Evidence n°1 : Far from a servile response to a powerful buyer, the management of key accounts has everything to do with the fierce determination to significantly grow a profitable business with a strategic customer.
Challenge #1 : shake up internally anchored habits and status quo, to bring new sources of value creation to your customer and to activate the levers of growth: global approach of major projects, implementation of global agreements, interpenetration of value chains, co-development or co-innovation, insights and added-value analysis, etc.
Evidence n°2 : we are pleased to introduce the ‘client’ in a list of 8 key words related to Key Account Management.
Challenge #2 : the main difficulty is to select a limited number of clients, according to criteria that reflect your strategy and business objectives. Some companies learned to manage several hundred customers around the world with a « key account » approach, but this requires resources, systems and some time.
Challenge #3 : define an alternative mode to manage the relationship with large customers not retained in the list. For instance carrying out regular business reviews and mobilizing top executives and key employees outside sales. Make it clearly distinct from the KAM approach.
Challenge #4 : take into consideration that each Key Account has its own expectations and organization for buying and decision-making. This requires some flexibility when defining a business and relational strategy. Roles and activities of the internal actors such as KAM or field sales may have to be adjusted accordingly, for each Key Account or group of Key Accounts.
Evidence n°3 : Naming Executive Sponsors is trendy. What company has not required from each of its top executives to ‘sponsor’ one of its 15 to 30 top customers?
Challenge #5 : explain to top company leaders what is their role, which rules and conditions apply, in order they can serve the KAM team efficiently (and not the reverse). Sometimes executive sponsors prefer to have it their own way, and that is a challenge.
Evidence n°4 : Information is probably the strongest expectation of a Key Account. Yes, even before price! From the most prospective information to the value-added analyzes stemming from transactional or technical data, there are many opportunities to explore, especially in the digital age. It is also a primary concern of KAMs, who often lack the global and operational metrics and dashboards necessary to effectively manage their account plan.
Challenge #6 : Do not panic if your customer obstinately asks you to communicate your cost data for an ‘open book’ collaboration. Ask him the name of any other provider fully satisfied with this approach, and wait. Concentrate your efforts on value added information: technological or normative evolutions, data and analyzes essential to its CSR reports or engagements, comparative on consumption and performance of its various factories related to your products, etc. The challenge is to focus on what really counts and, often, to build the information systems that make it all possible.
Evidence n°5 : preceded by words such as ‘strategic’, ‘global’, ‘key’ or even ‘national’, you are now heading a team of SAM, GAM, KAM and NAM.
Challenge #7 : set up a team that costs less than expected additional profits, while not being understaffed to achieve significant results. Interactions with Key Accounts often have to take place and be coordinated at several levels (global, regional, country, plant) and across different functions: R&D, technical, marketing, procurement, manufacturing, logistics, Information systems, etc.
Challenge #8 : Never let a SAM, GAM or KAM believe that his main job is to negotiate prices and volumes. Even less an Executive Sponsor. Easier said than done.
Evidence n°7 : a strong expectation of Key Accounts is the negotiation of lower prices through economies of scales and increased buyer power. And therefore requiring to have one single price worldwide for each SKU, aligned on the lowest already given. This sounds like a familiar fear for most companies that consider building or extending a KAM program, and obviously central buyers will not help mitigate this fear.
Challenge #11 : resist this pure price discussion and move to safer grounds: strong growth of the business though innovative ways, profitable for the supplier and creating value for the customer. Put forward the fundamentals of your business model and organization that make it very difficult, if not impossible, to give a single price worldwide. Use examples where the same product can be found at different prices. Even in the same place.
Challenge #12 : The harsh reality is that you are going to be regularly involved in high-stake negotiations with customers that represent an increasing share of your business and profits (hopefully). It is necessary to strengthen your negotiation skills and also to invest in order to further build your own position (making it painful for your Key Account to consider loosing the extra value your company brings to their business).
Evidence n°6 : The daily life of Key Account Management is made of multiple decisions, interactions and actions taken or led by many more actors or stakeholders than the small world of KAMs and buyers.
Challenge #9 : internal day-to-day mobilization is a major task of KAMs, which can be harassing in companies that operate on several continents and through 20 to 25 different business units. The culture of collaboration is a crucial point, and it is one of the duties of the Executive Sponsor to address it.
Challenge #10 : Do not forget that the customer also face similar difficulties. He may overestimate its organization’s capacity to carry out the commitments that he took with you. In some cases, he may not be in position to build the partnership you expected (think about challenge #2).
Evidence n°8 : It seems obvious to many people that global companies buy more and more global and ask their suppliers to appoint a single interlocutor worldwide. Not sure. A growing number of global firms are getting organized by large region, with each region being accountable for its P&L and having control on costs and several functions such as purchasing, information systems, marketing, etc. Corporate just provide methods and decide on core tools.
Challenge #13 : What does it mean for your KAM organization? Just add some RAMs? Is a company organized by region still a good candidate for being a Key Account (see challenge #2)? Can you pick-up just a region? This emphasizes what has been said on customer diversity (challenge #4) and the need for internal flexibility. Combining flexibility, clarity, transparency and efficiency of your KAM organization: that may be a real challenge.
Philippe Plunian, Partner at Powering
+ 33 6 80 89 68 42
Philippe Plunian specializes in the formulation and execution of customer-focused business strategies, sales & marketing transformation, sales efficiency and enhancement of pricing capabilities / execution
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