House Account

Definition

A house account refers to a client account that is handled at the main office or managed by an executive of the firm, as opposed to being managed by sales personnel within specific territories. This can happen for a variety of reasons including the strategic importance of the client, the complexity of the account, or the desire for more centralized control.

Examples

Corporate Clients: Large corporations that require special attention and customized service agreements are often managed as house accounts to ensure top-level service and consistency.
National Accounts: Accounts with a nationwide footprint, that span multiple sales territories, may be managed centrally to ensure cohesive service delivery and pricing.
Strategic Partnerships: Companies involved in strategic partnerships or alliances may have their accounts handled by an executive team to maintain strong relationships and foster growth.

Frequently Asked Questions (FAQs)

What differentiates a house account from a regular account?

A house account is centrally managed by the main office or a firm’s executive, while a regular account is typically handled by a salesperson within a specific territory.

Why would a company designate an account as a house account?

Companies designate house accounts to ensure top-level management for strategic clients, maintain consistency, and align closer with the main office’s objectives.

Can small businesses have house accounts?

Yes, small businesses can designate house accounts, particularly if they have high-value or strategic clients that require dedicated oversight by senior management.

How do house accounts affect sales representatives’ territories?

House accounts are typically excluded from the sales representatives’ territories, meaning they do not earn commissions from these accounts.

Is it beneficial for clients to be managed as house accounts?

Clients managed as house accounts generally receive more direct attention from senior management, better service, and more customized solutions.

Key Account: A significant client account that requires special attention due to its size or strategic importance.
Territory Management: The process of managing and defining sales efforts within a geographical area.
National Account Manager: A managerial role responsible for handling accounts that span multiple regions or territories.
Client Relations: Strategies and activities focused on managing a company’s interactions with its clients to foster long-term relationships.

Online References

Suggested Books for Further Studies

“Account Management: A Guide for the Sales Professional” by Richard S. Johnson
“Customer Relationship Management: Concept, Strategy, and Tools” by V. Kumar and Werner Reinartz
“The Challenger Sale: Taking Control of the Customer Conversation” by Matthew Dixon and Brent Adamson

Fundamentals of House Account: Business Administration Basics Quiz

### What is the primary characteristic of a house account? - [ ] Managed entirely online - [x] Managed by the main office or an executive - [ ] Handled by external consultants - [ ] Limited to a single product line > **Explanation:** A house account is primarily managed by the main office or an executive, distinguishing it from accounts handled by salespersons within territories. ### Why might a company designate an account as a house account? - [x] To ensure top-level management and alignment with company objectives - [ ] To reduce the number of sales representatives needed - [ ] Because the client requests it - [ ] To avoid paying commissions > **Explanation:** Companies often designate an account as a house account to ensure that it receives management attention from top levels and aligns with the company’s strategic goals. ### Which of the following is NOT a typical reason for an account to be managed as a house account? - [ ] The complexity of the account - [ ] Strategic importance of the client - [x] The client’s location within one territory - [ ] Desire for centralized control > **Explanation:** Accounts are generally managed as house accounts not based on client location within a single territory, but based on complexity, strategic importance, or the need for centralized control. ### House accounts are excluded from which group’s purview? - [ ] Senior executives - [ ] Main office management - [x] Sales representatives' territories - [ ] National account managers > **Explanation:** House accounts are excluded from the sales representatives’ territories, meaning sales reps do not earn commissions from these accounts. ### Which type of client is likely to be managed as a house account? - [x] Large corporation requiring strategic management - [ ] Small local business - [ ] Individual consumers - [ ] Passive investors > **Explanation:** Large corporations that require strategic management and high-level attention are likely candidates to be managed as house accounts. ### How do house accounts typically benefit clients? - [x] Receive direct attention from senior management and customized solutions - [ ] Reduced pricing on all services - [ ] Avoidance of paperwork - [ ] Faster delivery times > **Explanation:** Clients managed as house accounts usually benefit from direct attention from senior management, better service, and more customized solutions. ### What potential benefit does a company gain from managing key clients as house accounts? - [x] Stronger client relationships and strategic alignment - [ ] Increased immediate sales revenue - [ ] Reduced need for marketing - [ ] Lesser need for internal auditing > **Explanation:** By managing key clients as house accounts, a company can build stronger client relationships and ensure strategic alignment with the main office’s objectives. ### Can house accounts be found in small businesses? - [x] Yes, especially for high-value or strategic clients - [ ] No, only in large multinational corporations - [ ] Rarely, mostly in medium enterprises - [ ] Not at all, they're specific to certain industries > **Explanation:** Small businesses can also have house accounts, particularly for valuable or strategic clients requiring dedicated management by senior staff. ### How does a house account affect sales representatives' commission? - [ ] Increases it significantly - [ ] Has no effect at all - [x] Excludes them from earning commissions on these accounts - [ ] Reduces it marginally > **Explanation:** Sales representatives are generally excluded from earning commissions on house accounts, as these accounts are managed by executives or main office managers. ### What aspect best aligns with the nature of house accounts? - [ ] Short-term sales increase focus - [ ] Reduction in overall operational cost - [x] Centralized, strategic client management - [ ] DHigher number of clients handled by salespersons > **Explanation:** House accounts align best with the centralized and strategic management of high-value or complex client services directly by executives or the main office.

Thank you for diving into the world of house accounts with this structured guide and quiz. Keep enhancing your understanding of client management for better business outcomes!