Transparent selection: How to create a key account management programme
In the first in a series of articles, Meirion Jones, director of Client Critical, examines how to select the right clients for a key account management programme
In the first in a series of articles, Meirion Jones, director of Client Critical, examines how to select the right clients for a key account management programme
Four things you will learn from this Masterclass:
- How to position the KAM exercise within the partnership
- How to make the number of clients in the programme manageable
- Which selection criteria to apply to the initiative
- How to create a sense of transparency and consensus
Many ambitious and well-resourced key account management (KAM) programmes are doomed before they begin by a dysfunctional selection process. The problem is rarely caused by the quality of the clients chosen for the programme and more frequently by the sheer number of those selected.
Conversely, the one virtue that unites every firm currently running a successful KAM programme is their ability to practise self-denial: they succeed by deliberately, sometimes painstakingly, limiting the number of their client choices.
KAM involves systemic organisational and cultural change, is resource intensive and requires substantial fee-earner commitment. It can be a huge undertaking and the effort invested in the early stages of the programme is disproportionate – like jumpstarting a car from a standing start. Now, instead of a car, imagine trying to push a lorry from a standing start and you have the problem in a nutshell. It simply requires too much effort.
The KAM landscape is littered with firms that, for whatever reason, have decided to jumpstart that lorry – cramming their programmes with an overly ambitious number of clients. It’s easy to understand why this happens.
Status is as important in a law firm as it is in any organisation and client partners are not shy when it comes to lobbying for their place in the sun – particularly if that comes with extra marketing budget.
Equally, partners can be fiercely proprietorial about their clients, often insisting on the importance of theirs being included in the KAM programme, regardless of the objective merits.
An organisational psychologist I spoke to at a recent legal marketing conference explained that many partners often relate so closely to their clients that they come to see them as an extension of themselves; they can regard a client’s exclusion from the programme as a personal slight.
I have personally been at the receiving end of often passionate arguments for a client’s inclusion. “What will the client say if they discover they’re not in the programme?” a senior partner once said to me. “It would have a catastrophic effect on our relationship.”
The smaller, more modestly numbered KAM initiatives can also be accused of being exclusionary and elitist, of diverting budgets away from other activities for the sake of narrow gain.
Tiers before bedtime
Looked at from the perspective of a senior management team anxious to win the hearts and minds of the partnership, the temptation to inflate the number of clients in the programme can be enormous.
A large and ambitious KAM initiative is a sure sign of management intent and aspiration. Every firm wants to be seen as client-centred; every management team beats the client focus drum.
Which approach is more likely to get this message across to internal audiences: launching with a handful of clients – and risking getting an earful from partners who are not involved and see no evidence of progress – or with a dramatic, inclusive big bang?
Many firm management teams attempt to square the circle by creating tiered programmes, offering differing levels of KAM support and resources, depending on the client’s position and the opportunity of ascending to a higher tier. This can help to ration resources but, in most cases, is really only a smokescreen to hide the fact that there are simply too many clients in the programme.
Small is beautiful
Is there a rule of thumb on the number of clients a firm should select? The answer to this question depends on a range of factors:
- What is the level of dedicated BD account management support?
- How aligned is the firm’s culture, values and compensation system to its KAM objectives?
- How much learning, development and coaching support will there be for client partners and teams?
- How much credibility is the firm’s senior management prepared to stake in championing the importance of the KAM programme?
If the answers to all of these questions are resoundingly positive, then the firm can confidently raise the bar in terms of the number of clients in its programme.
In the real world of diminished resources, conflicting strategic priorities and endemic scepticism, I recommend one KAM client for every 100 fee-earners (partners and associates). In other words, for a substantial practice of 1,000 fee-earners, a cohort of ten clients is a reasonable and realistic number for a KAM programme.
Given that there may be upwards of two or three hundred partners at our hypothetical firm, imagine how great the pressures are to raise that number. Which management team would want to risk causing dissatisfaction with key partners, generating dissent and undermining confidence in the process by refusing? Holding their nerve and keeping to that core of ten clients will be hard.
