What is Key Account Management

Developing major/key accounts. Presentation by Steve Williams

What is Key Account Management (KAM) ? KAM is an approach which includes developing long term relationships with strategic customers whose needs you understand in depth, and for whom you develop a special offer with a differential advantage over the offers of competitors. Quote taken from McDonald, Millman, Rogers 1996

Who creates the need for KAM ?

Market Conditions – downturns typically result in less new customers and a need to offset the reductions through existing customers => Strategic / Key relationships

Customers – the size and nature of a customer may require the allocation of a KAM to manage them to ensure satisfaction.

Switched on management – customers have cycles – both in terms of business and employees – KAM reduces the likelihood of a solution being removed by a competitor at a later date.

Developing customer relationships

A companies greatest assets are its customers. Without customers there is no company !

The future behaviour of a customer depends largely on consequences of past and present behaviour.

The rewarded customer buys, multiplies and comes back for more.

The most important goal of any salesperson is to create and keep customers by rewarding them for their behaviour.

What is the reward ? 1) The ‘good feeling’ they get from the purchase. Customers will only exchange their money for two rewards; 2) A ‘solution’ to a problem they had, have or will have. In an ideal sale both conditions will be met !

Developing & maintaining the ‘good feeling’

The ‘good feeling’

People are ruled by emotions which they back up with logic

Cognitive dissonance vs. cognitive consonance – pre and post sale

‘ Good feeling’ only exists with a state of cognitive consonance.

Four basic emotions – Glad, Sad, Mad and Scared

Customers spend money most easily when they are glad.

The goal of any Key Account Manager is to keep customers feeling ‘glad’ about their relationship including any purchase(s) by ensuring that a state of cognitive consonance dominates.

The ‘problem solving’ approach to KAM The goal of any Key Account Manager is to keep customers feeling ‘glad’ about their relationship including any purchase(s) by identifying and solving past, current and future problems.

- Problems are good ! Problems require solutions.

Solutions require software and services = money !

Problems give us the chance to re-enforce cognitive consonance.

Problems allow us to take them from Sad, Mad or Scared back to ‘Glad’.

Customers will spend money to get back to ‘Glad’.

Solved problems invite confirmation of the strategic relationships worth.

What constitutes a ‘strategic customer’ ?

Growth

- It could be a prospect targeted in a high level company plan.

- It could be a prospect in a market where a vendor has not yet penetrated.

Customer prospect type that is particularly suited to the a vendors solution.

Protection

It could be an existing customer that spends a lot of money year on year.

It could be an existing customer whose ‘reference’ is of particular value even though they don’t spend much.

The goal of any Key Account Manager is to develop a KAM strategy that reflects the different types of strategic customer that exist, agreeing which to target and how - based on time, resources and money available to target each type.

Needs of a strategic customer ?

Needs are based on the type of strategic customer being targeted.

Classic sales applies: known needs, unknown needs, competitive driven needs, personal needs etc.

Vertical and/or industry knowledge is a must.

Competitive knowledge can highlight deficiencies in existing solutions

Good understanding of metrics that present value to the customer.

The goal of any Key Account Manager is to develop an understanding of the needs of the strategic customer being targeted, and develop an ongoing rolling strategy to acquire an expertise that demonstrates this.

What is the special offer ?

There may be multiple ‘special offers’ that are applied to any one strategic account to meet multiple objectives – subject to time, resource and money available.

The goal of any Key Account Manager is to understand and develop a ‘special offer’ that appeals to the strategic customer.

Each strategic customer is likely to consider ‘offers’ differently.

The ‘special offer’ can only be something the customer values.

The ‘special offer’ may generate revenue – or not e.g. 24/7 support.

The ‘special offer’ needs continual re-assessment to determine its continued value to the strategic customer. Pavlov effect.

The special offer can be both specific to an individual or generic to the organisation.

What is the differential advantage ?

You can’t differentiate unless you understand your competition.

You can’t differentiate unless you understand the customers vertical or market and associated challenges.

An advantage is only a differential one if the strategic customer perceives and accepts it to be such.

Existing references or repeated solutions are often the easiest way to differentiate a solution from the competition.

Good Key Account Management can be a differential advantage.

- The goal of any Key Account Manager is to learn, understand and exploit the differential advantages at the beginning of a sales cycle as well as re-enforcing them post sale .

What is a good KAM ?

Someone who is interested in more than a short term sale.

Someone who sees the customer as strategic to their own success as well as the companies.

A good problem solver who is able to bring a customer always back to a state of ‘glad’ regardless of the issue.

Someone who can think outside of the immediate environment and project issues the customer is likely to have before they have them and provide solutions to the same.