Key Account Management - Quarterly Research. In this research report, we review 3 case studies of key account management deployments and discuss various elements of success and failure. A presentation by Sales Benchmark Index.

1. Key Account Management 2011 Quarterly Research: Key Account Management

2. Key Account Management: Research Introduction

3. Hypothesis Does the benefit of a Key Account Program exceed the effort to implement one?

4. Most Common Objectives of Key Account Programs: Defend key accounts against competitive threats Grow revenues received from key accounts via cross sell Grow revenue received from key accounts via up sell

6. Outputs (deliverables)

7. Purpose (program impact)

8. Goals (strategic intent)Data Collection - Interviews, Rep ride alongs, Data reviews, Surveys, Documentation reviews, Observation Use of contrast method – Success vs. Failure

9. Key Account Management: Case Study #1

10. Case Study #1Firmographics Industry: Software Revenue: $337 million Size: 960 employees Region: North America GTM: Multi-Channel Age of Key Account Program: 27 months

11. Results Reduce churn by 50% Result: Key customer churn reduced from 9% to 4.3% in 27 months Grow key account client revenues Result: Average account revenue up 6.1% Increase penetration of software modules in use Result: Average number of modules in use went from 1.4 to 2.3 Increase new module revenues Result: Revenue generated from new module introduction within key accounts increased 13%

13. 2 Solution Engineers

14. 2 Customer Service RepsDefined Key Account Selection Criteria Focused Account Plans

15. OutputsKey Account Team Structure Corporate Functions – Professional Services, Product Development, Marketing, Legal, Finance, Etc

16. OutputsAccount Attractiveness Score

17. OutputsTotal Account Value

18. OutputsQuarterly Account Progress

19. OutputsMcKay 49

20. OutputsStrategic Actions

21. PurposeProject Impact Specific: Reduce churn, Increase revenue per key account, Improve cross sell ratio, Up-sell new product offerings Measurable: Churn reduced by 4.7%, revenue per account up by 6.1%, cross sell ration up to 2.3 vs. 1.4, and up-sell up 13% Attainable: Deliverables/tools were simple enough that KAM’s adoption was not an issue Realistic: Objectives of modest reduction in churn, revenue per account, number of products in use, and rate of consumption for new products introduced, were all set below industry benchmarks Timely: Project duration is 27 months and counting; victories along the way; demonstrated organization patience

22. GoalsStrategic Intent Improved company revenue performance Key customer receives differentiated attention Account managers obtain success with less heavy lifting

23. Key Account Management: Case Study #2

24. Case Study #2Firmographics Industry: Media Revenue: $440 million Size: 7,100 employees Region: Global GTM: Direct Age of Key Account Program: 16 months

25. Results Drive key account win rates north of 90% Result: Win rate declined by 21% Retain key clients Result: Renewal rate dipped below 80% Renew at stable price points Result: Annual Contract Value is down 6% Increase Customer Lifetime Value Result: Portfolio turnover is up to 27%

26. InputsKey Actions Taken Poorly constructed Key Account Recruitment Package Impact: increased client leverage, forced price pressure, led to client shopping the offering Account Planning Process all internal Impact: increased bureaucracy and admin ‘cost’ to reps Account decision makers decentralized Impact: required rep-to-rep cooperation, which did not happen Tried to automate in SFA first Impact: Without running in ‘manual’ mode first the process was not tested and automation investment was wasted Tried to go from launch to full roll out in 6 months Impact: organizational burnout and turnover of key staff

31. PurposeProject Impact Specific: Win rates went down but no win/loss reviews are occurring to understand root cause Measurable: Program was measurable Attainable: Deliverables/tools were poorly designed, internally focused, difficult to use, and misplaced in their application. Result was poor account and rep adoption Realistic: Objectives were not clear (examples: “own the account”, “get 100% wallet share”, “increase prices”) Timely: Results were expected in an unrealistic 6 months

32. GoalsStrategic Intent Result Drive key account win rates north of 90% Retain key clients Renew at stable price points Increase CLV

33. Key Account Management: Takeaways

34. Key Account Program MetricsLeading Indicators Metric name World-Class Wallet Share 76.5% Program Recruitment Success 87.0% Portfolio Value Improvement rate (quarterly) 13.3% Account Attractiveness Score Improvement Rate 17.9% Qualified New Candidate Member Rate 14.6%

35. Key Account Program MetricsLagging Indicators Metric name World-Class Accounts per Account Manager 3.4 Account Breakeven Rate 31.1% Account Lifetime Value Ratio 2.6 Program Churn Rate 3.9% Program Revenue Contribution 81.1%

36. Top 10 Evidence-Based Best Practices A Key Account Program should have all of these objectives: Defense Cross-sell Up-sell Program benefit for client must exceed program benefit for seller Low breadth/high depth is the best approach 5 phased adoption takes an average of 13 months start to finish Best selection approach is: Account Attractiveness Score Customer opt-in

37. Top 10 Evidence-Based Best Practices Build four-pronged risk mitigation approach into Account Plan Execution Operational Talent Deploy streamlined, value-driven Account Plans Institutionalize the relationship through many-to-many contacts Triangulate the review process to ensure continuous improvement Client review Account Manager audit Peer review Ensure the Program contains a process to exit accounts

38. Hypothesis Does the benefit of a Key Account Program exceed the effort to implement one? Answer: Yes -- if revenue concentration exceeds 80/20 rule (80% of revenue coming from 20% of accounts) No -- if revenue is spread evenly across many accounts

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