kam strategy
TRANSCRIPT
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KEYACCOUNT
MANAGEMENT
PRINCIPLES & STRATEGY
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OBJECTIVE
• To present the principles of Key Account Management so that all will have a clear understanding, so that we can agree:– The types of account management– The stages of KAM which apply to the above– The level of KAM required– How we can add value to a Key Account?– Who should be a Key/Major Account etc?
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DEFINITION OF KEY ACCOUNTS
“Key Accounts are customers in a business to business market identified by selling companies as of strategic importance”
Source: Tony Millman 1994
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WHAT IS KEY ACCOUNT MANAGEMENT?
“KAM is an approach aimed at building a portfolio of loyal key customers by offering them, on a continuing basis, a product/service package tailored to their individual needs. To co-ordinate day to day interaction under the umbrella of a long term relationship, selling companies typically form dedicated teams headed up by the Key Account Manager”
Source: Tony Millman 1994
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WHAT WILL A KEY ACCOUNT EXPECT?
• A nominated Manager to be the main link into FIRA for all issues
• Understand its business, market needs and competitive environment
• Help sell them products/services that achieve their business objectives
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WHAT WILL A KEY ACCOUNT EXPECT?
• Add value in the relationship to their business by advising on issues that are relevant to their business
• Help exploit market opportunities and identify new challenges
• Act with integrity and professionalism
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FOUR LEVELS OF RELATIONSHIP
PERCEIVED VALUE CUSTOMER RESPONSE SOLUTION
1. Commodity High Price Sensitivity Differentiate/add benefits to product to No Loyalty get to level 2
2 . Product Provider High Price Sensitivity Understand customer aims and support
Low Loyalty some of them Stage 1 of KAM process
3. Value-add Less Price Sensitivity Stage 1 of KAM ProcessSome Loyalty Stage 2 of KAM Process
Stage 3 of KAM Process
4. Partner Low Price Sensitivity Full KAM ProcessHigh Customer Loyalty
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FOUR STAGES OF KAM
1. ACCOUNT STRATEGY 2. RELATIONSHIP
PLAN
3. OPPORTUNITIES PIPELINE MANAGEMENT
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ACCOUNT STRATEGY
• Developing a customer-account-specific sales strategy that is based on the customer’s agenda of issues and needs.
• A well-developed strategy will address:
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ACCOUNT STRATEGY
• What you can do to add value for the customer
• Who you need to influence and by whom
• Where within the customer organisation to target
• When to pursue opportunities
• Why the customer will buy from you
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ACCOUNT STRATEGY
• Complete an account strategy charter for each key account consisting of:– Understanding of the accounts industry and current
situation– Understanding their key business objectives for the
next three to five years – What they critically need to do to achieve these– Ask how you can help them to achieve their
objectives
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ACCOUNT STRATEGY
Current Situation
Key Business Objectives
Key Business Initiatives/ Strategies
Barriers
Enablers
Key Account Development Plan
Objectives Strategies Tactics Q1 Q2 Q3 Q4
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RELATIONSHIP PLAN
• Identifying the key decision makers who are in our customer’s power base and devise a relationship development plan to provide value to them at a personal/social and business level. A good understanding of the key decision makers will address the following questions:
