Don’t Let Biases Impact Your Key Account Selection

(This is the second post in our multi-part series on Key Account Strategy and Management).

You’d think that investing in our best customers would lead to easy growth.  They buy a ton from us already, so if we just partnered a little more strategically then we could grow even more, right?  Wrong – and often, we’re the reason why.

Before we can even think about selecting key accounts that we want to target to grow, we need to make sure we have a compelling value proposition to get the customer to want to partner with us.  As my first post in this series addressed, if you can’t articulate the objective, scope, and advantage of being deemed a key account of your organization, neither can your customer.

But let’s assume we’ve got a solid value proposition in place.  Now it’s time to figure out which of our accounts to put into the key accounts program.  Many companies struggle with this because they put too much focus on revenue/volume metrics.  That’s not to say that current and/or potential revenue isn’t important, but there are things that revenue can’t measure.  Too much focus on revenue leads to us ignoring bigger issues like cost to serve or strategic alignment, and often emphasizes short term gains at the expense of strategic initiatives.

So how have companies overcome this? 

By conducting more thorough and objective analyses of many crucial variables prior to promoting accounts to key account status. 

Electrolux built a way to rigorously assess cost to serve by measuring things like profitability, relationship depth, brand strength, strategic value, value creation, and supply chain alignment.

Square D did something similar, ensuring that reps objectively assess not just the size of the opportunity, but how well an account is strategically aligned with their goals.  You’re now making decisions based not just on the size of the opportunity, but how well this customer is a good fit for your organization.

By making these assessments more objective, you’re helping to remove human biases that otherwise help the wrong accounts sneak into your key accounts programs.  Accounts that sound like good accounts because of the brand name or the size of the opportunity, but when you dig into it aren’t good fits for a key account program and never get the returns we expect.

So are we now ready to grow?  Not quite.  We have a value proposition in place.  And we’ve objectively quantified the accounts that have the highest future value and strategic fit.  There’s one factor we haven’t yet explored – the customer’s role in all of this.  We’ll examine that in a future post.