2. 07/06/10 2
“A student pursuing management education from IILM-
Graduate School of Management, for example may find
himself or herself placed in a firm as a Sales Manager.
Our goal is to prepare the student for the exciting
challenges related to leading sales organizations in
today’s hyper-competitive global economy”.
IILM-GSM
Importance of this course
Selling & Sales Management
4. 07/06/10
Learning Outcomes
After studying this chapter, you should be able to:
• Understand what a key account is and the advantages and
disadvantages of KAM
• Decide whether KAM is suitable in a given situation
• Understand the criteria used to select key accounts
• Tasks and Skills of KAM
• Ways in which relationship with key accounts can be built
• Key success factors for key account management
IILM-GSM
Selling & Sales Management Key Account Management
5. 07/06/10
Contents
• Key Account Management
• Advantages and Disadvantages of KAM
• The Tasks and Skills of KAM
• Building Relationship with Key Accounts
• Key Success Factors for KAM
• Case Study: Cloverleaf plc.
IILM-GSM
Selling & Sales Management Key Account Management
6. 07/06/10
What is Key Account Management?
KAM is a strategy used by suppliers to target
and serve high potential customers with
complex needs by providing them with special
treatment in the areas of marketing,
administration and service.
IILM-GSM
Selling & Sales Management Key Account Management
7. 07/06/10
What is Key Account Management?
IILM-GSM
Selling & Sales Management Key Account Management
8. 07/06/10
What is Key Account Management?
• In order to receive key account status, a customer must have
high sales potential. (IBM gives Big Blue Status to their loyal
customer. All Big Blue status are IBM's Key Account).
• A second characteristics is that of complex buying behavior.
The decision-making unit may be located in different
functional areas and varying operating units.
• Third, key account status is more likely to be given to
customers willing to enter into a long-term alliance or
partnership. Key accounts that are geographically spread are
often called national accounts.
IILM-GSM
Selling & Sales Management Key Account Management
Characteristics:
9. 07/06/10
KAM-Examples
P&G assigned a key status to Wal-Mart. Wal-
Mart shares the scanner data from its check out
counters in its over 4500 stores through the satellite. It
helps P&G plan its production, better management of its
production runs and keep its inventories low as it no
longer depends on sales forecast but actual sales data.
Wal-Mart gains as it does not have to keep inventories,
get faster replenishments.
FedEx assigned a key status to IBM where
FedEx stocks IBM’s spare parts in its own
warehouses and delivers them across the world on
instructions from IBM’s service personnel.
IILM-GSM
Selling & Sales Management Key Account Management
10. 07/06/10
Distinctions between Transactional
Selling and KAM
IILM-GSM
Selling & Sales Management Key Account Management
Transactional Selling KAM
Overall Objective: Sales Preferred Supplier Status
Sales Skills: Asking questions, Building trust, providing
handling objections, closing excellence service
Nature of Relationship: Short, Intermittent Long, More Intense
Interaction
Salesperson Goal: Closed Sale Relationship Management
Nature of Sales force: One or two Many salespeople, often
salespeople involving multifunctional
per customer teams
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Advantages of Key Account
Management
• Close working relationship with customer- the salesperson
knows who makes what decisions and who influences the
various players involved in the decision-making process.
• Improved communication and co-ordination- the customer
knows that a dedicated salesperson or sales team exists and
they know who to contact when a problem arises.
• Better follow up on sales and services
• Higher Sales- most companies that have adopted key
account selling techniques claims that sales have risen as a
result. In banking also HNI customers are very important.
• Co-operation on research and development for new products
and joint promotions (e.g. within the FMCG/Retail Sector)
IILM-GSM
Selling & Sales Management Key Account Management
12. 07/06/10
Advantages of Key Account
Management
However, KAM is not without its potential
dangers.
IILM-GSM
Selling & Sales Management Key Account Management
13. 07/06/10
Disadvantages of KAM
• When resources are channeled towards a limited
number of companies, the supplier runs a risk of
increased dependence on, relatively few customers.
• The risk of pressure on profit margins if a customer
choose to abuse its key account status.
• The possible danger of a customer applying ever-
increasing demands for higher levels of service and
attention once they know that they have preferred
customer status.
IILM-GSM
Selling & Sales Management Key Account Management
14. 07/06/10
The Tasks and Skills of KAM
• Simply choosing the company's top salesperson to handle
the management of key account is not recommended
because the jobs are so different, with the latter requiring a
higher level of managerial ability (e.g. leadership, co-
ordination, development of account strategies and
communication).
• This is because powerful buyers in key account carry high
expectations are very demanding.
For example, they expect key account salespeople to
act as partners in creating strategic solutions to their
problem or to be experts who provide specialized
product application knowledge.
