The challenges and opportunities of KAM
Key account management (KAM) has become increasingly critical for professional services firms (PSFs) looking to maintain and grow revenue lines in a highly competitive market. But as our comparison of four different firms from across the PSF sector shows, managing your most valuable clients is a complex business with considerable variables according to specific sector, size of firm, type of practice/division, and differing client requirements.
This doesn’t mean, however, that there are no opportunities for sharing cross-sector expertise. The four firms we interviewed in the property, law, accountancy and actuarial sectors, face many of the same client management challenges despite their obvious differences in service offerings and business structures. And yet, in general, these sectors seem to know very little of each other’s experiences or the potential solutions that have been tried, perhaps because of an ingrained perception that the differences between each sector is too great. This is only reinforced by numerous conferences and publications that focus on just law or accountancy, and so on.
In this piece, we seek to break down some of these barriers to improve cross-sector learning and collaboration, and so support the increasingly critical role of business management professionals working across all types of professional service firm.
The range of businesses spanning the PSF sector differs greatly in many respects – size, clients, services, professional make-up, and so on. This inevitably has an impact on each firm’s approach to client management.
Nor does this feature attempt to put them all into the same box. It merely asks whether the differences between firms across different PSF sectors are really so great as to warrant the relative isolation in which each seems to currently operate.
Most would say, for example, that at least as far as the day-to-day job goes, the property sector is a lot more commercially-oriented and sales-driven than accountancy, law or actuarial firms. ‘Within property, the core function is to sell assets,’ agrees Iain Mulvey, Business Development Director at Carter Jonas LLP. ‘Quite a lot of our professionals have a marketing background. So it’s probably more geared to marketing than, say, law might be. We’re further up the curve in that respect.’
By comparison, lawyers, accountants and actuaries are far more renowned for the reluctance to ‘sell’. This potentially creates a very different cultural environment: one in which the approach to clients could be poles apart. ‘A lot of people that we work with are quite analytical in nature,’ says Susie Greene, Market Operations Leader, London Mid Market at Ernst & Young LLP. ‘[Our partners] are obviously very happy to go and complete a piece of work, but they’re not comfortable with the idea of “sales” or with selling themselves. It’s a fear of stepping out of the comfort zone.’
This doesn’t necessarily mean, however, that there are no touchpoints between property and other professional services firms. In Mulvey’s experience, for example, the challenge for property professionals does not come from selling their own services, but from selling the services of other practices within the firm. ‘People spend their time becoming an expert in a particular discipline and they’re very comfortable with that,’ he says. ‘But they’re less confident about talking to a client about, say, disposals rather than valuations. They worry that the client will ask them for more detail about a subject that they’re less cognisant of.’ One of the roles of the client team, therefore, is to give individuals more confidence in this respect – ‘to make sure that everyone’s prepared for those broader conversations’ says Mulvey.
This is strikingly similar to the situation described by Greg Bott, Head of the Client Development Centre at law firm Addleshaw Goddard. ‘It’s still a challenge to get [partners] to see the broader opportunities, and to get them to think about their client business instead of their own practice groups/sectors,’ he says.
For Greene too, achieving a broader perspective has become a priority. This has most recently translated into a series of workshops in which partners are encouraged to develop relationships with the CEOs of their clients, rather than just dealing with the finance people and/or CFO, around whom client relationships in the mid-market have traditionally revolved. ‘We’re trying to get to a position where it’s normal to have strategic conversations with the CEOs, and to move to a situation where we’re not just your accountant, we’re your business adviser,’ she says.
It seems that all these firms are engaged in what is a behavioural shift in their approach to client management. And it’s not surprising. Regardless of sector, this is a market in which clients are squeezing prices, wanting more for less and expecting added value. ‘You have to be able to offer something else if you want to tie clients in for the long-term,’ says Mulvey. ‘If it just comes down to the commoditised service, then clients could go to anyone. It’s the soft stuff - providing CPD, training and secondments, technology, and so on. The rest anyone can do.’
A problem shared…
Delivering on these aims is easier said than done though. All these firms seem to face the same challenge: effectively recognising and rewarding those that demonstrate superior client relationship management. Mulvey describes it as an issue that keeps coming up in forums as there is ‘no hard and fast way of doing it’, and yet some kind of incentive is critical for success.
For law and accountancy too, it is a real stumbling block. ‘Quite often KAM demands a medium to long-term outlook, so if you invest time now you might not see a return for three or four years,’ says Bott. ‘That doesn’t sit with how partners are remunerated, in that they take cash out of the business each year.’
‘Relationships can take a couple of years to come to fruition, by which time that person might have moved on to a different role or will be working differently for different scorecard objectives,’ agrees Greene. ‘Partners are measured on what they deliver and there are some things that are out of their control.’
For Maureen McDonagh, who has headed up client management in the actuarial sector, most recently at Towers Watson, the answer is the right client management structure and effective client planning that allows for a longer-term perspective and encourages collaboration both with the client and also the wider team. ‘Having a clear client strategy as set out in client management plans provides a good basis for setting appropriate and achievable goals for consultants and business development managers,’ she says.
