And what the next generation of account leaders are doing differently.
A mid-sized industrial supplier I recently spoke with had just lost its single largest customer of 11 years, worth 15% of revenue. The post-mortem was sobering. No price war. No competitor undercut. No service breakdown. The customer had simply outgrown the relationship. While the supplier’s team was still running quarterly business reviews with the same procurement contact, the customer had quietly restructured its buying group, elevated a new set of strategic priorities, and begun co-innovating with a competitor who had bothered to understand where their business was heading.
This story isn’t unusual. It’s the rule.
According to Gartner’s study, 79% of sales teams have recently revamped underperforming KAM initiatives while 68% of key account managers admit their current methods fail to build partnerships. For mid-sized B2B companies reliant on a few key accounts, this inefficiency is a question of survival.
The harsh reality is that Key Account Management as it is practiced today by many mid-size organizations is outdated. It works well when customers’ buying groups are small, their markets stable, and the sale process predictable. However, that situation no longer exists. Here are seven reasons why the old system breaks down and what replaces it.
1. “Big Customers” and “Key Accounts” Are Different
In average B2B companies key accounts are often just defined as “big customers.” The Gartner benchmark study shows why — current spend, size of the company, and historical spend form the top three factors for most companies choosing key accounts.
Unfortunately, history does not predict the future well. As per Gartner’s research, companies relying predominantly on customer spend for choosing key accounts end up being 51% less likely to increase their spend. At the same time, companies using partnering ability and future spend potential as criteria grow their current spend by 8%.
The more strategically positioned account could very well go unnoticed until now. We have to go beyond factors deciding Account attractiveness and strength of relationship to uncover future potential in the Account. An Account Scoring model should evaluate strategic and reference value, technical maturity and receptivity to upgradation/ changes and growth trajectory alongside obvious metrics.
2. KAM Is Treated as a Sales Activity, Not an Operating Model
In most middle-sized organizations, the KAM function exists in the Sales division. The KAM is an executive-level salesperson who holds an exclusive territory under the Sales Director and with a sales target.
We need to pivot to a RevOps model that integrates marketing, sales, and customer success operations to manage high-value clients across their entire lifecycle.
Failure to achieve buy-in from supporting functions like Supply Chain, Finance and others makes the Customer Experience break. As stated by the Strategic Account Management Association (SAMA), key account management requires multifunctional team leadership competency. Not surprisingly, the research done by Gartner demonstrates that suppliers who possess a strong collaborative culture across the functional departments get three times more business from their customers than those with low cross-functionality.
The problem is that 76% of Key Account Managers admit that they get their department’s support based on personal relationships and nothing else.
3. Everyone Is a “Key Account” — Which Means Nobody Is
Mid-size businesses often find themselves in this trap. The list starts with eight customers, and two years later it’s grown to forty. Senior leaders fight to get their favourite clients included, turning what should be an investment plan into more of a vanity project. The outcome is predictable – resources spread too thin, weak account plans, and minimal focus on truly important clients. When everything is labelled as critical, nothing truly is. Deciding that an account isn’t a priority and re-tiering it is one of the hardest conversations in key account management, and one most companies avoid. Gartner’s research shows only 32% of sales organisations reduce resources for underperforming key accounts, largely due to fears of losing the customer. Yet the opposite seems to hold true – 41% of companies that re-tiered ended up with stronger key account portfolios.
4. Quarterly Thinking Undermines Strategic Partnerships
Strategic partnerships develop over many years. Performance incentives are issued every ninety days. It is impossible not to predict the resulting impact.
When variable compensation of the KAM depends on quarterly sales, discussions shift to targets, sidelining development and discovery meetings while promoting discounts— which is also noticed by the customer, thus turning the company from a partner into a supplier.
SAMA’s framework of competencies emphasizes strategic thinking and business acumen as two of the most crucial skills a professional in the field should possess. This is because Key Account Management is a multiyear activity, and the performance metrics used should reflect this long-term commitment. Bain’s research on key account management in the consumer goods industry shows that companies win as partners by knowing their customer’s profit pool equally well and creating plans to grow both profit pools over time.
