Key account techniques to aid customer retention management (MC, unit 4)

80% profit comes from 20% customers (or Key Accounts)

Who are they? Check out: profitability, sales volumes, regularity of order, payment structures, growth potential

Usually large customers, so personal sales is key (not always face-to-face though)

Number of changes that have led to a focus on key accounts;

• Compressed time horizons
• Intensity of competition
• Shorter product life cycles
• Shorter technology-based cycles
• Transient customer preferences
• Increasingly diverse business areas

Not just understanding relationship between buyer and seller but understanding each other's strategic intent - which may provide business opportunities.

Risk of...

• being vulnerable to opportunism and not obtaining a satisfactory saving or ROI
• committing to one partner at the exclusion of others
• misunderstanding the relationship and failing to achieve reciprocal security

Limitations that can hinder profitability of a customer relationship:

• cost implications of maintaining close relationships with KA
• mismanagement of a few KA can be potentially catastrophic
• relationships should be carefully selected for sensible investment of resources