Key Account Management

To help professional firms design and implement programs for key account management, I have interviewed clients of firms in a wide variety of professions and countries to obtain those clients' views of their relationships with their outside providers.

Many of these clients' concerns are similar. A few of the more commonly expressed concerns are these:

• They are only interested in selling their services, not in solving our problems.
• They don't do anything to make us feel that our business is important to them. We are taken completely for granted. They never call up to inquire how our business is doing. We only see them when they want to sell something.
• The quality of service is variable between departments and locations. We don't have the patience for "adequate." There's no point courting us at HQ unless they're impressing our people everywhere. We consult broadly with our executives before deciding whether to use them again.
• There are few signs that they're really listening to us. They bring us generic issues faced by all companies. We want to hear about the specific opportunities for, and challenges facing, our company.
• We don't want to be "romanced": We already have many opportunities to go to fancy dinners or attend sporting events. They should focus on being useful to us, not on becoming our friends.
• Their main problem is at their junior level: More quality assurance is needed. We are sceptical about the value of a lot of what's done by their junior people.

A number of key conclusions can be drawn from this list. First, it is clear that clients want their providers to earn future business. They don't want a "sales pitch." The emphasis in key account management must clearly be placed on investing the firm's own time to build the relationship. This notion is in direct contrast to what many firms have in place. Rather than relationship plans, firms tend to draw up sales plans. The difference is readily apparent to clients.

Second, it is clear that account management for a major client is not a simple matter of a single member of the firm (the key account manager) focusing his or her attention on a few key decision makers.

A proper relationship with a major account requires the full participation of a large number of people who service or deal with the account. Everyone who participates in serving the client can, and does, affect the relationship. Multiple contacts must be established, and a consistency of service and attentiveness must be attained.

Next, it is clear that clients want their outside providers to spot their specific needs and opportunities, and to customise any suggestions for additional work. This also requires teamwork among all the outside firm's people, since the key account manager is often poorly positioned to identify the client's emerging issues.

It is often the case that the client CEO and other HQ personnel are among the last ones to know about emerging issues. Frequently it is the client's junior executives and "field" people who are most aware of developing issues and are most willing to talk openly about them. Accordingly, the junior professionals on the provider's team, the individuals who have the greatest contact with these people during the current engagement, are often best positioned to surface new needs.

Finally, the clients' concern about junior-level people is not an absolute distaste for young people but rather for the fact that they are placed on major accounts in an unsupervised, untrained fashion. Internal training and good project supervision, it turns out, are major account retention and growth instruments. Unfortunately, many senior people at professional firms fail to pay attention to these instruments until disaster occurs.

What Clients Want

What do clients want firms to do to grow their relationship? Here are a few of the most commonly expressed suggestions:

• Make an impact on our business; don't just be visible
• Spend more time helping us think and helping us develop strategies
• Lead our thinking. Tell us what our business is going to look like five or ten years from now
• Place some of your people here for a couple of months so they (and you) can truly "know" us
• Schedule some off-site meetings together. Join us for brain-storming sessions about our business
• Provide more benchmarking studies comparing us to our competitors
• Do more things "on spec" (i.e., invest your time on preliminary work in new areas)
• Jump on any new pieces of information we have, so you can stay up-to-date on what's going on in our business. Use our data to give us an extra level of analysis. Ask for it; don't wait for us to give it to you
• Make an extra effort to understand how our business works: sit in on our meetings
• Tell me why our competitors are doing what they're doing
• Discuss with us other things we should be doing -- we welcome any and all ideas!

What many of these suggestions have in common is that they are about expending serious effort on getting to know the client's business and industry in great depth. Some of this exertion can take place in the professional firm's "back room" (conducting studies, benchmarking, etc.).

However, much will require greater contact with the client. It is notable that while clients want more contact, they want it to be in settings that allow mutual discussion and exploration of the issues.

It is also clear that clients want a business partner, not a friend. The good news is that clients clearly do want to be brought new ideas: they want a relationship.

The Key Account Manager

How does a firm respond to these client needs? The answer, increasingly, has been to develop a system of key account managers who are responsible for the firm's total relationship with each key client. These managers have the responsibility of managing (and growing) their firm's relationship with major clients, co-ordinating professionals across the various disciplines of the firm and often across geographic boundaries.

Since geographic or discipline groups are frequently made up of separate profit centres, the role of the key account manager remains a complex and often ill-specified responsibility. Even where such positions have existed for many years, there continues to be significant experimentation and frequent change as client needs and the required response from firms continue to evolve.