This is the direction in which many professional services firms are heading, but there is the sense that few will succeed in achieving a truly successful KAM structure until the core remuneration challenge is resolved.
Given the shared experiences in this respect, however, firms might benefit from looking beyond their immediate sector for the right approach and solution.
Ditching the league table
To do this, firms might also have to ditch the preconceptions over the relative client management sophistication of different PSF sectors. One view that is commonly expressed, for example, is that the accountancy sector is considerably more advanced than law in terms of business management, including client relationship programmes. Considering the sheer size of the Big 4 accountancy firms, which dwarf even the largest law firms, there may be an element of truth in this. After all, the largest firms have had to implement sophisticated processes to accommodate their global size.
But sophistication that comes of size is no longer limited to the largest accountancy firms. McDonagh has experienced this in the actuarial sector too, as firms have had to manage large complex clients on a global scale and with it the challenge of ‘coordinating global and regional teams and delivery including account management and administration’.
This has led to KAM that is as much about the structure and process, as it is about individuals and their abilities to develop client relationships. So in McDonagh’s experience, a KAM programme might include a Client Management Steering Group to oversee strategy, as well as individual Client Teams including Client Managers, Consulting Leads and, where appropriate, Business Developers.
Larger law firms will also typically have structured KAM programmes, says Bott. These may be headed up by the Director of Business Development (BD) or even a dedicated Head of Key Account Management, while two or more partners head up specific accounts supported by client teams including a senior associate and a member of the BD team.
Beyond KAM structures, there are also firms across PSF sectors engaged in surprisingly advanced client management initiatives.
Greg Bott, for instance, describes Addleshaw Goddard as particularly sophisticated in its approach to clients, with particular strengths in terms of process mapping legal services – for example, deconstructing M&A work, and developing an offering around it. His role as Head of the Client Development Centre is all about adding value too: he helps general counsel and heads of legal with non-technical legal needs, including succession planning, developing strategy, in-house leadership and resource mapping.
In fact, Bott’s background demonstrates just how advanced law can be in its approach to clients. He was until recently at consultancy firm Ohten (010) Group, which works with a range of professional services firms, but primarily law. ‘We would go in and work at the request of the managing partner, senior partner or board member,’ he says. ‘We would then take a number of partners – those working with the most important accounts – through a whole programme of applying the tools of business analysis.’ This would include examination of how to understand clients: the impact of change on clients at a macro level (eg, technology and the economy), leadership for partners heading accounts and relationship planning. Such programmes even included findings from neuroscience on ‘empathetic relationships’, helping partners to better understand how to collaborate with clients.
Bott says that this was ‘bold stuff, especially for more conservative firms’ – and he admits that many law firms and lawyers are not ready for this kind of thinking. But it demonstrates the dangers of stereotyping sectors and so limiting the learning opportunities that each can provide through the often unique advances of individual firms.
Of course there are differences across professional services firms in terms of the way they each approach their key account management. Size, culture, clients, and leadership styles will all create variations – which become greater when you take different professions all offering their own unique client services.
But despite this, the professional service firms interviewed here face surprisingly similar challenges, to which all are working hard to provide the right solutions – which also have cross-sector relevance.
In what is hopefully a post-recessionary landscape, firms will be looking to maximise growth opportunities with their key clients. If there ever was a time to come closer together and learn from each other, it might well be now.
Five steps to improving your key account management
The following are just a few practical suggestions, based on the findings from our interviews conducted for this feature.
- Prioritise and then prioritise some more. Take time to identify your most valuable clients who will make up a firm-wide key account programme. Around 30 accounts is likely a maximum most firms can reasonably handle. If your firm has 100 or more key accounts, it’s questionable whether it still constitutes key account management.
- Consider what structure will best support these clients. In larger/global firms, an overall steering or strategy group, including a Head of Client Management, may be required to oversee client relationship methodology, resourcing issues, individual plans and client satisfaction reviews. Client teams, made up of partners/directors, less senior staff, and BD professionals, can then manage the day-to-day relationship within the context of what should be a much clearer strategic plan, agreed from day one and driven from the top.
- Any KAM programme will be quickly worthless without regular monitoring/assessment of client management performance against agreed objectives. Consider using a neutral third party to conduct client reviews.
- Think bottom up as well as top down. It’s tempting to think of key account management as a process or structure that’s implemented from the top down. But even the largest client accounts still depend on the personal relationship, so individual/partner behaviour towards clients is critical. Invest in coaching/ mentoring and training programmes to support the right behaviours, and make them part of your firm-wide culture and processes.
- Think remuneration and reward. Often the biggest stumbling block for PSFs, consider how your remuneration model either supports or hinders the long-term development of your key client accounts. You will only change behaviours (see above) if you have the right incentives in place. At the very least, ensure great performance is rewarded with positive feedback and firm-wide recognition.
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