Written by Jeremie Bacon

Voyant Consulting Blog

The Difference Between Key Account Management and Customer Success

Posted on May 15, 2017

In today’s increasingly complex and competitive business environment the need to develop deep customer relationships more important than ever. Along with this trend, the development and maturation of key account management and customer success are easily two of the most important changes in selling and servicing customers over the last 25 years.

As a business practice, account management takes a number of forms which can be clumped into three buckets: "traditional" account management, key (or strategic) account management, and customer success. Each share a number of similarities and a few important differences.

Account Management

Account Management is generally the “farming” team within a sales organization and is responsible for nurturing long-term relationships with a portfolio of existing customers. Account managers work to understand their customer's business needs and create plans for how to meet them. They also work to increase customer happiness, reduce churn, and generate new sales opportunities. Depending on the kind of business, an account manager is typically responsible for anywhere from 10 to 25 (or more) customer accounts.

Key Account Management

Key Account Management looks and feels like traditional account management with a couple of very big differences. First, key account management is only for a small number of carefully selected customers who are of great strategic significance and financial value to the company. As such, key accounts tend to be the largest and most organizationally complex customers a company works with.

Key account managers leverage all of their company's resources to plan for and create value-based solutions to meet both the customer's and the company's strategic goals and drive future growth potential. Key account spend a disproportionate amount of their time inside the customer organization working collaboratively on creating value. Typically, key account managers will serve three to five customers, but this varies widely based on the complexity of the account.

Customer Success

Customer Success is very similar to traditional account management but with a few critical differences. For starters, the foundation of customer success is based on driving product adoption, increasing retention, and mitigating customer churn. In many organizations, while the customer success department is tasked with software subscription renewals, it is not responsible for generating new revenue. This is a key difference between traditional B2B account management and customer success teams. Additionally, customer success managers (CSMs) generally have responsibility for a larger number of customer relationships than traditional B2B account managers. The number of assigned accounts varies widely based on the type of products the company provides. An industry rule of thumb is that a CSM should have a book of business between $1M and $2M in annual contract value (ACV) or annual recurring revenue (ARR).

For all their differences, account management, customer success, and key account management share the same fundamental goals: to retain, nurture, and grow customer relationships by helping the client get more value from the services a company offers. Similarly, each function is typically built around the same core tenets.
To be effective, Account Management and Customer Success should be:

  • Championed from the highest levels of executive leadership
  • A strategic, organization-wide priority, not a sales tactic
  • Focused on judiciously identifying and segmenting customer accounts

Executive Sponsorship

Making account (and key) management a central focus of company strategy is such a big deal that it requires buy-in from the highest level, preferably the CEO. Customer-centric organizations rarely struggle to get the c-suite behind success initiatives. However, we’ve all seen or heard about cases where bottom up initiatives that are popular with the troops get squashed by senior management.

If your company is struggling in this regard, don’t despair! Continue investing time hunting for higher ups across every department who can champion the cause. Your persistence will pay off eventually and you’ll have champions across the company who can help to convince the powers that be of the value of the work.

Strategic, organization-wide priority

Many organizations continue to make the mistake of assuming that account management is just an extension of the sales team. The companies I know that have the most successful account management teams realize there is a major difference between hunting (sales) and farming (account management). Organizations that view account management as an initiative within the sales department are doomed to fall short of their goals. The same thing holds true for companies that view customer success as an offshoot of customer service or technical support. It isn’t!

Every department in a company needs to be in alignment and understand the strategic vision behind account management and what role they play in managing expectations and supporting the customer throughout their journey. Success and account managers are, in turn, not only responsible for quarterbacking relationships, but coordinating efforts internally to ensure that every stakeholder understands what needs to be done to drive growth.

Customer Segmentation

Many companies allocate too many accounts to too few relationship managers when trying to implement an account management practice. Instead of judiciously segmenting and categorizing their customers and then balancing the assignment of account coverage based on the skill of the account rep and the complexity of the customer, they simply assign account managers a handful of big, medium, and small accounts. Splitting your customers into buckets and assigning a mix of major and minor accounts to different account managers works to a point but is far from ideal over the long run.

Another area where many companies hamper their own success lies in the way they implement key account management. There is a big difference between your key accounts and everyone else. I consistently find that most companies are trying to service far too many key customer accounts.

Case in point, I was at a conference while writing this piece and listened to a senior executive from a large SaaS company with a 30 person customer success and strategic account management team stand up on stage and claim his company has "more than 100 key accounts." That’s bonkers. It is simply not possible to have that many key accounts.

So how many key accounts should your company have? Every business is different but I tend to believe that, for a mature company, the number should be somewhere between 15 and 30 accounts with upper and lower bounds of 5 and 50.

Implementing Key Account Management

As we’ve seen above, key account management has some similarities - but also some key differentiators - from both account management and customer success. It may seem overwhelming to initiate a KAM team, but there are some easy strategies to begin the process. Some ideas to keep in mind:

  • Customer segmentation is a foundational step to implementing key account management. Ideally, everyone within the company should agree on what does and does not constitute key account management.
  • Consider posting the key account management role as a new position within your company. Even if you’re filling the role from within, it allows you to define the role and allows you to choose only the best players for this critical team.
  • In the initial implementation, keep the rules and processes the same for key and non-key accounts. This simplifies your initial implementation.
  • As your KAMs begin working with their accounts, they should listen for the needs or wants that set those key accounts apart. New KAMs and their management should sit down at least weekly to review feedback from the key accounts and decide how to change processes to improve the level of service.

We welcome your comments on this post, and invite you to contact us if you’d like to know how we can help you succeed.

This entry was posted in Account Management, Customer Success, key account management, KAM

A Simple Recipe For Success Building a Remarkable Customer Success Playbook
Jeremie Bacon

Jeremie is a B2B SaaS entrepreneur with a proven track record of strategic organization building, diligent operational & financial management, and fanatical customer advocacy.

LinkedIn Google+

Website