Luminary or Manager?

The most important decision that must be made in determining the role of the key account manager is which direction he or she should be facing. Should the key account manager be primarily a "luminary," the firm's representative to the client (i.e., facing outward), or should he or she be facing inward, acting as the client's representative to the firm (perhaps even the client's advocate), ensuring that all of the firm's resources are brought to bear on the client's problems?

Naturally, both roles must be played, but the most effective key account managers I have encountered see themselves primarily in the second role. The logic of this should be clear: If you ensure that the client's needs are met, the firm will benefit.

Many firms refer to their account managers as "relationship officers." This captures a profound truth: Key account managers are most effective when they focus on the (long-term) issue of strengthening the relationship. When key account managers see themselves primarily as salespeople, focused on generating more fees from the client, they are less well accepted by the client and become less effective.

Many key account managers see their role as carrying the primary burden of building the relationship. This is usually a mistake. The job is to manage the relationship, not to try and build it alone. The team of people serving a major client should be made up of individuals from all levels of the organisation, from numerous disciplines and many geographic locations. The team must serve this client, and the team should be responsible for building the relationship. This creates a managerial task of no small proportions.

Key account managers must truly be managers, since key account teams are rarely simply defined organisational units. While the account manager may be dedicated to serving his or her key account exclusively, few of the team members will be. Most frequently, their work for the key account will be only one of a number of responsibilities they bear.

While in aggregate the key account may be of major strategic significance to the firm, each team member's portion of that account may be only a minor activity compared to the priority clients of his or her office or of the discipline team to which he or she belongs. Accordingly, the job of the key account manager is to create the team to serve their mutual client and then to energise and motivate that team. This means devoting significant time to being a terrific coach.

Influence Without Authority

Key account managers often have responsibility without full authority. Team members assigned to their account report primarily to local discipline and geographic business unit leaders, who are often the primary influences on the team members' performance appraisal and reward. Accordingly, many key account managers must learn to manage without having the power of the purse to influence their team members.

Fortunately, this can be done. While money is a major motivator, there do exist a number of "non-financial currencies" available to the key account manager that can be used to attract and energise members of the client team. Among these are the following:

• Challenge
• Meaning
• Participation/involvement
• Visibility (inside and outside the firm)
• Contacts
• Special roles or assignments
• Access to information
• Access to additional resources
• Personal interest
• Recognition
• Appreciation and approval

The key account manager's task is to make the team members want to participate actively in serving and nurturing the account. This can be done by providing what they often do not find in their regular work. Among these things are challenge and meaning. In principle, work for key clients should be exciting and challenging, even more so than serving other kinds of clients. However, meaning and challenge should not be taken for granted. In the hurly-burly of busy professional lives, it is easy to lose sight of the significance of what you are working on. Effective key account managers work at helping their team members find the excitement, the challenge and the drama in their client's problems.

Effective key account managers also work hard to make the people on their team look good. They create opportunities for other team members to participate in highly visible activities that help their careers. They are willing to suppress their own ego needs and to work hard to give the team members valuable client exposure. They work hard to create new contacts for the team members and to get them involved in stretching, learning activities that are out of the norm of the team members' daily lives.

Outstanding key account managers are always looking for ways to be helpful to their people before they need those people's (often last-minute, emergency) assistance. They think about ways to make it easier for their team to serve the client. They give them tools, research, industry and client information, all in easily digested form.

They arrange for someone to read, summarise and circulate every trade magazine, industry association publication and financial analyst report in their client's industry, so that all team members are up-to-date about what's going on in the client's world.

Good managers go out of their way to make their team member's lives easy in ways large and small, because the best way to get someone to co-operate with you is to do them a favour first.

Above all else, the best key account managers travel a great deal. They maximise the amount of contact not only with client personnel but with their team members. They demonstrate a personal interest in every person on the team, and use the immense power of face-to-face appreciation to motivate enthusiastic involvement in their account. They work on the principle that if they serve their team, the team will serve the client.

Summary

The most important fact to note about key account management is that it is an investment activity for everyone involved. While it is relatively easy to define the roles and responsibilities of the key account manager, ways must be found to convince and reassure other team members that participation in the key account program is a valid, recognised firm activity, even when it is not billable.

