One of the most engaging talks was given on Key Account Management. Many firms have instituted these initiatives to focus on those most important clients to secure existing revenue and grow new revenue lines.
Many firm's account revenue follows a Pareto distribution, where roughly 80% of the revenue can be attributed to just 20% of the clientele.
With such a significant influence on the success of firms, we were lucky to hear about how to run a key account management program from:
- Cheri Devlin, Sales Director, Business Applications @ Microsoft
- Justin Edmondson, Director of Client Relationships @ Covington & Burling
- Erin Lawler, Head of Marketing & BD @ Hogan Lovells
While the talk had many clear and useful takeaways, we've tried here to summarise some of the most salient points from the session.
While more law firms have adopted Key Account programs, it appears best practice is not well understood
Despite the fact that most of the firms represented in the audience of this talk were running Key Account Management (KAM) programs, it appeared that only a minority of those programs were considered successful.
Only a little over 20% of the programs surveyed were described as working "just fine" or "exceptionally well", the rest were performing below average.
It seems like advice on the subject is much needed.
Diagnosing the nature of the firm's relationships with key accounts is the starting point for any KAM program
A key account program is not always the best use of a firm's resources. Understanding if the program is needed and defining what it will address starts with diagnosing the firm's relationships with key accounts.
At the heart of this diagnosis is understanding the risk of a key client leaving the firm as well as how well placed the firm is to gain more business from existing clients.
If a firm's key relationships are held mostly by individual partners, where data and transparency are lacking and where there is potentially low client satisfaction or ability to prioritise that client - that is where a KAM program may be called for.
Successful KAM programs need support at the highest level
According to Cheri, even at Microsoft, one of the largest and most complex organisations on the planet, the KAM program is well understood and talked about at the highest levels of the organisation, Satya Nadella will often take an interest in the program.
For law firms it appears to be no different.
Erin spoke at length about how the most successful KAM programs are actually not percieved as marketing efforts by the rest of the firm. They may be driven by marketing and BD, but they are seen as firmwide initiatives baked into the fabric of the firm.
Justin backed up this, going deeper and describing how the far reaching nature of an effective KAM program impacts all element of the firm and must therefore be built into all regional, sector and practive group planning. In Justin's words, when a KAM program is living and breathing alongside the firm - the firm will constantly see and understand the fruits of that program.
As with so many marketing & BD initiatives, demonstrating that effectiveness for the firm is key to long term success.
When KAM programs work well
Not all clients are suitable for KAM programs, Justin recommends using the well known BCG matrix to identify the "stars" and "cash cows" the program will be the best fit for. These are the firms with the most revenue and growth potential, those that offer the highest potential pay off for a KAM program.
The "really great" client that pushy partner suggests on a Friday afternoon for extra attention is often not the best choice. Understanding the size, industry and trajectory of clients is essential.
When Kam programs are executed well, they offer some clear benefits to the client and the firm. Justin outlined potentially the most critical of these in light of recent events. A client with deep relationships, engaged on many matters across many sectors becomes more "recession-proof" as the risk of one area of their business slowing down is mitigated by involvement across other areas.
Where to from here for legal KAM programs
KAM programs are moving squarely into focus for leading BD & marketing leaders in law firms. With potentially 80% of a firm's revenue on the line comes the need for growth-focused firms to see the benefit of strong KAM programs. After all, a 5% increase in revenue from the KAM clients nets a disproportionate amount of growth for the firm.
While not said by those speaking, it is highly likely that we see CMOs from KAM disciplines within major firms in the next 10 years. Within those leaders exists the right mindset, comercial focus and client experience knowledge to drive growth.