Key Takeaways
- A key account manager needs a clear pricing strategy to defend value, manage pricing pressure, and negotiate with confidence.
- Strong account management combines client retention, relationship building, and commercial discipline.
- KAMs need pricing policies, negotiation playbooks, and value communication skills to protect profitability.
- Cross-functional support helps KAMs manage complex accounts while balancing customer needs and business goals.
Are your key account managers and customer-focused sales teams armed with a logical pricing strategy?
Sometimes, even the most experienced key account manager or sales leader has to develop a sense of gallows humour and recognise that they are performing a very demanding and often thankless task (see Glengarry Glen Ross).
They are often caught between a customer, increasingly represented by a skilled procurement executive, and the demands of their own business. Thus, these two sides usually have quite different criteria for success: the procurement officer seeks to drive down prices and/or extract more value from the supplier, while the business seeks to maintain or increase profitability.
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Of course, procurement professionals can sometimes focus too heavily on price. In this blog, we will discuss how businesses can support key account managers with pricing tactics when they enter major negotiations.
Key account managers and sales representatives build relationships, submit tender proposals, negotiate with customers, seek renewals, and defend value against pricing pressure. Yet they may have little guidance or training on pricing strategies.
This article covers key account management best practices, the skills needed to manage strategic accounts, the role of pricing tactics in the job, and the major sources of stress for key account managers.
Definition of Key Account Manager
Key account management (KAM) is the process of creating long-term relationships with a company’s most strategically important accounts. These accounts can represent a significant share of revenue and often receive dedicated resources, tailored offers, and regular meetings. To turn buyers into business partners, a key account manager (KAM) focuses on building long-term value and trust.
KAMs also report on client progress to key stakeholders and identify ways to address emerging challenges and opportunities.
What a Key Account Manager Needs From a Pricing Strategy
A key account manager needs clear pricing support before entering a major negotiation. This support should include:
- Pricing tactics: KAMs need practical guidance on pricing options and tactics when negotiating with customers.
- A pricing policy: They need clear boundaries around when they can move on rates and how pricing decisions should be handled.
- A negotiation playbook: A defined approach can help KAMs respond to pricing pressure rather than negotiate without guidance.
- Value communication: KAMs need training in discussing and defending the value of the offer, particularly when customers challenge price.
- Commercial and financial context: Because KAMs are responsible for the customer relationship and are seen as the face of the company, they also need to understand pricing, value, and financial performance.
- Cross-functional support: KAMs work with customer service, finance, sales, and other internal teams, so pricing support needs to connect with the wider business.
This support gives KAMs a clearer framework for handling complex negotiations.
See whether your pricing is under controlHow a Key Account Manager Drives Business Growth Through Client Retention
A key account manager helps a business grow by retaining important clients. Strong retention protects recurring revenue and reduces the need to replace valuable accounts. By understanding client needs and maintaining strong relationships, KAMs can support revenue continuity.
For example, if a key account manager works with a large retail client, they might adjust product pricing to keep the offer competitive. Regular communication also helps KAMs identify changing client needs and opportunities to provide tailored solutions. This level of attention can strengthen the relationship and encourage clients to stay.
Retaining key clients can also create growth opportunities. Strong relationships can encourage clients to return, refer others, or purchase additional services. For example, a software company might keep a major client happy by giving them access to new features early. This strengthens the relationship and supports continued business.
What Are Account Management Best Practices
- A winning strategy hinges on being selective. Be sure to choose the right key accounts and apply the same criteria to each one. This is especially important for global key account management.
- Regularly review your key accounts to make sure they still require additional time, energy, and resources.
- Keep track of non-key accounts. If a customer is about to have a windfall, they may qualify as a strategic account. Convincing them now will earn you their loyalty before any other company does.
- Periodically assess your selection criteria. Are your current key accounts generating as much ROI as you anticipated? If not, something might be wrong.
- Assign dedicated key account managers (KAMs). If possible, keep these employees separate from the sales team.
- Build diversified teams around each key account manager. To serve your clients well, you’ll need a range of skills, disciplines, and expertise.
