Key Account Management

Author: Carlo D'Amico


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Key Account Management

Key Account Management

It is regarded as an important approach used by business-to-business suppliers to create value through implementation of the processes targeted on the most important customers.

It produces measurable business benefits.

Key Account Management

Modern companies aim to permanently increase their value by the means of customer orientation and retention.

Moreover, the relationship marketing literature suggests overhauling the economic decline through focusing on the business with the main contributors to a company's budget.

Relationship Marketing

Relationship Marketing

“ Relationship Marketing is a company's behaviour purposing to establish, to maintain and to develop competitive and profitable customer relationship to the benefit of both parties. ”

Bjerre, M. and Hougaard, S. (2003), p.40

Relationship Marketing

“ The ultimate goal of Relationship Marketing is to acquire loyal customers, who have selected a particular supplier over time and intend to buy from that same supplier in the future. ”

Orr, M.L., Hawes, M.J. and Keillor, B.D., (2007)

Relationship Marketing

“ The detailed research has proved that the profitability of the firms practicing customer relationship management increases significantly. ”

Orr, M.L., Hawes, M.J. and Keillor, B.D., (2007)

Relationship Marketing

Moreover, a base of loyal customers is more profitable than one-time transactions from a long-term perspective. That is why Relationship Marketing was especially acknowledged in practice and broadly applied in industrial and business-to-business markets where long-term contracts are preferred.

Relationship Marketing

“ Researchers of the "Marketing in the 21st Century" assert that Relationship Marketing is critical for a successful business strategy of any firm operating in modern day business environment. ”

Keillor, B.D., Orr, M.L. and Hawes, M.J. (2007), p.9

Key Accounts

Key Accounts

“ Key Accounts are customers in a business-to-business markets identified by selling companies as of strategic importance. Key Account Management is an approach adopted by selling companies aimed at building a portfolio of loyal key accounts by offering them, on a continuing basis, a product/service package tailored to their individual needs. ”

Millman, T. (1995); cited by McDonald, M. and Rogers, B., (1998). p.XI

Key Accounts

“ To co-ordinate day-to-day interaction under the umbrella of a long-term relationship, selling companies typically form dedicated teams headed up by a Key Account Manager. ”

Millman, T. (1995); cited by McDonald, M. and Rogers, B., (1998). p.XI

Two main objectives of KAM

  1. Customer Retention
    2.
  2. Maximising Customer Value
    3.

1. Customer Retention

“ It is much cheaper and more effective than the permanent acquisition of new customers. ”

Reichheld (1990) and Sasser (1993); cited by Wengler, S. (2006), p.29

The supplier gathers valuable information on the customer and his needs when serving him – and therefore next time he he can efficiently design the offering using the previous customer knowledge experience.

2. Maximising Customer Value

  • “In the total value, which a customer delivers to a firm”
  • “Monetary value is summarised in all earnings and profit”
  • “Non-monetary value is seen in all customers' contributions, such as reputation, recommendations, and additional know-how transfer.”

Wengler, S. (2006), p.31

Introducing KAM

Reasons for a company to introduce KAM

  1. Increase of customer orientation.
    2.
  2. Intensification of business relationships.
    3.
  3. Differentiation of the company from its competitors.
    4.
  4. Minimisation of market risks.
    5.

Tasks of a KAM

  1. Raising customer satisfaction.
    2.
  2. Managing relationships.
    3.
  3. Establishing trust with the customer.
    4.
  4. Developing customer orientated strategies.
    5.

