The document discusses key account management (KAM), which involves targeting and serving high potential customers with complex needs. It provides examples of companies like P&G and FedEx that use KAM. It outlines the advantages of KAM, such as improved communication and higher sales. However, it also notes disadvantages like increased dependence on few customers. The document then discusses the tasks, skills, and success factors involved in effective KAM, such as developing long-term relationships, technical support, and trust between supplier and customer.

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By :
Prof. Amit Kumar

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“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

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IILM-GSM
Selling & Sales Management

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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

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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.
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Selling & Sales Management Key Account Management

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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

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What is Key Account Management?
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Selling & Sales Management Key Account Management

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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.
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Selling & Sales Management Key Account Management
Characteristics:

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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.
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Selling & Sales Management Key Account Management

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Distinctions between Transactional
Selling and KAM
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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)
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Selling & Sales Management Key Account Management

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Advantages of Key Account
Management
However, KAM is not without its potential
dangers.
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Selling & Sales Management Key Account Management

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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.
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Selling & Sales Management Key Account Management

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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.
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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

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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:
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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
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1. Personal Trust

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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)
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Selling & Sales Management Key Account Management
2. Technical Support

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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)
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Selling & Sales Management Key Account Management
3. Resource Support

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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)
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Selling & Sales Management Key Account Management
4. Service Levels

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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
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5. Risk Reduction

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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.
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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.
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Selling & Sales Management Key Account Management