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Key Account Management

Key Account

The key account manager is in today’s organizations regarded as the gold-standard in sales. What is a strategic customer? There different meanings and some are misleading.

We can split between 2 types of key accounts

  • Customer can have a demand which they regard as normal in their own environment. For our startup it can be regarded as a high revenue. There is a risk, that the revenue takes a high share of the total revenue. It requires close and permanent monitoring, to avoid unlikely surprises. This is typical for suppliers in the automotive business.
  • A Customer can provide an application, which has a benchmark-function for our startup. It must not result in a high sales-number, but it supports as a reference.

What makes a customer strategic? There is no generic rule.

Are there strategic customers in every company? Not necessarily

Is it a requirement, to have strategic customers? No, but it makes the team pride, to have popular or famous customers as a reference. It supports the identity and the acquisition of further customers.

Before we use this customer as reference for public, we need to check if he agrees with. The request can be regarded as a weakness, or he want to get paid for. In any case we should be sensitive, before we discuss this with him.

In the automotive industry it became obvious, that huge key accounts are critical for SME’s. Small specialist companies get forced to adjust their structure to the needs of few OEM’s. This makes them less flexible for other market segments and can put their whole business at risk, when their OEM customers are face with weak market conditions.

Most of the business should be spread among small and medium sized customers. It is less risky, if some smaller companies are faced with bankruptcies. The losses can be compared with other small newcomers and with growth of other accounts. The business with bigger number of smaller accounts takes more efforts, but the profit is generally higher than with OEM’s.

Coming back to the initial question: do we need a key account manager? We need to look at the needs, how we feel comfortable and if it accommodates with our business practice.