Why Agencies must implement Key Account Management
A growing relevance of KAM across all industries
The concept of Key Account Management is by far not new but it is highly relevant to many businesses.
The core idea of true KAM is to accelerate the implementation of the company’s strategy by identifying the few Customers with whom it is worth developing a closer relationship, often based on a specific Value Proposition, leading to a larger and more sustainable business.
Modern KAM, where “Key” means “truly strategic” and not simply “large”, also implies joint innovation with the Key Accounts. Driven by the evolution of the business world, across all sectors, an increasing number of companies realise that in order to remain competitive they need to develop a strong (true) KAM practice.
This business need and opportunity also exist in the world of Agencies. Despite this, most Agency leaders and owners still do not associate the concept of KAM to the efforts they are driving to keep their organisation on the leading edge. This Post paper is intended for them. It presents KAM as an efficient framework to help manage the best Clients while developing the organisation.
Key reasons for Agencies to implement KAM
In this post, by Agencies we mean all companies from a few tenths to a few thousands employees offering services in one or several of the following areas: Marketing, Digital Marketing, Web design, E-commerce, Public Relations, Public Affairs, Market Research, Advertising and Event Management. The ideas developed in this article are also valid for the very large Advertising Groups although the way to implement KAM would differ a bit due to the company size factor.
An interesting specific characteristic of Agencies is that compared to industrial firms or to most other service companies, they tend to have a small number of active customers, typically a few tenths. This makes the concept of KAM even more relevant to them.
There are many reasons why Agencies need to take a closer look at modern KAM. Below are what we believe are the 7 most important.
- Complex web of Stakeholders and Business issues
- Manage the Customer Experience and generate Loyalty and Advocacy
- Less retained business, more projects
- Challenge of Profitability
- Innovation and Co-Creation
- Culture of Collaboration
- Talent Management
Complex web of Stakeholders and Business issues
As soon as they do some serious type of work, Agencies become part of how their Client tackles business issues or leverage opportunities. In order to deliver value, they need to develop a deep understanding of their Client’s business as well as personal relationships with various people at all levels of the organization. This networking and dialogue effort must be properly engineered and implemented. Doing this, and maintaining this practice over time, even when people change jobs, is a landmark of modern Key Account Management.
Manage the Customer Experience and generate Loyalty and Advocacy
Even if the business relationship between an Agency and a Client is rarely for ever, the quality of the Customer Experience has an impact on the duration of the relationship, on the Loyalty of Clients and on their willingness to recommend the Agency to others. A habit of regularly monitoring the Customer Experience, taking feedback, discussing areas for improvement and uncovered needs, all things that are part of a modern KAM practice, help the Agency increase the stability of their Client base as well as the acquisition of new Clients through recommendations.
Less retained business, more projects
In Communications, Marketing and Advertising, since over a decade, Clients tend to reduce the budget allocated to retainers and work more in a project mode. Agencies who are faster and better at adapting to this reality get a competitive advantage. Incumbent Agencies, usually large ones, who don’t adapt fast and well enough, suffer. Projects are more easily won when the Agency is recognized for the quality of its work, is good at developing its internal network, and knows which Business issues are on the mind of which Stakeholders. A strong KAM practice orchestrates harmoniously the networking effort with the Client as well as the identification and acquisition of projects.
Networking with the Client’s organisation, ensuring a good Customer Experience, staying on top of things in order to sell projects, monitoring and tackling competitive threats (other Agencies are not sleeping), takes time and resources. If all of this is not managed properly, the profitability of the Agency’s operations takes a dip: many Agencies suffer from this chronical disease.
Managing for profit is not really popular among Agency Staff as once noted by Peter Chadlington, the British PR legend, founder of Webber Shandwick and of the Hunstworth Group. However, somebody must take charge of that part and good processes and practice common in KAM to monitor and protect profitability can be of invaluable help.
Innovation and Co-creation
Clients expect from Agencies capabilities – and, more and more, specific tools – that they don’t have in-house. In areas such as Digital Marketing, Influencers Marketing, Online and Offline Communications, Analytics (and probably many others) the average level of in-house knowledge is increasing and the gap with Agencies is closing. As a consequence, the expectations of Clients on Agencies are shifting towards more Innovation in terms of creative ideas, tools and techniques, and lean execution to maximise return.
To remain compelling to their Clients, Agencies must to help them innovate. Developing leading-edge tools or working as key partners of the providers of these tools and elaborating a strong service-offering around them, are very good ways to create this Innovation-driven value. Agencies can also team-up with selected strategic Clients, not necessarily the largest ones, to co-create new tools and practice. This co-creation process is another landmark of modern KAM.
Culture of Collaboration
Modern Marketing & Communication and advanced Key Account Management have a strong common foundation: Collaboration.
Networking with the Client’s organisation, designing campaigns that address complex business issues, driving innovation in a highly competitive landscape, co-creating with Clients, all of this requires a very strong culture of collaboration within the Agency. A modern KAM practice is also of great help to Agencies in this aspect because it includes the development of collaborative habits in an intercultural environment through training, coaching, experience sharing and the use of specific tools.
In the world of Agencies, the War for Talent is a daily reality: not only it is difficult to attract talents but it is equally difficult to retain them. In this field, each battle needs to be fought but there is nothing like a final victory. Being able to offer positions of (true) Key Account Managers, however the Agency decides to call them, with the associated broad skills development this implies, can be a joker to retain highly talented individuals.
Conclusion: KAM applied to Agencies works!
As a conclusion, as long as the methodology and tools are adapted to the specifics of Agencies, the concept of Key (or Global) Account Management is a powerful and very efficient framework to organize many of the initiatives required to manage and grow a modern Agency.
A few years ago, a small global PR Agency (about 600 people worldwide) had managed to acquire as its largest customer one the most prestigious brands of the Information Technology sector. The PR budget across more than 20 countries and 3 continents was split between this Agency and a competitor, one of the most prestigious Agency in this space and about 7 to 8 times bigger. This Client was cutting into their PR budget year after year. In Europe, across 10 countries, by applying the KAM concepts exposed in this white paper, the smaller Agency grew their business by 65%, while simultaneously improving the measured Client satisfaction, the profitability and the quality of internal collaboration. In the same period of time, their competitor, the bigger Agency, lost 50% of their business with this Client.
A bit less than two years ago, a 400-people Swiss Web & Branding Agency, has started its KAM initiative in order to better manage the increasing variety and complexity of its business. In the past, each team of specialists (like E-Commerce, Web Presence, and Brand Building) was interacting with each Client. There were multiple contact persons. This way to operate made it very difficult to have a business-driven view of the value offered to Clients. In addition, ensuring synergies between the teams was not simple. The Agency has changed its organisation and introduced a KAM concept for its most strategic Customers. The interface with the Clients is ensured by Key Account Managers and the resources and skills required to fulfil the Client needs are coordinated internally between the various teams of experts. Specific KAM processes help manage the operations for good results and profitability. While still in the process of ramping-up its KAM practice, this Agency is very confident that this is making its business much stronger.
So, what about YOUR agency? Will you take a deeper look at KAM to make it stronger?
The content of this post is also available as a white paper, with more information on how to implement a KAM initiative. You can download the white paper here.
Interested at an exchange on how KAM can help you develop your Agency? Please get in touch