It is for this reason that some firms allow the key account manager to "buy" the time of other personnel for what would otherwise be non-billable activities, thereby allowing those helpers to get "full billable credit" for their participation. Significant (non-billable) budgets must be set aside, and the program should be launched with a longer-term perspective than the traditional "fee credits" or "bookings" systems usually allow.

The best news is that key account management is in everyone's interests. Clients want it, and it benefits the firm by growing relationships and generating new fees. Done properly, it can provide career-enhancing opportunities for every professional involved. Studies in many industries have proven the economic benefit of creating customer loyalty, and my own work with professional firms over the last 15 years have convinced me that there is a clear link between profitability and success in nurturing key accounts. It's hard work, but it's a clear path to economic success.

Managers and Values

by Greg Thomas 2001

from weLEAD Online Magazine, 2001

Richard Wood is recognised as one of the leading authorities on the financial management of professional service organisations. He consults and advises on a wide range of issues, from financial management to marketing. Richard gets to the heart of a matter in a down-to-earth and colourful style. He has authored a number of other acclaimed articles.

Richard, I have completed reading your latest article, Practice What You Preach, and found it to be very insightful and well written. Many of the leadership professionals who write articles for weLEAD Online Magazine emphasise the importance of "personal example" or "walking the talk." Your article confirms this point. What events or experiences led you to write Practice What You Preach?

RW: After 5 years as a consultant, I thought I had learned some lessons about good management. When I shared these with my clients, they would usually agree that what we discussed was sensible and logical, but they would always ask "But does anybody DO that?" I would trot out my anecdotes and stories of famous companies and managers, but neither my logic nor my stories seemed to be satisfying to my clients. So I decided to collect some systematic data on what successful businesses were doing differently from the rest. To my delight, the evidence confirmed what I suspected all along: the best performers were not doing things that others didn't know about, they were just doing them. Business is a lot less complex than we try to make it. Does any leader not know the importance of client focus, outstanding teamwork, continuous learning for everyone and the rewards of quality? We all know this stuff. But how many leaders can confidently say that those standards are lived to a high level in their operations every day? The problem isn't what we don't know about how to win. The problem is that we're not doing it.

The real lesson of the article was the fact that the most successful operations were led by individuals who did not merely advocate these standards as a matter of business opportunism ("Oh well, I suppose we had better try quality, if we have to"). They were led by people who lived and breathed the standards they advocated, almost to the level of religious enthusiasm. It turns out that if you want to get your people to follow the standards and principles you preach (and that will make you money) then they must believe that you mean it, that these are real principles, values and standards with you, on which you will not tolerate non-compliance. Very few managers believe in ANYTHING to that level, or at least they can't convince their people that they do. As one company said to me, "Our values only apply to you if you don't have a book of business." Notice that when I use the word "values," I'm not trying to be moralistic or religious; it's nothing more than a strict set of standards that make up your theory of how you are going to win.

What should a leader or manager do when their personal values differ from the organisation's values?

RW: There are only three choices. One, fight to have your values in place where you are in charge. Don't wait to convince your superiors, or to get permission. Just start running the place according to what you believe in. If they want to fire you, fine. But since we are talking about values that breed employee commitment, excellence in client service and extra profits, they won't fire you. In other words, prove that what you believe in works. Second option, quit. Life's too short to work with and for idiots. Unless you're a Buddhist or a Hindu, you probably believe you only have one life to live. Do you really want to spend the one life you were given doing things you don't believe in? The third option is to buckle under, give in, give up. You don't really believe those values anyway, do you? You certainly can't have believed in them if you're prepared to compromise them. But it's not my job to be a moralist, and it's the option most business people take: compromise, concede and get on by going along. If you want to do that, it's your privilege. I just want to meet my maker saying, "I failed often and I made lots of mistakes, but I really did my best." Perhaps even more important, I want to look myself in the mirror each morning and be able to say the same thing. Nobody knows what real truth is, and you can believe lots of different things. But someone who doesn't believe in anything, who has no fixed principles, isn't going to attract much of a following. He or she cannot be a leader, because no one will follow.

What do you believe is the single most important quality or lesson the survey revealed?

RW: It isn't about systems. It isn't about processes. It isn't about strategies. It's about having managers in place who know how to excite, enthuse and energise people. Again, this isn't "be nice to people" time. It's strict logic (and now data). To make money, you've got to serve the market-place to superior standards. To do that, you've got to be able to get your people energised, excited and enthused to never settle for competence, and see the fun and drama and challenge in never settling for less than excellence. And to do that, you've got to have a manager who knows what he or she is doing. What this sequence shows is that if you want to make bucketfuls of money, the only way to do it is to begin the chain of events that produces the money, and that's to focus on getting people excited. Yet the truth is that most managers focus on the money and neglect the people's enthusiasm levels. (Keep your heads down and grind it out, ye swabs!) Somewhere mangers got told that this was good businesslike behavior that produced the most money. Somebody's been lying to these managers. It isn't how the game works!

