Account management can be considered an aspect of both sales and marketing. The goal of any business is to maximize the value of its shareholders, by increasing revenues and, eventually, profits. For businesses to grow, it is important that they can regularly identify potential new opportunities and, successfully, convert them to new customers. It is also important, however, that relationships with previous clients can be managed and strengthened, so that they continue to place future orders with the business.
This is where the concept of account management is introduced. The core element of account management is managing the business relationships with its existing clients, by understanding their needs and fulfilling those needs with products, or services, that the business offers.
The skills employed to enhance account management has to do with the recognition of this field as science. Some people might even consider it as an art. Whatever it may be considered, the main concern with account management, nowadays, is that it is either misunderstood or applied incorrectly. Many companies tend to take account management for granted, and consider the management of accounts as simply a pre-sales relationship-building exercise.
Companies that are successful, however, take account management very seriously and consider it as the centerpiece of their sales process. These successful companies spend a lot of resources, in the form of time, trainings and money, on account management to ensure that the company has the right processes and people. Investing in any one of them will not result in successful results. A company with outstanding account managers, with very healthy client relationships, will not be as effective if the processes are not managed correctly. Similarly, a company with excellent processes but no investment in human resources will result in poor relationships with clients.
Ensuring that effective systems are in place for account management and rightly trained account managers are present, is the responsibility of the senior management of the business. The science of account management comprises of four elements, which need to be understood in detail: (i) Account Profitability, (ii) Relationship Management, (iii) Product Selection and (iv) Account Planning. The sales process produces excellent results if these key elements are kept into consideration. A well-structured process along with dedicated people in the company can, automatically, make it easier to run the business.
Managing the profitability of each account is the foremost element of account management. Every business will have a combination of clients. Some of these clients will be highly profitable, while some will not be profitable to the business, but may have some strategic importance like providing revenue growth.
It is the responsibility of the account manager to find out the profitability of each account, and to manage them accordingly. Proper account management would require an account manager to focus on highly profitable accounts, and to ensure that business is received from them. The account manager will be expected to put in most of the efforts in building a relationship with the profitable clients so that the amount of value that can be derived from those clients can be maximized.
It is imperative to mention that the account management of these highly profitable clients is the difference between successful and unsuccessful companies. Accounts that are not profitable, in a business, will be compensated by these highly profitable clients, and the amount of value that can be derived from them. The account manager will be expected to use artful ways in maximizing revenue, at better profit margins, from the less profitable clients. If that does not succeed, the right thing to do would be to trim unprofitable clients, since they hurt the overall profit margins of the business.
It is important to select the right type of relationship in account management. The art of account management becomes important in relationship management. Some relationships may be very intense, requiring numerous interactions and frequent transfer of all types of information; some may be more moderate where only relevant product (or services) information is shared with regular interactions; while some may even be arm’s length relationships. The type of relationship will be dependent on the type of account.
An account that generates a high sales volume, with healthy profit margins, may require an intense and strong relationship; given the account, manager and client representative can easily gel together. There may even be some accounts, which generate high revenues and profits, but do not appreciate close relationships; it is important to identify the right type of relationship beforehand, in these cases.
The art of account management is to understand, in advance, the importance of each relationship and to, systematically, come up with a right balance, ensuring a profitable business for the company.
Products can be used in account management to strengthen the relationship. A company may use certain types of basic products to convert potential opportunities into clients. Once a sale has been made, companies can then introduce other advanced and auxiliary products to build long-term relationships with the clients. This will also help to build trust and confidence at the client’s side by indicating to them the company’s commitment to a long-term relationship.
This element of account management ensures that a long-term relationship will continue to exist between a company and its client, even after a certain individual leaves from the client’s side.
It requires understanding the needs of the client, ensuring those needs are fulfilled, planning on the potential benefits of the account, identifying the relevant people involved in the decision making process, spending time with the relevant teams at the client’s side to get to know them better and coaching of the relevant people to develop a better understanding of the products/services offered by the company. It is important that a company can allocate sufficient resources in account planning, so that it shows commitment and determination in the end.
As mentioned above, the core of successful account management lies in ensuring that a potential opportunity is converted into sales, through proper relationship management and a well thought out process. The most important ingredients into successful account management are the processes, which ensure that account managers have clarity in what needs to done and how, and people, which actually apply the art and science of account management to make the business profitable.