5. Your Key Account Manager Knows Your Product Better Than Your Customer’s Business
Herein lies, simply stated, the problem of skill gaps – and it may just be the most critical of all on this list.
Research by Malcolm McDonald at Cranfield School of Management shows senior buyers hate being sold to. They seek experts that understand their company and its needs; people who know their balance sheets, strategic challenges, competitive environments, and corporate politics. People who can talk about their company’s Annual Reports as easily as they discuss product catalogues.
Unfortunately, what they get more often than not is a good old sales rep, usually one that’s been recently promoted. Experienced, competent, skilled in building relationships, but unable to offer advice. In the Skills Model of the SAMA competency framework, organizational knowledge, value analysis, financial management, and co-creation are key components of the competency profile, none of which are found in job descriptions for KAMs within mid-sized enterprises.
6. Mid-Sized Companies are Implementing Enterprise KAM without Enterprise Resources
Mid-sized companies often adopt bloated global frameworks from giants like Siemens and ABB , investing in CRM modules and 15-workstream committees, only to struggle with bureaucracy after six months. No one has time for cross-functional meetings, which are now cancelled. The technological investments are not fully utilized. Mid-sized companies invest in enterprise-scale solutions; however, those do not work, and worse yet, they stifle the flexibility of the company’s culture.
This problem cannot be solved by abandoning discipline. On the contrary, companies should scale down their approaches to account management. Select 3 to 5 truly strategic customers. Develop one standardized approach for planning each relationship. Utilize the data available to the organization instead of waiting for a comprehensive analytics tool as McKinsey’s study on B2B sales transformations suggests that organizations that use data to transform sales operations start simple and iterate. Prove your value first with minor achievements before requesting significant investments.
7. Dependence on One Relationship in a Multi-Stakeholder Context
The last type of failure is systemic. The nature of B2B buying itself has shifted. In a typical purchase process, there are now up to six to ten people from procurement, IT, financial, operational, risk, and the business unit – each with separate agendas, distinct perceptions of value, and power.
While B2B buying now involves six to ten stakeholders with distinct agendas, old-style KAM relied on a single vulnerable point of contact. Multi-threading is the name of the game today. It entails intentionally mapping out the customer organization’s purchasing processes, developing contacts at multiple layers, and ensuring that if one point of contact goes away, the entire basis of the relationship remains. This is essentially what SAMA calls “high-wide-deep” engagement.
Where This Leaves Us
Traditional KAM fails not from flawed premises, but because it is treated as a quarterly sales tactic run by sellers, rather than a multi-year operating philosophy led by business advisors. The good news is that the route forward is clear. Data from SAMA’s annual benchmark survey indicates that mature strategic account management initiatives deliver profit margins some 10% above those delivered by nascent initiatives. However, the difference usually does not come down to budget size. Rather, it comes down to focus — on what constitutes a key account, who owns it, what resources are committed to it, and what benefits it is expected to create for all parties involved.
For B2B organizations of midsize stature, the solution is relatively straightforward and urgent. One doesn’t need a massive global initiative; you only need five to ten strategic partnerships that transcend silos and quarterly targets. The resulting returns would far outweigh anything else one can achieve via their sales efforts.
Thus, the key question to ask is not how to make one’s KAM program grow, but whether the most valuable customer relationships have been optimized for sustainability for at least five years ahead. Otherwise, they are likely to rely heavily on a single account manager’s goodwill and historical inertia. If you’re not sure of the answer, that is the answer.
At Growthsqapes, we work with mid-sized B2B leadership teams to diagnose where traditional KAM is quietly leaking value and to redesign account programs that are right-sized, cross-functional, and built for long-term growth. If the questions in this article are ones you’ve been circling, we would welcome a conversation.
This blog has been written by Sandip Mitra, an Associate Partner with GrowthSqapes.