Richard, some leaders or managers have personalities that lack expression or emotion. What are some of the ways they can get people "energised"?

RW: I hope I haven't miscommunicated either my findings or beliefs. It's absolutely not about being an extrovert. In fact, extroverts make bad managers (which is why I'm solo)! The best managers in my research are even-keeled types. As I said in the article, they manage with a style of insistent patience. Patience in that they don't expect Rome to be built in a day, but insistent in that everybody understands that we are building Rome; we're going for the gold, we're going to be excellent and never settle for competence. They create energy, drive and enthusiasm in others, not by force of personality but by getting them to believe that we ordinary people can accomplish great things if we really try. It's the degree of convincingness (if that's a word) that the leader can create that we are doing important, meaningful things with our work lives that are worth our commitment. Being convincing on that point doesn't take open displays of emotion; in fact, it's usually the opposite. Think of Gandhi, think of Mother Theresa. We follow because of the strength of their convictions, not their bubbly-ness!

You use the words "manager" or "managing" often throughout the article. How do you personally see the difference between a "superstar" manager and a leader?

RW: I hate definitions and labels: all that matters to me are behaviours, skills, attitudes and actions. Put whatever label you want on it. I like the word "management" because it comes from medieval French and, literally translated, means "the holder of horses." The manager's job is to get all these feisty stallions and broncos to move at roughly the same pace, in vaguely the same direction. The skill is not the vision, "Let's go this way, folks!" Direction is very valuable if you can manage the horses, but if you can't it's kind of irrelevant. The managers I studied were not visionaries. They got incredible performance out of people by having clear standards and principles that they operated by, and people could decide whether to opt in or opt out. But if you were in, then the value statement wasn't just a bunch of aspirations; it was a set of non-negotiable minimum standards: You will keep learning! We will never compromise quality, no matter what the financial temptations. We will be team players to the extent that we'd fire our biggest business-getter if he or she didn't join in and tried to be an individualist. You get the benefits of that which you are prepared to enforce, not that which you hope to be someday.

In a dynamic section in the article, titled "The Courage to Manage," you state, "In my experience, the single biggest barrier to implementing any strategy is courage." Would you expand on this statement for our readers?

RW: It's real simple, and it's real tough at the same time. Everything we want in life takes effort and discipline, and that comes first, with the payoff later. Want to be thin by Christmas? Then diet and exercise now. Want to do well in university? Here's the secret; go to class and do the homework! Want to do well in business? Never compromise on outstanding quality and service to your clients and customers, energise your people and act like team players. Any questions?

So what's the problem? Why didn't we all get great grade point averages; why aren't we all fit? Because life is filled with daily temptations: attractive, deeply satisfying acts of expediency. (Hey, want to party tonight? Doesn't that cream donut look good? How about taking in a little off-strategy work; c'mon, it's cash! You weren't really serious about that strategy rubbish, were you?)

We don't need help figuring out what works. We need help finding the courage to stick to the diet. Human beings are incredibly short-term focused, and it's hard to work on an improvement program if all you care about is how it feels today. If we're going to make it, we have to really want that goal, really believe in our bones that it's worth striving for and really believe that there are no quick fixes, that the only way to live is doing the right thing. (Sorry, can't come to the party, got to study!) That's courage, and that's what it takes.

The articles balances a lot of beneficial information with actual "case studies" of high-performing offices or organisations. Which case study did you find most interesting and why?

RW: I hate to wimp out on you, but I can't pick. Readers can decide for themselves, but to me the whole point of the nine case studies in the article was that, in different words, each of these leaders (and their people) were saying the same thing, again and again. You can read one case study and get the point. I suppose my favorite is the British company (I can't tell which it is). But if even the Brits can believe in the power of openly expressed passion, ambition, enthusiasm and can show that you can make a bundle of money doing it that way, well, there's something powerful going on!

What is your next project? Any more articles planned in the future?

RW: I've already authored my next article, due out in April 2002. It's called First Among Equals, and is a detailed how-to article on how to manage a group of professionals. Only seven or eight months to wait!

Thank you, Richard!