Why are B2B Companies Adding KAM Tech to CRM?
Most businesses know that 80% of their business comes from 20% of their clients. Chitra Iyer, Contributing Editor at MarTech Advisor traces how many have chosen to deploy technology that optimally serves to manage the scale and complexity of these Key Accounts
For B2B companies that rely heavily on Key Accounts for a bulk of their revenues, a Key Account Management strategy is undoubtedly indispensable. The problem is, strategies are like opinions. Everyone has one. Judgements on whether the strategy is comprehensive, scalable, or effective are all subject to who is doing the evaluating and of course, business results over time.
In the meanwhile, B2B business leaders are asking: we have had a ‘KAM strategy’ in place for a while now. So, why aren’t revenues from Key Accounts growing? Why are so many opportunities slipping through the cracks?
And, therein hangs a tale.
Let us rewind to a time when there was no such thing as KAM Enablement. There was Sales, there were big customers and small customers. There was relationship-based selling. There were legacy software systems to manage processes and a lot of time and money was poured into those systems. Only the big boys could afford them and a lot of software companies became very rich. But Key Account Management practice did not evolve much.
And Key Account organisations were already morphing into the complex creatures they are today. Global behemoths with multiple buying units spread across geographies, functions, lines of business. Matrix organizations with complicated reporting structures and diverse affiliations … Phew!
Suddenly, Key Account Managers — those highly paid guys who were expected to build the relationships that brought in the major revenues — were spending a significant amount of their time just ‘managing’ the relationship (both internally and externally) — pulling data from various sources, formatting ‘annual plan’ templates, compiling reports for leadership, aligning stakeholders to get the basics done. Running faster and faster just to stay in the same place. Size and complexity on both sides was becoming a hurdle. A time and resource consuming one.
In addition, KAMs were given a sort of laissez faire hand at managing ‘their’ key accounts by leadership. It was more of ‘let’s not lose it’ rather than ‘let’s help these guys grow’. More and more, the organization was losing touch with the Key Accounts while the Key Account Manager became the only touchpoint and the sole owner of the relationship. The obvious vulnerability that got built into the system thus, became a self-fulfilling prophecy. The more person-dependent the Key Account became, the more power and freedom the KAM was given to ensure the Account remained with the organisation. The fear of losing the Account when the KAM decided to move was a very real one.
And then came CRM.
Suddenly, there was a system through which many of the customer management processes could be automated. For organisations that had become aware of the painful vulnerability of KAM dependency, this was a great solution to a nagging concern. So, in went the Key Accounts …. along with all the 55,000 other accounts.
While some said ‘that’s no way to treat the 20% of our customers who bring in 80% of our revenue’, others went about their business as usual. Some visionary CXOs however, were more aligned to the cause of Key Accounts in the present. They realised that Key Accounts had their unique complexities and could not be processed through the same CRM systems that managed their hundreds of other smaller, low-growth potential accounts or what we may call today the ‘long-tail’ of accounts. So, they set about commissioning someone to start custom building functionalities on top of their CRM system. Slowly, steadily, with several hits and misses, (and many, many calls to the ‘guys at IT’) a specialised system to cater to Key Account complexities emerged. KAMs were happy they now had something that could help automate core Key Account processes while still giving them the flexibility to manage the Account at an individual level. Even though maintaining this new system was expensive, at least the organisation could expect higher growth rates from Key Accounts. We will return to this group of people in a bit to check in on how things panned out.
What happened to those who went about their business with their standard CRMs? The biggest outcome was that large Key Accounts with multiple buying units, geographies and lines of business started getting treated as a bunch of smaller Accounts. CRM just couldn’t address the complexity and depth of analysis, planning or governance required from these Accounts. But more worryingly, these organisations went even further away from spotting opportunities for growth and value creation for Key Accounts. Farming and mining the business potential across the many buying units, functions and lines of business became almost impossible — because the intel simply wasn’t there — or it was so spread out or so stuck in silos — that KAMs couldn’t even begin to consolidate it, forget using it to build strategy. The dots were just not being joined across data points to create a ‘big picture’ from which a global strategy could emerge. And there it has remained. (These CEOs still are possibly asking: ‘Why aren’t Key Account revenues growing at an above-market rate’? or variations thereof).
When will the meteor hit you?