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RELATIONSHIP PLAN
1. What is their business agenda?
2. What is their personal/social agenda?
3. By whom they need to be recognised?
4. How are they measured?
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RELATIONSHIP PLAN
PBI SBAS
SMT
PBI SBS
BDM
PBDM SBAS
SMT
PBDM SBS
COO
Complete an organisational map of each Key Account
PBDM = Power Base Decision MakersPBI = Power Base Influencers
SBS = Supporter Base SponsorSBAS = Supporter Base Anti-Sponsor
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OPPORTUNITIES MANAGEMENT
• Managing the pipeline of opportunities from initial identification to qualification and go/no-go decision and then from pursuit/closing to final contract and engagement
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OPPORTUNITIES MANAGEMENT
• With the account development plan (objectives, strategies and tactics) and the organisation relationship map (target audiences) in place, a programme of interaction and communication can begin
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MEASUREMENT
• Survey, interview and set early warning flags to measure and track your account performance and the customer’s satisfaction
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MEASUREMENT
• For each key account, an annual performance measurement and customer satisfaction survey should be carried out as a precedent to updating the account development plan and organisation relationship map
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MEASUREMENT
KEY MEASURE REPORTS TRACKING
Opportunities Review of opportunities identified, qualified & pursued
Sales Performance Targets, achieved and forecast based on KPIs
Relationships Strength of interpersonal, mirror-relationships
Satisfaction Buying process and moments of truth
Alerts Symptoms of potential retention issues
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DIFFERENT COMMUNICATION LEVELS
• Pre KAM Stage
• Early KAM Stage
• Mid KAM Stage
• Partnership KAM Stage
• Synergised KAM Stage
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PRE KAM STAGE
DIRECTORS
MANGERS
SUPERVISORS
ADMINISTRATORS
KEY ACCOUNT MANAGER
DIRECTORS
MANGERS
SUPERVISORS
ADMINISTRATORS
KEY ACCOUNT MANAGER
SELLING COMPANY BUYING COMPANY
KA Manager deals directly with the buying company’s Purchasing Manager. This can lead to exposure with individuals leaving or moving into another position
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EARLY KAM STAGE
BOARD MGRS OPS OPS MGRS BOARDKA Mgr KA Mgr
The bow tie effect, where the KAM communicates throughout the buying company but other communications are made only to respective levels
SELLING COMPANY BUYING COMPANY
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MID KAM STAGE
SELLING COMPANY BUYING COMPANY
MANAGERS
ADMINISTRATORS
KEY ACCOUNT MGR & PURCHASING MGR
MANAGERS
SUPERVISORS
DIRECTORS
OPERATORS
ADMINISTRATORS
SUPERVISORS
DIRECTORS
OPERATORS
This is the spider web model where everybody interfaces with each other. This makes for a more stable relationship where better understanding of individual
needs are met. If one line of communication is cut then it still means the buying company is ‘tied in’
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PARTNERSHIP KAM STAGE
BOARD
MGRS
OPS
KA Mgr
SELLING COMPANY BUYING COMPANY
KA Mgr
ADMIN
BOARD
MGRS
OPS
ADMIN
Where the bow tie has been reversed
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PARTNERSHIP KAM STAGE
• This takes, time, trust control and commitment to work, The KAM feeds information through the multi-levels of the selling company direct to counterparts in the buying company
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PARTNERSHIP KAM STAGE
• This often means change in structure, processes and systems so that there becomes a ‘total offering’ not just a product offer i.e. ‘the way we do business’
• This can lead to an open book relationship where sharing costs information leads to mutual cost savings
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PARTNERSHIP KAM STAGE
• However if the buyer is bigger, power can be used against you. Circumstances could arise where the buyer wants to take all the savings and you are left without any benefits
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SYNERGISED KAM STAGE
OPERATIONS FOCUS TEAM
KA Mgr
SELLING COMPANY BUYING COMPANY
KA Mgr
The ideal situation where this is quasi integration between the two companies.
