KEY ACCOUNT MANAGMENT is the backbone of any go-to-market strategy today...as companies are trying to reduce their vendor base for better quality and control AND CONVERSELY sellers want to reduce their selling cost by gaining more wallet share of their loyal customers
Key Account Management is enjoying a
resurgence as suppliers look for new ways to increase sales and profitability.
Many suppliers have come to realise that certain customers must be treated somewhat differently from the average customer. However, it is one thing to recognise that they should be treated differently, it is quite another to figure out exactly what to do. Many suppliers are struggling to deal with these questions on a national or regional basis. Managing key accounts is a complex and difficult business.
Key 1: Account Selection
More and more companies are focusing their sales effort on a smaller group of prospects and customers. This has many benefits in terms of revenue and profit generation, customer satisfaction and loyalty, effective use of sales resources, and organisational alignment. Surprisingly, very few companies apply any rigour to the process of selecting key accounts. This is patently unwise, as poor account selection virtually guarantees that some of the accounts chosen will not deliver a good return on investment.
Companies moving into key account management are sometimes tempted to start big - either by starting their program with too many accounts or by simply declaring their largest revenue producers key accounts (whether or not they are profitable). The danger in choosing customers solely for their revenue levels is that you may find yourself making large investments for little or no return.
In addition to historic revenue patterns other things to consider are:
Many suppliers have come to realise that certain customers must be treated somewhat differently from the average customer. However, it is one thing to recognise that they should be treated differently, it is quite another to figure out exactly what to do. Many suppliers are struggling to deal with these questions on a national or regional basis. Managing key accounts is a complex and difficult business.
Key 1: Account Selection
More and more companies are focusing their sales effort on a smaller group of prospects and customers. This has many benefits in terms of revenue and profit generation, customer satisfaction and loyalty, effective use of sales resources, and organisational alignment. Surprisingly, very few companies apply any rigour to the process of selecting key accounts. This is patently unwise, as poor account selection virtually guarantees that some of the accounts chosen will not deliver a good return on investment.
Companies moving into key account management are sometimes tempted to start big - either by starting their program with too many accounts or by simply declaring their largest revenue producers key accounts (whether or not they are profitable). The danger in choosing customers solely for their revenue levels is that you may find yourself making large investments for little or no return.
In addition to historic revenue patterns other things to consider are:
Do you understand the customer's culture; do you have similar values?
How much do they spend on the things you have to sell?
Will they be as important to you in the future as they are today?
Do you know and understand their strategy?
Do you know your competitors' strengths in selected customers?
Most importantly, how does your customer view you?
Key 2: Account Organisation
Customers are increasingly evaluating suppliers on their ability to deploy teams. Those teams need to feature appropriate seniority for the work and the appropriate range of specialists throughout the supplier organisation. Critical elements of the supplier organisation are:
Top down support. It is vital that a key account programme is positioned in the company as core to the business. It is not just another marketing department initiative. The best indication of this is positive support from the board to any programme.
Internal Communications. Not only is it vital to demonstrate how important the programme is from the outset, but it is critical that momentum is sustained by an energetic internal communications programme.
Accountability. Wherever key customers impact the organisation, or can be impacted, the commitment to that customer must percolate through all levels, departments, and functions of the supplier. Team working and accountability is essential.
Change Management. All employees must be trained to accept the change and work towards a new approach. There should be an account management manual as a guidebook for the entire supplier organisation to know which customers are most important and why.
Key 3: Value Proposition
Research repeatedly shows that “understanding the customer's business” is a critical factor in the framing of any Value Proposition for a key customer. The Value Proposition will change over time as the relationship progresses (and hopefully deepens).
Understand customer's needs - some only want a commodity supplier. If so, they may not be key!
Articulate value, not costs
Keep refreshing any Value Proposition in line with the customer's changing business
Propose a mutual Value Proposition when appropriate
Do things gradually - don't rush!
Key 4: Account Manager Recruitment
Key Account Managers are individuals who must generate profitable revenue over the long term. While they are salespeople their knowledge and skills base are wider and must encompass general business management, board level communications, consultative selling, and thought leadership.
Key 5: Account Manager Mentoring
For Key Account Managers, the major challenge is moving from a traditional needs based approach - exploring the customer's current needs and offering products to match them - to taking a 'big picture' approach which encompasses the customer's future strategy within their own marketplace and seeking ways to add value by helping them achieve these strategic aims. This is a more consultative sales approach and requires a different skill set to that of a traditional salesperson.
Directors may be the best mentors as they are probably in the best position to:
help account managers to think strategically and to review the business plans being developed on the basis of that strategic thinking
help in developing a Value Proposition around how their organisation can create value for the customer beyond traditional product benefits
help the Key Account Manager gain access to more senior levels within the customer in order to sell this Value Proposition
help to resolve any internal difficulties that might block new and innovative solutions and ways of doing things
Key 6: Account Planning
Key Account Management by definition focuses on your most profitable customers and prospects. This usually means developing a written sales plan for an individual customer - understanding the customer's longer term goals, how their organisation makes decisions, who the important influencers are, what specific business needs you can address with your products, services, and information. It is imperative that as much work as possible is done to build a good knowledge base on the customer. The written plan need not be too lengthy or detailed ( two or three pages would suffice) but it should be regularly reviewed and updated.
Key 7: Plan Execution
Planning is all very well but without effective execution it is worthless. Plan execution requires a variety of skills both to manage the customer, and the supplier organisation. Two sets of politics, imperatives, and cultures may be in conflict at many stages during the relationship.
A regular review of the alignment between the parties, and involving both parties, greatly improves the chances of successful plan execution.
Key 8: Monitoring and Measurement
During the initial stage, the first objective should be to set a standard of performance. For instance, if the objective is increased sales of brand A and this was being pursued strongly by the Key Account Manager in an efficient managing of the customer, then it should result in x % increase in sales.
There should be a continuous measurement of the way a customer is handled and the customer's performance in leveraging the product in the market. Through a process of continuous evaluation, a supplier can recognise key customers and pay more attention to them.
with best
compliments
Dr Wilfred
Monteiro
VISIT MY SALES BLOGSPOT http://strategic-selling.blogspot.in
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