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Understanding the Key Account Matrix

Helen Blomfield

Published: 2014-06-05 16:42

Once you’re in the fortunate position of having enough customers that you’ve hired another member for your sales team, you need to start thinking about prioritisation. It’s absolutely useless to have your top sales person maintaining contact with the very first account you signed – you know the one, they’re lovely people but they pay you approximately 43 pence per month and don’t really need review points every other week.  

Key Account Matrices (KAMs) are a way of visualising data that you have on accounts in order to prioritise your sales team’s efforts. Effectively, it’s a graph divided into four parts, measuring X (Customer satisfaction) against Y (Account attractiveness). This allows you, at a quick glance, to understand which customers you’re at risk of losing (low satisfaction) and which ones you really want to retain (high account attractiveness).

The more information you have, the more useful it becomes. Returning to the first example, if you track which accounts are handled by which member of the sales team, a distressing fact tends to become apparent at start-ups: a significant number of low potential accounts are being handled by your original sales hire. These were the accounts that were, essentially, trial runs; those first attempts where you fast-launched and tried to work the bugs out. They’re paying you a smaller amount per year but still have that direct phone line to one of the top members of your sales team. This takes up time that could be more productively spent on those new highly attractive accounts that they are trying to win.

This is just one aspect though.

The temptation is to think of key accounts in relation to two factors only – earning potential vs. customer satisfaction. This then gives you a nice matrix with the accounts that you want to focus on in the top left and top right corners. Doing this limits the usefulness of KAMs. It’s far better to think in terms of satisfaction vs. attractiveness – and attractiveness will be made up of a number of factors.

Is cash-flow a serious problem at your start-up? You need to be prioritising the accounts that would be willing to pay out as soon as possible. That half-a-million pound contract is no good if it would take place three years from now when your company’s gone in to liquidation.

Want to break into new markets? Prioritising accounts by industry segment or location may be necessary so that you can get that trophy client up, running, and willing to have a case study published about them.

This can all be done by a weighting formula – you’ll have all the information drawn together in a beautifully attractive excel spreadsheet. Want more emphasis on speed of contract? Increase the weighting on this factor to 50% and decrease the other factors accordingly.

 In this section I’ll be showing you a few ways you might want to refine your KAM and make it more useful.

First up, let’s put together some very basic information.

I have 10 companies here, and from having discussions with them, I’ve worked out all the money they could possibly spend on my services in the next 12 months. That’s going to be my initial attractiveness score. The other score is their satisfaction – I’ve initially based this on my subjective opinion of how happy they sound when they talk to me. I want to measure attractiveness on a scale of 1-10, so I’ll divide the potential revenue by 2000. (20000/2000=10, which is my maximum attractiveness at the moment).

I’m going to be very dull and put this all into a basic scatter graph. For my very basic first edition KAM, I’m also going to divide the quadrants equally right along the middle.

My first glance tells me I have a bit of problem. Two of the accounts that could spend a lot of money on me in the next 12 months are pretty unhappy with me – what’s happened with company G and company J? I’ll have to make sure one of my best revenue-savers handles those two accounts.

More positively, three accounts that could spend a lot of money on me in the next 12 months are pretty happy with me – that’s companies B, I and H. I’ll make sure they get a very good account manager to ensure I get as much of that potential revenue out of them as possible.

The bottom right-hand corner gives me a list of the companies that are happy with me but can’t pay me a lot this year. They’d probably be good companies to train my newest hire on and a steady source of revenue for reasonably little effort. The bottom left-hand corner aren’t very happy with me at the moment but they also can’t pay me a lot. It’ll be harder to get money out of these guys than the companies on the right, so they’re right at the bottom of my list of priorities.

If I’m really desperate for money, I might lower the red line a bit to change the quadrants around. This could bring company F and E up in importance. Alternatively, I might be looking for example case studies which means I need people to be really happy with me – in which case I’d move the blue line over to the right, and focus on getting people into the ‘satisfied’ quadrants. From my very fast graph, I can tell that I don’t think anyone’s really happy with me – at a 9 or 10 – so maybe I need to work on getting my customer service up to scratch.

Obviously, this isn’t hugely necessary when you only have a small number of accounts. When you have a hundred or so, however, it becomes increasingly important as a way of ensuring you’re focusing your best sales directors on the top accounts – it can become very easy to lose track of which accounts are assigned to which member of the sales team. My very basic first edition KAM has given me an idea of who I need to assign to which accounts as well as which accounts should be at the bottom of my priority list.