Not every business needs a Key Accounts Management function or team but many more are finding they do. Why? In recent times we are witnessing a distinct shift to Key Accounts Management with five major events fostering the development of key account management as a crucial business function.
- Market maturity
- Increasing cost of sale
- Customer / client negotiating power
- Pressure on margins
- Increased local, regional and global competition
In particular, Customer Power has changed the game. We are seeing big customers getting bigger and at the same time they are rationalising their supplier base. Buyers are becoming much more knowledgeable and more sophisticated and are demanding tailor made solutions. This is increasing the cost of serving customers so buyers and sellers are developing new ways of working together.
So, is your business ready for Key Accounts Management?
Many organisations made the move to key accounts management in the hope of capturing a larger slice from larger customers. As a consequence companies geared their operations to deliver on the premise and many were disappointed when key accounts failed to deliver anything more than “big orders”…
You can’t expect to get any meaningful benefits from something that is misaligned!
So, what is Key Accounts Management?
An important point needs to be made here: Key Accounts Management (KAM) is NOT Selling. Confused? Well you’re not alone. Many people think Key Accounts Management is just a fancy way to sell. Which it is not.
If the majority of business a company receives from its existing customers is in the form of a key accounts, then the role of the sales organisation is Customer Development not Traditional Selling!
And Key Accounts Management is not about generating new business either. Still shocked?
Well, Key Accounts Management is all about helping important customers improve the way they do business by providing them with easy, consistent access to the specialist domain expertise, products, services and solutions that the sales organisation has. The consequence of providing this added value and support is reciprocity in the form of first option of more business opportunities, at better margins.
value for money
And this thinking isn’t just coming from the supply side, it is coming from the customer as well. Buyers/customers are looking for better value, more efficiency and complete peace of mind. These demands are shifting professional buyers’ priorities and driving better management of increasingly fragile supply chains. For instance a typical large company spends between 40-70% of its total revenues on third party goods and services. More and more organisations are recognising this fact, and seeing the risks and opportunities on the supply side of business. They are investing far more in better management of the supply side.
That is why Key Accounts Management is good for business.
Key questions you need to answer before starting the Key Accounts Management journey…
- How do you define key accounts?
- What are the objectives for your key accounts initiative?
- How will your key accounts approach differ from your sales approach?
- What do you want to achieve from your key accounts initiative?
- Do your key accounts managers have an appetite for change?
- Can the organisation support a totally new role for business development?
If you need support or advice designing your own sales strategy or want to access key accounts management training please contact us on 03 95330000.
Remember everybody lives by selling something.
Author: Sue Barrett, www.barrett.com.au
I really like this article, but wonder how, if at all, things would differ in the superannuation world…an employer is the distributor of the product to an ever changing staff…is Key Account Management of this high value employer not a sales function? I would be interested in comparing this situation to another industry…like a franchise business which I would imagine would apply a key account management strategy in looking after their largest franchise holders…this would surely also result in greater sales?
Key accounts is an externally focused function so it would not apply to how employers “sell” the concept to their employees. But certainly the same key account principles apply to those organisations that sell different super schemes to employers – providing the employer organisation is large enough to warrant that level of service, treatment and support. In the end key accounts management is a commercial decision. If a customer expects that high level of attention, there has to be reciprocal value to the sales organisation.
As for franchise operations, too many franshisors don’t provide their franchisees with the support the need to develop and then bemoan the outcome. If they did see franchisees as key accounts – at least those large enough to warrant that profile – they probably would get a better return.