What is Account Management and Why it is important
Account management is the ongoing process of retaining and growing the business with your existing accounts or customers.
It is widely used practice by sales reps and business managers in each and every industry and it is generally used with the top accounts or critical for business customers. Every account manager should develop winning strategies and tactics for the top 20% of the customers to make sure the company keeps these customers in long term and generates additional business.
Why account management is important?
Your top customers offer many benefits to your business such as continuous flow of revenue, increased loyalty, more referrals, low cost business development, reliable sales forecast and long term planning, high-quality recommendations, etc.
Your top customers have a high long-term lifetime value and as a result your competition is going after these same customers. Because of this reason, managing your top accounts must be an effective strategic as well as tactical process used by your sales force.
Effective top customer management allows your company to engage your key customers on a regular basis and learn more about their business. This is one of the most important competitive advantages you can develop for your organization – to know your customers’ business better than anyone else in your industry. Understanding their business will help you increase your existing account revenue by offering better services, products and additional solutions.
Account managers are links between the organization and its customers. They know the customer, they understand their business and they know their pain, needs and priorities. What bothers the customers and what they strive to achieve is a critical information for every growth-oriented business.
Account managers need to have excellent marketing and selling skills in addition to good planning, problem solving, communication and relationship building skills. They are focused on opportunities and developing new solutions and flexible to adjust to the client’s environment. Being proactive is a required quality for successful account managers.
Successful management practice will give you the opportunity to lock out your competitors and obtain reliable revenue in the future. Typical short-term or one-time transaction oriented sales rep focuses on maximizing the transaction value by using sales tools like promotions, presentations, testimonials, etc.
On the other hand, the account manager has a different goal and focus – to maximize the lifetime value of the customer by creating value added solutions and creating long-term relationships. While transaction focused businesses have trouble establishing themselves as reputable, trusted and reliable providers, account management allows companies to achieve these very important and critical elements for business growth. Long-term relationships build trust and reliability while decrease the price sensitivity for the customers. Customers who trust you will generally be willing to pay you above average for the value, trust and reliability you provide.
Your key accounts are sources of new business growth opportunities. You can simply ask how satisfied they are and how you can improve your products and services. While others need surveys to gather customer opinions, account managers are simply able to ask the decision makers directly and get the feedback they need. There is no other more important information than your customers telling you how you can improve your business.
In order to develop successful account management practices you need a plan. This plan includes your major goals and objectives (what you are trying to achieve) and the most effective alternatives or ways to achieve your goals and objectives.
For example, for some organizations the account management plan includes a general calendar where major events are planned and scheduled such as account manager’s regular visits to the key customers, regular calls, ongoing support, annual and quarterly meetings, etc. In addition, the plan needs to include how the account managers will deal with unexpected issues, problems and opportunities. Such a plan will minimize mistakes and help management prepare for various potential scenarios.