The document outlines key account management principles and strategies. It defines key accounts as strategically important customers and describes key account management as building loyal customers through tailored offerings. It discusses the four stages of key account management: account strategy, relationship plan, opportunities pipeline management, and performance measurement. Finally, it addresses determining appropriate account types and levels of management for different customers.
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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 Process
Some Loyalty Stage 2 of KAM Process
Stage 3 of KAM Process
4. Partner Low Price Sensitivity Full KAM Process
High Customer Loyalty
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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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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 Makers
PBI = Power Base Influencers
SBS = Supporter Base Sponsor
SBAS = 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
• 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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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
• 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 Process
Some Loyalty Stage 2 of KAM Process
Stage 3 of KAM Process
MAJOR ACCOUNT MANAGEMENT
4. Partner Low Price Sensitivity Full KAM Process
High 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 Strategy
2. Relationship Plan
3. Opportunities Management
MAJOR ACCOUNT MANAGEMENT
1. Account Strategy
2. Relationship Plan
3. Opportunities Management
4. 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
Editor's Notes
Information collected and analysed is then translated into an account development plan, which sets out your objectives for the year, the strategies that are to be deployed to achieve those objectives and the quarterly actions or tactics that execute those strategies.
Complete an organisational map of the key account, identifying the Power Base Decision Makers (PBDM) and Influencers (PBI ), the Supporter Base Sponsor (SBS) and Anti-Sponsors (SBAS ).Then decide your mirror-relationship team alignment pairings – CEO–CEO, CFO–CFO, etc.