Being a Key Account Manager

Being a Key Account Manager

  • It means being the orchestrator of the strategic customer relationship.
    •
  • A KAM directs the deployment of corporate-wide resources to provide comprehensive product, service and solutions to the strategic account.
    •
  • He/she is the main point of contact for the customer for both good and bad situations.
    •

Critical success factors

  • Organizational alignment.
    •
  • Senior management involvement.
    •
  • Processes and systems for communications knowledge management.
    •
  • Prioritizing resources.
    •
  • Account planning.
    •
  • People development.
    •
  • Relationships and program metrics.
    •

Customer Needs Assessment

  • The first activity of a Key account Manager should be a comprehensive understanding of customer needs.
    •
  • The simplest way is to interview the customer, in addition to reviewing published reports and all available pieces of information.
    Our customer is the best source for telling us what they believe they need from us.
    •
  • Armed with this information, we can start to build our account plan.
    •

Interaction with our customer

  1. Products and services portfolio.
    A KAM has the right products and services in his/her portfolio to present the right solution. It needs to be clear to the customer that he/she can be trusted to deliver the solutions he/she promises
  2. Support and service.
    KAM's may deliver great products, and still get in trouble for poor service and support. KAMs are responsible for service and support that is unmatched and delights the customer.
  3. Customer value creation.
    By creating superior business value, we can differentiate ourselves, and expand long-term business and gain higher margins.

How a KAM should act

  1. By exceeding expectations.
    Our customer has certain expectations, and should be clearly defined in a service level agreement document. When KAMs exceed a customer's expectations, word quickly gets around the account.
  2. By helping our customer grow their business.
    By helping our customers grow their business and become more profitable, he/she becomes a trusted advisor to them and he/she creates value for his/her business as well.
  3. By being a partner, not just a supplier.
    Once the KAM starts to help the customer grow, shares the risks, and creates value for them, he/she will have achieved the key to account management.

Main skills of a KAM

  1. Strategic Business Advisor.
    2.
  2. Business Manager.
    3.
  3. Relationship Architect.
    4.
  4. Team Leader.
    5.

1. KAM as Strategic Business Advisor

  • Able to understand and anticipate clients' existing and future needs in depth and communicate this within team and own organisation.
    •
  • Develops compelling solutions to client issues.
    •
  • Taps into the wider resources and skills within own organisations to develop client/partner solutions.
    •
  • Brings fresh insight to client business that will help them deliver competitive advantage.
    •
  • Develops joint strategies that are mutually beneficial to all partners within the account.
    •

2. KAM as Business Manager

  • Acts like a business manager being fully conversant with financial and strategic planning tools, including profit and loss and other accounting conventions.
    •
  • Responsible for setting of and deliverance of key business metrics; turnover, profit, product, etc..
    •
  • Allocates resources and tracks their performance makes adjustments as necessary to achieve the plan.
    •
  • Needs a solid grounding in business and general management skills.
    •

3. KAM as a Relationship Architect

  • Builds and manages internal/external relationships involving all stakeholders and influential bodies.
    •
  • Able to relate to people at all levels in the organisation.
    •
  • Manages the contact matrix ensuring that all potential points of contact and influence are being served appropriately.
    •
  • Ability to build trust in all stakeholders and influence Operations, Customer Solutions, Multimodal and Admin functions.
    •

4.KAM as a Team Leader

  • Builds and leads cross functional teams that are able to anticipate and deliver solutions to meet client requirements.
    •
  • Motivates and sets task direction for team members without direct hierarchical control.
    •
  • Communicates strategy and direction effectively across the team, both in own and client organisation.
    •
  • Involves team in the creation of the client plan.
    •
  • Maintains levels of motivation.
    •
  • Effectively balances time among team, organisation and client requirements.
    •

Skills of an Operational KAM

  • Strong knowledge of Ocean freight operations, from start to finish.
    •
  • Previous experience of managing operational requirements for major key accounts.
    •
  • Able to produce monthly KPI reports.
    •
  • Attending regular performance review meetings to explain any operational issues.
    •
  • Involvement in development initiatives and projects with key account customer.
    •
  • Is analytical and goes beyond the numbers to find the real insight that will be the key to achieve the best results.
    •

The end

For more information about the author, please visit www.carlodamico.com

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