There are, however, ways in which the management team can load the dice in their favour.
Selection criteria
The fewer the number of clients in the programme, the more visibility and transparency needs to be created around their selection. A frequent criticism of the client selection process is that it is a ‘black box’ exercise – arbitrary and opaque.
Instead, the management team will want to ensure that the choice of clients is the end result of a rigorous, consultative and objective process that the partnership understands and is well aligned to the firm’s strategy.
One course of action could be to simply choose the firm’s ten largest clients by revenue. However, some of these clients may be at an extremely mature stage and, no matter how much KAM activity is made, will resist further growth stimulus. Equally, some of the clients omitted by this approach may be bursting with development potential.
Therefore, the process needs to be more sophisticated than simply skimming off the ten largest clients by revenue: it needs to apply a balanced set of selection criteria that reflect a client’s current importance to the firm and the cost of losing it, together with assessing the growth prospects of others.
Deploying this set of selection criteria across the partnership via a consultation exercise is a powerful way of building consensus with the very partners whose dissatisfaction might otherwise wreck the initiative.
Worth considering are the strength of the client relationship, potential for revenue growth and industry sector alignment (see below). Other factors that a firm might wish to include in its selection criteria can include existing revenue levels, the enhancement to the law firm brand of having a particular client on its roster and the geographical match between a client’s locations and the firm’s office network.
Strength of relationship
Most large client relationships have a network of interconnected contacts between client and firm – across a range of the client’s business units, law firm practice areas and geographies, and with individuals of varying levels of seniority.
Gathering an accurate picture of that network is a highly valuable piece of information-gathering. Questions to ask include:
- Who knows who?
- How strong are those relationships?
- What is the purchasing power of these individuals at the client organisation?
One ‘relationship mapping’ exercise undertaken for a large international law firm revealed important relationship gaps with key individuals in the client’s in-house legal team. The outgoing general counsel was due to be replaced by her second-in-command whom, it was discovered, had no relationships at all with members of the firm’s transactional client team.
It was only thanks to the relationship map that it was discovered that the incoming general counsel knew an associate in the firm’s employment department well. The associate was then able to facilitate introductions and pre-emptively build bridges before the formal handover.
This story highlights the value of relationship data, its bearing on KAM and the way that potentially critical client development information can lie hidden in the firm.
Potential for revenue growth
Most partners, if pushed, will claim that their client has growth potential, but there’s a world of difference between making an unsubstantiated claim and presenting evidence on where this growth might come.
Client analysis is a valuable tool for assessing potential. The kinds of questions to ask should include:
- What are the strategic objectives of the client and what kind of legal advice will it need to help it to achieve them?
- What regulatory challenges is the client likely to be exposed to?
- What needs does the client have that are not already being serviced by the firm?
- If those needs are identified, how strong is the firm’s relationship with the individuals at the client who can award this work?
- Finally, how strong are the relationships between those individuals and rival firms?
Industry sector alignment
Many firms are developing industry sector offerings. Theoretically, an industry sector initiative should give the firm a deeper understanding of the drivers and dynamics of those industries. This, in turn, should enhance the services firms offer to clients from that sector.
At least some weighting, therefore, should be accorded to clients from within particular sectors. (Although this, in turn, raises another question, namely the method that firms employ to select their priority industry sectors.)
A powerful tool
The important thing is that the selection process uses a standard set of consistently applied criteria, that it consults widely (demanding in time and resources, yes, but a worthwhile investment in terms of winning partners’ hearts and minds) and that it is objective.
With this latter point in mind, utilising some form of standardised selection template, with a scoring system that enables the clients in the selection process to be ranked, is a particularly helpful part of the process. It adds to the sense of transparency and is a powerful tool for positioning the overall KAM exercise within the partnership.
meirionjones@me.com