally, but if we talk about the United States, the overall Google searches for KAM have remained constant over the past 5 years time. In the graph from Google Trends below, you can see the number of searches for Key Account Management in the United States over the period of the last 5 years.

Well! A possible reason for the stagnancy could be a lack of perception about KAM as a dynamic or trendsetting function in the organization. Key Account Managers are a bit like unsung heroes, chipping away at complex relationships, away from the limelight. Needless to say, they have almost the same pressure as the regular Sales team to meet their quotas, but because successes are not so fast or visible, they tend not to be top of mind when it comes to the development of enablement or automation tools like CRM. Automation is generally some modified version of CRM because the focus tends to remain on the Key Account Managers individual relationship building skills. Methodologies for KAM Sales tend to be homemade, and core processes are not systematic or consistent across the organization.

However, like every other field, technology is driving the world and KAM can’t escape for long. Key Accounts are getting increasingly complex, dynamic, global and networked. There is a genuine need to be able to automate and institutionalize key processes, reduce a person’s dependence, enable the people who drive KAM, manage data and analytics and of course track customer goals and opportunities in a more structured way. Associations like SAMA are trying to spread awareness globally about Strategic Account Management & emerging technologies through their efforts and events. We are looking forward to seeing a lot more KAM tech in Dreamforce’16 coming up this October. However, the traditional mindset that considers KAM an ‘art’ tends to question the scope of technology. We say it’s time for organizations to start asking- can technology transform the way we manage and grow our Key Accounts?  It’s a question that we just can’t afford to ignore anymore.

Future

The future of KAM is about not just increasing productivity in the long term but about creating value for all shareholders in the ecosystem. With increasing complexity, it’s imperative to look for solutions that operate at the cross-section of the art and science of Key Account Management and help take execution to the next level. On the positive side, some industries are leading the charge for KAM, with Google trends showing a positive increase for KAM searches over past 12 years across Banking, Health and Business and Industrial areas. These are also the early adopters for KAM technology. The 90s was the year of CRM; 20s can be the year of KAM technology. What do you think? We’d love to hear your views on the past, present, and future Key Account Management, and especially on technology to transform Key account management. Write to me and we will share the best ones with all our readers on this blog next month!