Sales leaders often default to a binary view when stratifying or tiering their customers, leading to the creation of two broad account categories — key accounts and “non-key” accounts. Many times, the “non-key” accounts are further stratified into sub-tiers focusing on different engagement strategies or resourcing models.
In speaking to Gartner clients, I have noticed a tendency to view the key account tier as a unified group with a single common characteristic — size. In Gartner’s 2021 Gartner Key Account Benchmarking Survey key account managers observed current revenue contribution (79%) and company size (74%) as being the #1 and #2 criteria, respectively, used to determine key account status.
Grouping and treating customers too similarly, even the most important ones such as key customers, leads to wasted scarce resources and missed opportunities. For example:
- Only 16% of key account managers describe their key customers as fully utilizing dedicated resources provided to them.
- 58% of sales organizations missed achieving quota linked to their key accounts.
Factors outside of just current revenue, such as strategic importance, potential for growth and willingness to collaborate, all contribute to determining the value of a key account compared to others. However, it’s important to think about this as a two-way street, because relative to others, the supplier has a different level of importance and value to the customer. Finding the sweet spot of alignment is essential.
Effective Customer Collaboration and Calibration Is Critical
Identifying levels and types of relationships within the key account tier enables sales leaders to make more tailored and targeted investments with those key accounts seeking to advance their business relationship. Getting answers to the following core questions can help sales leaders responsible for key account programs to “zoom in” on their key account tier and refine the key customer relationship types:
- What is the key customer trying to achieve?
- What can you as a key supplier uniquely provide to help the key customer achieve its strategic business goals?
- How does the key customer view the business relationship with you as a supplier?
- How much potential is there to elevate the business relationship with the key customer?
- How easy is the key customer to do business with?
- How willing is the key customer to collaborate or partner?
At a minimum, the process is likely to result in dividing the key account tier into four sub-tiers:
- Strategic — Key customers and supplier participate in co-value creation activities, engaging in joint business planning to achieve mutually beneficial goal.
- Growth — Key customers and supplier prioritize engagements to ensure that the customer’s needs are aligned with the supplier’s products or solutions are linked to help them meet business results.
- Maintain — Key customers and supplier acknowledge a strong current business relationship anchored on both possessing significant buying and supplying capabilities.
- Retain — Key customers and supplier acknowledge the transactional nature of the business relationship, enabling both parties to focus on how to most efficiently manage it.
Getting the answers that will enable you to refine your key account tier can be challenging. Ultimately, however, the benefits of collaborating with key customers and calibrating expectations about the relationship with those customers outweigh the difficulties, in no small part because collaboration is so critical to alignment. In Gartner’s 2020 B2B Key Customer Survey, 69% of the key customers who said they collaborated with their supplier to determine the shared goals of the relationship found the supplier effective in aligning its strategy with their objectives.
Another benefit of the key account refinement process is clarity. For example, you may determine that certain key accounts really aren’t seeking a strategic partnership. In fact, some key customers may want a more transactional type of relationship —– and that’s OK. Identifying those types of accounts and calibrating with the key customer on expectations allows for suppliers to shift resources and effort toward other key accounts that may be more aligned toward a strategic partnership. Knowing that not all key accounts are created equal ensures your team’s effort is deployed where it will matter most.
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