The CXOs who made the choice to custom-build on top of the CRM systems were visionaries, no doubt. They realised that technology was critical to mine the business potential of Key Accounts. They began creating a KAM tech system in-house because it was the best thing to do at the time. In fact, there wasn’t another way. For the courage to recognize and address the dual challenge and opportunity of Key Accounts, I doff my hat to them. But now, things have changed. Now, there is another way. A far more specialist, cost effective, less risky way. Because there is no good reason to invest big in technology when technology is changing every single day. There is no way to keep pace with it if that is not your core business. And if you persist, the danger of being hit by the meteor of change is a pretty real one. For example, Salesforce Lightning is coming. Can your Key Account software built on top of Salesforce transition efficiently? Will you be spending millions of man hours and dollars to make the switch? What about managing constant change in legacy systems?
The cost of maintenance, continuous upgradation and customisation is prohibitive and won’t come down anytime soon. Yes, KAM Tech is a strategic necessity, but at what cost? Having invested time and money in a sub-optimal solution is no reason to continue doing so when a better way is available.
And this is where we come to the ones who said ‘that’s no way to treat the 20% of our Clients who bring in 80% of our revenue’.
Of clouds, apps and freedom
Let us assume, that for any B2B that has Key Accounts, a specialised Key Account Management strategy was an obvious and acknowledged need.
As we discussed earlier, different companies responded to this need in different ways. Some built customisation into their CRM, some just used their standard CRM and some invested millions getting expensive consultants to custom develop methodologies to manage Key Accounts (getting those methodologies internalised and implemented in daily ops was another story altogether, which is a tale for another day).
One group, however, knew that whatever approach or combination of the above approaches they were using, was sub-optimal. There was a need for not only specialised Key Account Management processes and methodologies, there was a need for specialised Key Account management technology as well. A way to manage both — the scale and the complexity of Key Accounts — optimally.
But without the investment and risk of a custom-developed legacy system.
It’s a good thing that the era of cloud, SaaS, mobile and Apps had arrived.
Suddenly, the martech, fintech, foodtech and every other tech space exploded with specialist solutions that focused on very niche requirements. Yes, KAM Tech too. Enabling technology to help address all the complexities of Key Accounts, without any of the headache of developing speciality software and sub-optimal solutions. Users could now — for a fraction of the cost — have access to a full-feature software that could be scaled up or down without any investments. Further, the solutions sat on the cloud, not on-premise; and the data, while secure, could be accessed from anywhere, anytime, with any connected device. There was none of the bother of development, maintenance, security or upgradation, and yet, users could be assured that the latest technological advancements and features would be seamlessly and quickly integrated into consistently advanced versions of the software.
The Case of IT for IT
Let us take the example of Information Technology to illustrate the scenario. Of all industries, IT companies are among the most dependent on Key Accounts. Say, a B2B — Alltech Software International — specializes in building Enterprise Software and services hundreds of small Accounts. About 80% of their revenue however comes from about 30 large Key Accounts. These Key Accounts are high-growth potential Multinationals across industries. Alltech invested significant time and cost to win these Accounts, with a view to the long-term business potential they promised. Now, the job is to anticipate / spot those opportunities for growth and make good on the potential.
Alltech's strategy is to create value for these Accounts, help them grow and grow with them over the medium to long term. These are complex global entities. For an Account Manager to track and manage the complex relationship is operationally tough enough. Add to that the current reality that the IT buying dynamics of its Key Accounts have changed (see figure — IT is moving).
What support do AllTech's Key Account Managers need to grow Accounts efficiently and effectively? This is where the CXO will make a choice.
Luckily for AllTech, because the CXO wants an optimal solution, they choose a cloud-based, SaaS model App built specially for KAMs to optimally manage and grow Key Accounts.
If you have Key Accounts, you have to make this choice too.
So, assuming I have established the business case for KAM enablement to optimise profit potential from Key Accounts, let us go back to the original question posed in the title.
Why are B2Bs adding KAM Tech to their CRM? Because they can. Because there is a specialised, nimble, cost effective, secure, efficient and effective solution out there in the form of cloud-based KAM Enablement apps. And because leveraging them for business success with Key Accounts is now a no-brainer. For less than the cost of dinner, KAMs get access to an enablement technology that helps do their job far more efficiently, while retaining ownership and intel of the relationship with the organisation. Without the risks of building your own solutions, the costs of using sub-optimal solutions like standard CRM, or the vulnerability of not having any system to manage Key Accounts. A system that allows you to pay-as-you-use and pay-as-you-scale; while still letting you take advantage of continuous technology enhancements.
Now tell me. Shouldn’t the question really be: ‘Why aren’t all B2Bs adding KAM Tech to their CRM?’
The luxury of having a choice in KAM Transformation is gone. If you have Key Accounts, you need to enable Key Account Management with the right tools. Today.
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