beth rogers: "how can you manage your key accounts, when they think they are managing you? - a...
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How can you manage your key accounts, when they think they
are managing you?
Beth Rogers
Athens Sales Management Forum
September 21st 2007
How important is selling?
• “Everyone lives by selling something.”» Robert Louis Stevenson
• “Nothing happens until something is sold.”» Senior executive, telecoms industry
• The key purpose of selling is to “create build and sustain mutually beneficial and profitable relationships through personal and organisational contact.”
» UK National Sales Board
The history of sales
Go out and get the
numbers!!!!!!!!!
The sales function today
• Understanding business strategy• • Understanding purchasing strategy
• Using analytical tools specific to sales strategy
Management of “top line” strategy
“We believe that a 20% gainin profits can be realized by
companies that improve a poorly working
marketing/sales relationshipInto a better one.”
Where does this leave marketing?
Kotler, Rackham et al, 2006
Integrated sales and marketing
• Joint vision, values and goals
• Teamwork
• Mutual understanding
• Shared information
• Shared process management
Managing business relationships
strategic
co-operative tactical
prospective
Our value to the customer
strategic
co-operative tactical
prospective
High
Low
LowHigh
Customer valueto us
Rogers B, 2007
Sales takes thelead
Marketing takes thelead
Examples of strategic relationships
• Parts manufacturers in automotive• Medical supplies company/ logistics• Steel company + top 17 customers• Oil company/tyre manufacturer• Ceramics supplier/steelworks• Logistics provider/mail order company• Facilities management company/laboratory
services• IT supplier/bank
Key account management is….
An approach which includes
developing long term relationships
with strategic customers
whose needs you understand in depth,
and for whom you develop a specific offer with a differential advantage over the
offers of competitors...
McDonald, Millman, Rogers, 1996
It should work….
• In a survey of 200 Fortune 1000 companies in 2005, most were able to raise revenues and profits by more than 20% on average through collaborative initiatives with customers (McKinsey).
The trouble is….
• What sort of customer justifies this level of investment?– “best” customers place 40% of unprofitable
orders (SCEB)– suppliers who are not able to collaborate
effectively lose money trying (McKinsey)– Supposedly “key” relationships do breakdown
Managing risk in business relationships
strategic
co-operative tactical
prospective
Our value to the customer
strategic
co-operative tactical
prospective
High
Low
LowHigh
Customer valueto us
Rogers B, 2007
The role of purchasing
“Professionalism in purchasing, with its ongoing external trading relationships, is key to supporting and/or enhancing the brand; sometimes this can be the only differentiatingfactor between companies.”
CIPS – Chartered Institute of Purchasing and Supply
Strategic contribution of purchasing
• Focus on the capability of a supplier is associated with improving value of purchasing function
• 62% of companies procure most of their business needs from their top ten suppliers
• However, diminishing returns set in if organizations try to set up strategic relationships with more than 5% of their supplier base.
Source: Performance Benchmarks: Procurement, 2006,
American Productivity and Quality Center
Purchasing strategy
Kraljic1984
Leverage
Bottleneck
Strategic
Non-critical
Importance of purchase
(profit impact)
Complexity/risk in supply market
Which means that….
• You can only have a strategic business relationship with a customer if you, as a supplier, are in that strategic box
• If you are in any of the other boxes, your choices are:– Reduce all overheads associated with the
relationship and focus on streamlining processes so you are “easy to do business with”
– Selectively invest to improve your position
Cost control
• The best-known brand in industrial chemicals set up a sub-branded e-commerce division to deal with price-driven customers. It concerned industry analysts at the time, but delivered good overall results, even in the short-term.
Selective investment
• As early as 1989, a French stationery company set out to help its largest customers to automate purchasing stationery
• An oil company offered stable prices, stock control and just in time delivery in return for single sourcing
• But where next?
The nature of KAM
• The development of value, such as joint new product development and/or process integration between the supplier and customer
• The business management skills of the account manager
• Long-term planning• Special organizational focus, including key
account teams
But….
• Be sure your key account thinks you are strategic too!
• Beware risks – Concentrating resources on small number of
customers might increase market exposure – hence the need for portfolio management
• Monitor closely – things change over time
• Be distinct between “key” and “keep”
Remember how business relationships break down:
• Communication breakdown• Critical incidents• Change of contacts• Confidence fails• Complacency• Core product problems• Change in strategy• Contingency building• Cost issues• Collapse of status quo
Strategic relationship momentum:
• Mutual value and mutual problem-solving– Innovation/differentiation (product/process)– Cost reduction
• Deliver it
• Sustain it
• Renew it
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