Depth & Breadth

Do you have a classic business model where 80% of your business comes from 20% of your client base? If you do, then having a key account management plan is absolutely essential. An effective key account management plan helps us to focus on the long term relationship with clients.

A key account management plan lays out how we will treat each of our customers and what level of service we will give to them. This is worked out with the marketing department using a client matrix and weaving this information through the marketing plan.

One of the greatest dangers businesses face is that they can become overly reliant on a very small number of key clients. The danger with this is that if anything happens to our client (or our relationship with our client), the business can suffer a significant loss of income in a very short space of time. There are other concerns as well of course, like being overly dependent on a single contract or customer which then unfairly weights any negotiation proceedings as they will often know that you need them more than they need you.

Another less obvious impact is when the relationship between your business and your largest client is reliant on only one or two people. As a business owner you need to be very aware that it is not ideal for your key relationships to be people dependent. You need to make sure that you have depth and breadth of relationship across an organisation. If only one person in your business has the relationships with your biggest client, then the reality is that if anything happened to them your business is at risk. The relationship is not with you as a company but with them as an individual. 

This is particularly concerning if that person is an employee, as they can be shoulder tapped and poached by your competition. Likewise, if your connection with your largest client is with only one person, the reality is that you do not have a business relationship with the business but rather a relationship with an individual. Should this person leave the business (for whatever reason) they will be replaced. Often the new person replacing them is more likely to use people that they are familiar with and whom they have a relationship with. (As a side note – a change of buyer in a business is a superb time to approach a company that you have been struggling to get an opportunity to supply).

To ensure that you do not limit your business to being merely a relationship between individuals, it is important to have depth and breadth of relationship. What this looks like is knowing your key contacts very well and also knowing who their supervisor is, their subordinates and their peers. The knowledge of these people and the contact with them should also be spread across various people within your organization. Then if anybody does move on from their role, be it your salesperson or the buyer in your key client, other people within the organization are aware of the relationship and of the value that you offer as a business. This makes it more likely that you will stay connected.

It is easy to get comfortable with a relationship that is working well and to read an article like this and think, “That's a great idea I must get onto that”. A bit like insurance though, if you wait until the incident occurs before taking action you will realize that it is too late.

Is this something you need to act on now?