Key Account Management Research Paper Starter

Key Account Management

An increasingly popular approach to marketing and customer service in many organizations is to identify key customer accounts that generate a significant proportion of revenue and assign them special attention and management. This is done to help ensure that the key account will be maintained and, if possible, grown. There are several general reasons for this practice, including, finances, customer relationships, increasing market share, and improving operational efficiency. However, key account management is not an inexpensive proposition and it is important that the provider develop criteria for choosing those customers or potential customers that will yield the highest return on investment for the key account management efforts. In addition, key account managers are much more than salespeople: They also have high levels of status and authority both within their own organization and with the customer; in this way, they can give the customer the attention it needs.

In today's world of increasing globalization and proliferation of high technology products, the opportunities for businesses are seemingly endless. However, in many industries, these same factors bring with them increased competition and the need to stay on the cutting edge in order to gain or maintain one's market share. A number of new marketing approaches have emerged that are designed to help organizations remain viable in this highly competitive environment. Strategic marketing is essential for developing a roadmap and measurable criteria of success for determining how to best market to increasingly sophisticated customers. This subfunction of marketing examines the marketplace to determine the needs of potential customers, the strategy of the competitors in the market, and attempts to develop a strategy that will enable the organization to gain or maintain a competitive advantage in the marketplace. Frequently, a business's strategic marketing plan is supported by an integrated marketing communications approach that combines and integrates multiple sources of marketing information (e.g., advertising, direct response, sales promotions, public relations) to maximize the effectiveness of a marketing campaign.

Identifying Customer Value

In most cases, in order for a business's marketing strategy to be successful, it is important not only to identify and acquire customers, but also to retain them. This is increasingly done by identifying customers that generate a significant proportion of the revenue for a salesperson or organization or have the potential to do so. This quality is frequently determined by estimating the customer's value, an estimate of how much a customer will spend with a business or brand. Analysis of customer value should include consideration of the depth, breadth, and duration of the customer's relationship with the business or brand as well as the cost to acquire, serve, and retain each customer. Another type of customer who may be designated as being key is one whose business is of strategic importance to the organization. For example, a customer for a new product line might be designated as key as might a customer who can serve as a crossover customer for both current products or services as well as those that the selling organization desires to market in the future. Although part of the philosophy of key account management is to build a portfolio of loyal key customers, an organization's key customers may change over time as other customers are acquired, the key customer's purchasing habits diminish, or the organization's strategic plan, target market, or offerings change. However, in general, it should be remembered that it typically costs more money to acquire a new customer than it doesretain an existing customer, whether or not that customer is "key" and the decision to designate any customer as not being "key" should be carefully made.

Key Account Assignments

Once these key accounts have been identified, they are typically assigned to a marketing staff member for special attention and management in order to help ensure that the key account will be maintained and, if possible, grown. Because of their strategic importance to the organization or salesperson, key accounts typically receive premium customer service in order to maximize customer satisfaction. Key account management is increasingly an important part of the marketing plan of many businesses. However, this approach to building a relationship with one's most important clients is not a quick fix. Key account management is a long term approach to building a relationship with a customer that can require up to 10 years to completely implement from identification of suitable account through achieving the full potential relationship with the key client.

Reasons for Implementing Key Account Management

According to research performed by Cranfield University's Key Account Management Best Practices Club, there are four primary reasons for organizations to implement this practice (Bruce, 2006).

  • Approximately 30 percent of the businesses surveyed cited hard, financial reasons as the primary reason for implementing key account management.
  • Another 25 percent of the survey sample responded that their primary purpose for using key account management was to improve relationships with their key customers.
  • 20 percent responded that they were using key account management as a way to gain a greater market share than the competition.
  • Another 20 percent citing the belief that treating key accounts differently results in better internal processes and higher operational efficiency.

In addition to these perceived benefits from key account management, the research revealed three additional benefits of the process.

  • First, it was found that organizations that practice key account management tend to attract and retain higher quality personnel not only for the key account team, but also for related sales and marketing functions than do those organizations that do not implement such key account management.
  • Second, the results of the review process with key customers frequently leads to process improvement not only for specific key accounts, but also throughout the organization as creative thinking becomes the norm and is more widely applied.
  • Third, many organizations using key account management found that costs were reduced in serving non-key accounts.


Not every client -- including large ones -- is a good candidate for key account management. Key account management requires a significant investment to improve customer satisfaction and help ensure customer retention. Therefore, it is important that the provider develop criteria for choosing those customers or potential customers that will yield the highest return on investment for the key account management efforts.

Determining Good Candidates for Key Accounts

To determine which customers are good candidates for becoming key accounts, several things need to be considered. Key account management is most applicable to situations and clients where...

(The entire section is 3145 words.)