- If possible, appoint an executive sponsor for each account. They can play a major role in getting the necessary resources, connecting with the C-suite at the target account, and providing high-level guidance.
Key Account Management Process
- Set up a step-by-step guide for internal account reviews. Depending on the team, account value, and relationship dynamics, reviews might take place weekly, monthly, or quarterly.
- Regularly check the account’s engagement and loyalty. Both should trend upward.
- Schedule recurring check-ins with the account to get their feedback, address any issues, and find areas for improvement.
Tools and Techniques in Account Management
- Use a CRM to log interactions with account stakeholders and keep everyone on the account team updated.
- Implement an email tracking and notification tool to alert you when recipients open your emails or click links.
- Use LinkedIn Sales Navigator to monitor account updates, hiring activity, decision-maker changes, and other relevant developments.
- Use a meeting tool to schedule calls and appointments seamlessly.
- Use a video platform to create personalised videos for prospecting and relationship building.
Unique Skills Crucial to a Successful Key Account Manager
1. Understand the Company
A key account manager must understand their account’s strategy, market position, finances, products, and organisational structure. This knowledge helps them build business cases and identify opportunities to create value.
2. Collaborate
Key accounts don’t usually buy off-the-shelf: They want a tailored blend of products and services suited to their needs. With that in mind, it’s crucial that a KAM can work across the organisation to develop these offerings.
3. Lead
A KAM needs strong leadership skills to guide team members, who might include sales, marketing, technical support, implementation, and onboarding specialists.
4. Orchestrate and Execute
Key account programs demand action. KAMs should be able to plan short- and long-term initiatives, execute them, analyse the results, and apply those insights to future strategies.
5. Dynamic Business Acumen
What’s business acumen? It is an understanding of how a company makes money. A KAM should also track changes in customer growth, profitability, cash flow, markets, and business priorities.
With this knowledge, they’ll be able to solidify their position as a trusted resource and advisor for their clients.
6. Analytic Skills
In addition to business acumen, key account managers need strong analytical skills to create and present business cases. They should be able to think quickly, apply their knowledge to different clients and markets, and confidently present their findings.
Why Pricing Tactics Should Be Part of the Key Account Manager’s Role
In large B2B industrial businesses, a relatively small number of key accounts can represent a significant share of total revenue, while a much larger group of smaller customers makes up the long tail.
As the main point of contact for customers, KAMs often work across customer service, finance, sales, and other internal teams. They therefore need to understand how pricing, financial performance, and customer value connect.
The Key Account Manager’s Role in Effective Pricing Negotiations
A key account manager plays an important role in pricing negotiations. They help the company and client reach an agreement that reflects the customer’s needs while supporting the company’s commercial objectives.
One of their main tasks is understanding the client’s needs and budget. For example, if a client is concerned about a price increase, the key account manager can explain the reasons for the change, such as rising production costs. They might also suggest flexible payment options or additional services to make the higher price easier to accept.
Transparency is another important part of the role. KAMs should explain how pricing works and answer any questions the client may have. For instance, when negotiating with a large retail client, they might explain that the new price reflects improvements in product quality or faster delivery. This transparency can help clients understand the reasons behind the change.
A key account manager also seeks solutions that balance the client’s budget with the company’s profitability. Offering value-added services or volume-based discounts can help close the deal.
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Major Sources of Stress
One major source of stress is the lack of clear pricing support during negotiations. Without a pricing policy, negotiation playbook, or training in value communication, KAMs may be left uncertain about how far they can move on rates or how to respond to pricing pressure.
If that were not enough, they could also be given a hard time for reducing prices, with little incentive to increase rates. Yet many KAMs still do their best to defend the company while helping the customer.
From a pricing perspective, the remedy is relatively straightforward. The bigger challenge is building stakeholder engagement and gaining C-suite support so sales teams can put that guidance into practice. For pricing professionals, one of the biggest frustrations is knowing they can support the sales effort but not having the buy-in or authority to do so.
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Are you a business in need of help to align your pricing strategy, people and operations to deliver an immediate impact on profit?
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