Traditional sales methods have undergone such a significant evolution in recent years that it could plausibly be claimed that we are now in a new era – the age of Key Account Management (or KAM). KAM may be more complex than the sales techniques which preceded it, but it has far greater potential and reach. It literally goes inside both seller and buyer organisations, and it’s become such a feature of successful business today that key customers have come to expect professional, high-involvement relationships. Put simply, it’s a method which a huge array of the most successful business are adopting, from the flourishing UK umbrella company to the profitable law firm, the prosperous accountancy company to the thriving recruitment consultancy.
Professionals such as lawyers can benefit substantially from adopting the KAM model. The fruits of lavishing special care on key accounts are, frankly, bountiful, offering major opportunities to generate more business as well as saving costs for both sides. Given that the costs of managing key accounts are relatively high, demanding time, significant investment and continuous innovation, it matters that law firms select their most strategic accounts wisely.
Studies consistently show that between 60 and 80 per cent of a firm’s profits are generated by approximately 20 per cent of its clients. It’s essential to differentiate accurately between these high profit clients and those who generate lesser revenue in order to deploy resources most effectively. Key Account Management, as its name implies, directs additional attention toward a firm’s key accounts (that lucrative 20 per cent) without neglecting other major accounts – the clients who between them may generate up to 30 per cent the company’s profits. A larger number of smaller clients – the base of the pyramid, as it were – typically generate around 10 per cent of revenue.
Specialists in Key Account Management will typically conduct a matrix analysis of a firm’s client data using sophisticated software. Generally, these analyses plot relative customer satisfaction against account attractiveness, providing a powerful tool for deciding accurately which accounts to prioritise. KAM analysis also continually monitors a firm’s accounts so that the process of prioritisation remains live and up-to-date.
Different management strategies can then be applied to different accounts: those with high customer satisfaction scores plus high account attractiveness ratings will become the firm’s strategic accounts and secure the highest investment. Another category may score highly on customer satisfaction but somewhat less on attractiveness. These accounts may need further scrutiny and more selective investment. A little lower down the scale are accounts with high customer satisfaction but relatively low attractiveness, and are most appropriately served by more basic maintenance strategies.
In short, Key Account Management will allow lawyers to carefully understand each of their customers and stay ahead of their needs. But it also helps law firms accurately assess a client’s potential for further desirable business, and evaluate not simply the profit but the cost and the sources of risk, too. This is how the firm’s most strategic accounts can be identified. KAM allows law firms to drop a less discriminating “one size fits all” approach to managing accounts, facilitating the development of targeted strategies appropriate for each customer.