Key Account Management

1. Key Account Management Aristoteles Kabarganos, Managing Partner Ariston Group Performance Consulting www.aristongroup.de

3. KAM is fashionable but also difficult

4. KAM can develop beyond partnership to more synergies

5. There are mismatches between suppliers and customers

6. KAM does reduce costs and improve quality

7. A key account manager needs a comprehensive skill-set

10. Loose-win

11. Win-winGoal: win-win-win Integrated Interdependent Strategic intent of seller Cooperative Basic Exploratory Strategic intent of buyer Firm Partners End- Users

12. The Buyers’ View of Sellers (78%) Unreliable Devious Opinionated Arrogant Poor Listeners Big Talkers The enemy Untrustworthy Pushy Aggressive Manipulative Only 18% saw the salesperson in positive terms Source: Negotiation Resource International ‘Buyer Behaviors’ 2001 (2000 purchasers over 2 years)

13. What is important to customers? 22% 39% 21% 18% Source: The Chally Group 2006

14. What do customers want? Substantiated value Total Solutions, not products and services Outsource everything except their own core competencies Source: The Chally Group 2006

15. Some KAM skills from the customers point of view 59% 24% 21% 19% 10% 9% 6% Source: The Chally Group 2006

16. Creating closer relationships with supply and demand chain partners (1) DIRECTORS DIRECTORS From Marketing Marketing Operations Operations Information Systems Information Systems Sales Purchasing Supplier Customer Adopted from Professor Malcolm McDonald, Cranfield School of Management

18. Driven by price, success measured by price

19. Probably multi-sourcing

20. Easy to exit

21. Single point of contact

22. Business relationship only

23. Very little information sharing

24. Reactive rather than proactive

25. Probably low common interest

26. Organization suits selling company

27. Reward structure of KAMgrsparamount

28. Small chance of growing business

29. Can be stable state or trial stageFrom basic key account management

30. Key-Account Co-ordination Supplier Development Supplier Customer Creating closer relationships with supply and demand chain partners (2) Directors selling company Directors buying company To Marketing Marketing Operations Operations Information Systems Information Systems Adopted from Professor Malcolm McDonald, Cranfield School of Management

32. Principal or sole supplier

33. Exit more difficult

34. Larger number of multi-functional contacts

35. Developing social relationships

36. High volume of dialogue

37. Streamlined processes

38. High level of information exchange, some sensitive

39. Better understanding of customer

40. Development of trust

41. Pro-active rather than reactive

42. Prepared to invest in relationship

43. Wider range of joint and innovative activity

44. Joint strategic planning, focus on the future

45. Opportunity to grow businessTo interdependent key account management

46. And from traditional key account categorization A Top 15 (in volume/revenue generated) B Next 30 C Next 55

47. to a more relevant key account categorization …. Degree of collaboration KAM relationship stage Needs of parties to KAM relationship High: collaborative Realisation of fullest potential of both organisations Integrated Confidence in relationship, stable & highly evaluated by both sides Interdependent Reduction of risk, ability to forecast Cooperative Operational, efficient transactions Basic Low: transactional

48. … and ultimately to a customer portfolio view Supplier’s business strength with customer High Low High Strategic: invest Future stars: selectively invest Customer attractiveness Volume: manage for cash Bread & butter: maintain Low Key customer

49. Key account strategies Interdependent KAM Integrated KAM Exploratory KAM Investin tailoring product Basic KAM Invest inbuilding relationships Cooperative KAM Invest inimproving processes Invest in Jointinformationsystems andfocus teams High Customer Attractiveness Invest indevolvedrelationships Maintenance &Consistency Basic KAM Co-operative KAM Vigilanceandmotivation Low Integrated KAM Co-operative KAM Stage of KAM relationship Adapted from: “Key Account Management”, Cranfield University School of Management, 1996

50. Developing strategic plans for strategic customers: the process Understand the customer’s external environment Understand the customer’s internal capabilities & resources Work out the customer’s strategies and its critical success factors for us Understand our internal capabilities & resources Work out our objectives & strategies, plus key actions Agree a process to produce a strategic customer plan

51. The contents of a KAM strategic plan (T+3) Purpose statement Financial summary KA overview Client’s CSF analysis summary Applications portfolio summary Assumptions Objectives and strategies Budget

52. An example of a key account plan

53. Another example of a key account plan