for mba students

1. Key account managementHow to develop a strategy?In this series of articles, I have been discussing key account management. In the first part, I focused on identification of key accounts. In the second part, I highlighted identification of strategic accounts and how to allocate resources for their management. Now I will provide a step-by-step process for developing a strategy.Now that we know who our key accounts are, we have to have a strategy to manage them so that not only will they stay with us, remain as “key,” but also grow in value for us. This is accomplished through a strategic plan, the main steps for which are shown below. Customer needs assessment: Since I believe in basing your HYPERLINK quot;
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business model on HYPERLINK quot;
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unmet customer needs, the initial approach to a key account management strategy has to start with a comprehensive understanding of customer needs. The simplest way is to HYPERLINK quot;
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interview your customers, rather than rely on published reports or advice from outside agencies. Only your customer can tell you what they need from you. Skills & Capabilities Development: Once you have an understanding of what your key accounts need, you must do an HYPERLINK quot;
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inventory of your in-house skills and capabilities. That would enable you to identify the gaps that you have. The result is a good list of what you need to develop through training, hiring, partnering, HYPERLINK quot;
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outsourcing, etc. Generally, these skills and capabilities can be divided into three distinct groups: Products and services portfolio: This is the most basic requirement in order to serve a customer. You must have the right products and services in your portfolio to present the right solution. In many cases you may not have everything in-house, but as long as it is clear to the customer that you can be trusted to deliver it, they don’t care if you outsource it. Having said that, it is very important that if you plan to outsource or subcontract a specific product or service, it is your responsibility to make sure that your customer’s needs are met. There is no room to pass on the buck to another vendor.Support and service: It is very ironical and frustrating to suppliers that they may receive no praise for excellent products but get into a lot of trouble for poor HYPERLINK quot;
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service and support. On the other hand, customers can be a lot more patient with not-so-good products as long as your service/support is unmatched. In summary, there is simply no room for compromising on support and service. With your key accounts, the best approach is to provide a single point of contact (with a backup) to them for all kinds of support and let this person coordinate internally how to gear up appropriate resources as and when needed. (Related article: HYPERLINK quot;
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How to improve customer service?)Customer value creation: While I have shown it at the bottom, it is probably the most important skill that you may need. In order to maintain your business relationship with the key account, you have to meet the requirements of the contract and provide necessary support and service, but what will really differentiate you from your competitors and shield you from future competition is how you create value for your customer. Let me explain. In today’s world, not many companies have offerings that only they, and no one else, can provide. Both direct and indirect competition is everywhere, but by creating value for your customers, you can differentiate yourself, and hopefully, expect long-term business and higher prices. Let me take one example to highlight how you can create value for your customer. When I worked at packaging solutions provider, we provided packaging equipment and materials to our customers. In doing so for thousands of companies worldwide, we accumulated vast amount of knowledge about packaging systems, package design, and inventory management. While we kept our promise to deliver highest quality equipment and material and backed it up with support and services, for our key accounts, we started offering package design to reduce the overall cost of packaging and packaging systems redesign to streamline their operations. We often saved millions of dollars for our customers by sharing our knowledge. In no time, customers valued that part of our offering more than our equipment and material. Indirectly, this goodwill helped us in our core business. (Related article: HYPERLINK quot;
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Customer service outsourcing)Delivery of solution: The final step in key account management is delivering on the promise that you make to your customer. What can you do different for your key accounts then? Exceed expectations: Your customer will have certain expectations, and in most cases, it will be clearly spelled out in a legal document. As an account manager, that is something that you need to keep an eye on, but what will endear you to your customer is when you exceed her/his expectation. While it is tempting to adopt an “under-promise and over-delivery” strategy, a better approach is to truly demonstrate to your customer that you exceeded her/his wildest expectations because most customers are pretty sharp to figure out that you under-promised and over-delivered. Such a strategy produces enormous dividends through HYPERLINK quot;
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“word-of-mouth” marketing. When you exceed a customer’s expectation, your behavior leads to stories and anecdotes in the marketplace – exactly what you want.Help them grow sales and income: You may want to think that your job is to deliver what the customers wants and grow “your” sales and income, the reality is somewhat different. Remember that you exist because of your customers. In other words, when your customers prosper, so will you. By helping your customers grow their business and become more profitable, not only are you endearing yourself to them, you are also creating value for your business.Be a partner, not just a supplier: Building on my previous argument, almost anyone can be a supplier, but with your key accounts, you have to be their partner. Once you start to help them grow, share the risks, and HYPERLINK quot;
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create value for them, you have become successful in creating “customer delight” – the biggest achievement of a key account management strategy.ConclusionReluctance to putting in place a key account management program can have disastrous consequences in the long run for any enterprise. While creating all that extra value can be costly and require a lot of hard work in an environment where everyone appears to be buying on price alone, enterprises that do not provide special considerations to their key accounts, eventually die, since someone replaced them by offering a lower price.Related articles: HYPERLINK quot;
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Key account management solutions for small and mid sized businesses HYPERLINK quot;
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Major elements of a key account management program for an MNC HYPERLINK quot;
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How to empower customers HYPERLINK quot;
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How to build a customer facing organization HYPERLINK quot;
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How to build a community of customers HYPERLINK quot;
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