R&D FOCUS TEAM
ENVIRONMENTAL FOCUS TEAM
JOINT BOARD MEETINGS
FINANACE FOCUS TEAM
MARKETING FOCUS TEAM
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SYNERGISED KAM STAGE
• There are departmental focus groups and even joint board meetings, where the KAM is responsible for setting up your own systems which are in turn tailor made to suit individual companies needs
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POSSIBLE TYPES OF ACCOUNT MANAGEMENT
NO ACCOUNT MANAGEMENT
1. Commodity High Price Sensitivity Differentiate/add benefits to product to No Loyalty get to level 2
2 . Product Provider High Price Sensitivity Understand customer aims and support
Low Loyalty some of them Stage 1 of KAM process
ACOUNT MANAGEMENT
3. Value-add Less Price Sensitivity Stage 1 of KAM ProcessSome Loyalty Stage 2 of KAM Process
Stage 3 of KAM Process
MAJOR ACCOUNT MANAGEMENT
4. Partner Low Price Sensitivity Full KAM ProcessHigh Customer Loyalty
KEY ACCOUNT MANAGEMENT
PERCEIVED VALUE CUSTOMER RESPONSE SOLUTION
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POSSIBLE TYPES OF ACCOUNT MANAGEMENT
1. Account Strategy
ACOUNT MANAGEMENT
1. Account Strategy2. Relationship Plan3. Opportunities Management
MAJOR ACCOUNT MANAGEMENT
1. Account Strategy2. Relationship Plan3. Opportunities Management4. Measurement Performance
KEY ACCOUNT MANAGEMENT
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TYPES OF ACCOUNT MANAGEMENT
We therefore need to define which customers fall into the following:
•Key Account Management
•Major Account Management
•Account Management
•Other
Note: Need to consider FIRA Membership and non membership
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HOW TO IDENTIFY A KEY ACCOUNT
• “Which of our accounts could we not afford to lose?”
• “What makes them so valuable to us?”
• “Why do these accounts justify the time and resources involved in key account management?”
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HOW TO IDENTIFY A KEY ACCOUNT
• The 80/20 rule (i.e. 80% of sales or volume attributed to 20% of customers)
• Size of purchase budget
• Sales growth potential
• A prestige customer (not necessarily large, but one that can enhance our reputation to have as a reference customer)
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HOW TO IDENTIFY A KEY ACCOUNT
• Current and potential profitability to FIRA
• A customer with a wide geographical reach that could give access to markets otherwise inaccessible
• Receptive to developing a long term relationship
• Access to new technology
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HOW TO IDENTIFY A KEY ACCOUNT
• Cultural “fit”
• Similar objectives/aspirations (strategic fit)
• An opportunity for “cross selling”
• “The only game in town” (limited customer base)
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TESTING SALES
• Top 50 companies = 40% of sales
• Next 271 companies = 40% of sales
• Remaining 1505 companies = 20% of sales
(Based on a total spend over the last three years)
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SERVICE TECHNCIAN SALES
• Top 12 companies = 90% of sales– M&S, IKEA. Reylon, Simmons, Tesco, Laura Ashley, Erkornes, Buoyant Upholstery, Kaymed,
Habitat, Celebrity Motion & Halo Furnishings
• Remaining 70 companies = 10% of sales
(Based on a total sales YTD 2009)
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HOW TO ADD VALUE THROUGH KAM
• Volume discounts or rebates, or other price incentives
• Build a priority ordering programme, such as an online order system
• Build an exclusive order status reporting program
• Develop specific inventory programme
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HOW TO ADD VALUE THROUGH KAM
• Customize our product or service (branding, labelling, or actual features
• Set up a single point of contact so that all relevant staff report to the key account manager
• Provide access to senior management
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HOW TO ADD VALUE THROUGH KAM
• Set up cross-business teams and initiatives, such as quality improvement
• Provide integrated delivery, fulfilment, re-order points, inventory, and invoicing
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WE NEED TO AGREE
• Types of account management– Account Management– Major Account Management– Key Account Management
• Which stages of KAM apply to the these– Account Strategy– Relationship Plan– Opportunities Pipeline– Measure Performance
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WE NEED TO AGREE
• With so many levels to full KAM we need to decide which level best suits our strategy and structure– Pre KAM Stage– Early KAM Stage– Mid KAM Stage*– Partnership KAM Stage– Synergised KAM Stage
* TW Preferred option
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WE NEED TO AGREE
• How we can add value to a Key Account?
• Who should be a Key/Major Account etc?
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THOUGHTS SO FAR
• Key Account Management – Customers to be defined
• Major Account Management– Remaining Top 50 testing accounts and top
12 ST accounts
• Account Management – Remaining 271 testing accounts ST, TFO &
FIRA Members