IILM-GSM
Selling & Sales Management Key Account Management
15. 07/06/10
IILM-GSM
Selling & Sales Management Key Account Management
TASK SKILLS
Develop long-term relationships Relationship Building
Engage in direct contact with key customers Co-ordination
Maintain Key account records and
background information
Negotiation
Identify sales potential of existing key
accounts
Human relations
Monitor and control key account contracts Presentation Skills
Co-ordinate and expedite service to key
accounts
Communication
Co-ordinate communication among
company units servicing key accounts
working in a team
16. 07/06/10
Building Relationship with Key Account
There are certain ways in which suppliers can
build relationships with key accounts.
Five ways of building strong customer
relationships are:
IILM-GSM
Selling & Sales Management Key Account Management
17. 07/06/10
Building Relationship with Key Account
The objective is to build confidence and reassurance.
Methods:
Ensure promises are kept.
Reply swiftly to queries, problems and complains
Establish high frequency of contact with key account
Arrange factory / site visits
Engage in social activities with customers
IILM-GSM
Selling & Sales Management Key Account Management
1. Personal Trust
18. 07/06/10
Building Relationship with Key Account
The objective is to provide know-how and improve the
productivity of the key account.
Methods:
Research and development
co-operation before and after sales service
Provide training
Dual selling (suppliers help key account to sell)
IILM-GSM
Selling & Sales Management Key Account Management
2. Technical Support
19. 07/06/10
Building Relationship with Key Account
The objective is to reduce the key account's financial
burden.
Methods:
Provide credit facilities
Create low interest loans
Engage in co-operative promotions to share costs
Engage in counter-trade (accept payment by means of goods
or services rather than cash)
IILM-GSM
Selling & Sales Management Key Account Management
3. Resource Support
20. 07/06/10
Building Relationship with Key Account
The objective is to improve the quality of service
provision.
Methods:
Reliable delivery
Fast/ JIT delivery
Installed computerized recorder system (FedEx)
IILM-GSM
Selling & Sales Management Key Account Management
4. Service Levels
21. 07/06/10
Building Relationship with Key Account
The objective is to lower uncertainty in the customer's
mind regarding the supplier and the products/ service
provided.
Methods:
Free demonstrations
Free/ low cost trial period
Product guarantees
Delivery guarantees
Maintenance contracts
Proactive follow-ups
IILM-GSM
Selling & Sales Management Key Account Management
5. Risk Reduction
22. 07/06/10
Key Success Factors for KAM
A study by Abratt and Kelly (2002) investigated
the perceptions of suppliers and key account
customers regarding the success factors of key
account relationships. They identify six critical
issues that can assist management in the
creation of enhanced and sustainable
relationships.
IILM-GSM
Selling & Sales Management Key Account Management
23. 07/06/10
KAM Key Success Factors
1. Suitability of the Key Account Manager
2. In-depth knowledge and understanding of the key
account customer's business
3. Commitment to the partnership
4. Delivering Values
5. Trust
6. Proper Implementation and Understanding of the KAM
concept.
IILM-GSM
Selling & Sales Management Key Account Management
Editor's Notes
To arm or prepare in advance of a conflict
The part of the arm between the wrist and the elbow.
LG assoigned one person…for the key.. IILMM for all campous
HDFC assigned a person to all IILM
KAM is mainly used in B2B market..very rare in B2C like For banking and insurance company they assign a key status to each of their HNI customer…
Ibm is having heardqarter at Newyork, USA. Fedex is having one of the warehouse at Mumbai. At mumbai warehouse FedEx stores the IBM computer parts. Whenever demands arised for the IBM computer in India. An instruction from the headquarter newyork…they ship the parts to that location in india. Its like a dual earning for the FedEX…because FedEx is a courier company which shift the goods from one location to another location…so FedEx is getting more revenue from the key account IBM.
In KAM….suppler or the company (this is company point of view…and company’s objective) also enjoys Preferred supplier status
Both supplier and distributor works together fpr a new product..the dealer distributor knows better about the market demand and also the feedback of the product..so they can suggest further improvements in their products
P&G
Engage in social activities with customers (Hardley davidson)..check in CRM
Supplers help key account to sell..in a sence…they can give potentail prospects name..through their own contacts..supplier is not only one key account might be to 50 to 60 different accounts…they can provide better ideas related to branding, advertising or promotion
Engage in social activities with customers (Hardley davidson)..check in CRM
Engage in social activities with customers (Hardley davidson)..check in CRM
Engage in social activities with customers (Hardley davidson)..check in CRM
Engage in social activities with customers (Hardley davidson)..check in CRM
Engage in social activities with customers (Hardley davidson)..check in CRM