Aspects to Consider When Developing Key Account Management - Coursework Example

Key Account Management Name: Course: Tutor: Institution: Date: Table of Contents Table of Contents 2 Aspects to Consider when Developing KAM 3 Territory Account Allocation Review 5 Compensation Approaches Recommended 7 Future Recommendations, Challenges and Solutions 8 References 11 Aspects to Consider when Developing KAM One of the strategic merits of KAM planning is the eventual organizational new thinking. In this regard, the application and adoption of KAM system would facilitate and involve the development of alternative organisational systems through which a reorientation in the long run management of the organisation can be based. As such, this in particular involves the establishment of relationships through which the respective consumer involvement is facilitated and promoted. Thus, with consumer involvement and relationship development, the virtue of loyalty and long term gains is eminent. However, in the development and application of KAM is its complexity. As such, the process involves the learning and incorporation of diverse consumer cultures that are often different. Consequently, this requires the sales staff to develop different portfolios through which to manage the different consumer cultures and decision making practices (Emery and Oertel (2006, p.15). Although such an approach is bound to increase overall competency and consumer satisfaction, the KAM practice risks increasing production and operational costs in an organization. For instance, if the organisation sets the employees’ salaries based on their sales at 2% standard rate as per the cost of sales existing rates, the new salaries for the representatives would be as follows Current Basic Salary ($) Sales ($) Proposed Salary on a 2% increase ($) T1 26000 1800000 36000 T2 33000 2000000 40000 T3 27000 900000 18000 T4 38000 1600000 32000 T5 20000 800000 16000 T6 22000 1200000 24000 T7 23000 700000 14000 189000 180000 Total Difference $ 9000 Percentage 2% Although there is a $9000, the actual cost of effecting the changes could be higher than the revenue gains thus negating the overall KAM system establishment system. Thus, the proposed key accounts management system should be based on a cost benefit analysis. A cost benefit analysis I an approach through which a strategy application benefits to an organization both direct and indirect. On the other hand, a strategic cost is described as the expenses incurred in developing and implementing a strategy in an organization. For instance, a consideration should be developed on an evaluation of the implications of employee payments against revenue gains in the proposed system. For instance, a calculation evaluation should be developed to establish the ideal percentage per annual sales made by organizational regional sales representatives. As such, this should be developed based on the overall costs of sales and the desired organizational profit margin. Consequently, in order to develop a sustainable key account management system should be based on a critical evaluation of ensuring overall revenue benefits to the organization rather than on the incurred costs. Finally, a critical evaluation aspect that the organizational executive management should consider in the proposed categorization of its accounts into prospect, and key accounts categories. In this case, due diligence should be placed on the strategic contribution to the organizational strategic goals. In this case, the need to increase sales value by 10% should be evaluated based on the need to increase sales regions allocations. In this case, the cost of developing and sustaining an additional sales region, as well as the movement of the sales for employees from one region to the other should be based on the need to increase organizational competitiveness into the future. Therefore, the management should consider the strategy long-term market implications. Territory Account Allocation Review An organizational sales territory determination and development is based on a review of the organizational product needs and thus determining the relevant territory approach. Currently, the territorial system is based on a build up design established at the organizational start. However, with increasing organizational and market changes, a breakdown approach is imperative to identify territory performances and needs as a key account management practice development to categorize the respective market accounts. One of the projected areas for change in the administration of the key accounting management practice for the venture is the customer coverage. In this regard, the consumers coverage is categorized and classified as the extent to which the sales representative cover and administer to the total expected and potential consumer base. Through the development of a key account seller across the regions, the organization will ensure an increased consumer retention rate as well as the development of relationships that are imperative in increasing the organizational consumer loyalty and future competitiveness in the highly competitive office furniture and fittings industry (Dumont, Stojanovska and Cuyvers, 2011, p.259). Statistics indicate that Newton serving the Yorkshire and Humberside region registers the highest targeting with a 78%. While the lowest target rate was in the Midlands and West, East region that registered a 38%. Therefore, this illustrates that despite the 20 years service by Mathew Briant, the organization is yet to cover and achieve its full regional potential. Key among the causes for this challenge could be a region’s expansiveness as well as lack of a sufficient sales workforce. Therefore, alternative alignment strategies for the challenges could include the development of new sales representation regions. As such, the regions will be based on the current consumer coverage rates in the Midlands and West, East and the South West regions high on the priority list. As such, the realignment should focus on aligning the regions based on the three accounts, categories with an assistant staff for each of the categories. Therefore, this analysis proposes the development of an organizational missionary sales force that would pioneer the development and establishment of the prospective and emerging accounts into the proposed new sales representative focus regions. As such, a missionary sales person should take over Newton’s region as it has a high number of prospective and emerging accounts while he Finally, an additional area for review is the call rates aspect. Currently, the call rates range from the lowest 3.8 in the North West and North East regions with the highest 6.3 in the Eastern region. As such, the evaluation argues that the alignment will include preferentiating time for the various accounting categories offering the representatives overall 240 minute client calls per day. As such, this is expected to standardize clients contact with the key accounts category offered a monthly 2 calls per client for increased satisfaction among the consumer base. As such, this will allow the sales representative to have additional administrative time to serve as consultant sellers to other recruited sales representative to increase the organizational overall performances. Therefore, the above review establishes that the organizational sales territory alignment should into the future focus on the development and establishment of key account seller as well as new business sellers for the prospective and emerging accounting sections. Compensation Approaches Recommended As already discussed, a sales force motivation and compensation system is imperative in the development of a successful and efficient sales force for any business venture. As such, in the development of its alternative compensation system, the venture will evaluate and consider the development of a compensation system that incorporates a blend of both the organizational goals and employee interests. One of the current challenging reward and compensation system is the use of sales expense 0.5% that has reportedly been abused by a majority of the sales force in the organization. In this case, an alternative compensation approach is through the application and adoption of the bonus and profit sharing approach. On one hand, through the application and adoption of a bonus approach, employees should be rewarded and compensated for their achievements. In this compensation practice, the organization should base the bonuses on the profit shares acquired by the value of each of the employees and regional performance ratios. In this case, although a regional performance may be low, individual employee contribution should be evaluated and established in offering bonuses. Such an approach would increase respective employees’ intrinsic employees’ motivation in the long run. Thus, although the changed key accounts management system could reduce employee earnings, the bonuses would serve as a motivational tool in that it could increase the overall earnings for the exceptionally performing employees. Therefore, the application and adoption of the bonus will serve as an alternative to the annual fixed increments in the organization. Therefore, instead of offering fixed increments for all the employees, the performing employees will be offered an annual pay demonstrating and appreciating their performance as compared to peers across the sales regions. A second current system challenge is the application and the use of the basic salary as well as the fixed annual increment per served year in the organization which is a form of employment Aswathappa (2005, p.300) argued that it increase the overall cost of employment and production. In this case, this has been argued to increase the operational costs as evaluated based on the ration between the basic salary and the total sales per year in the organization. For instance, while as Mile Philips earns $26,000 after making a total 2013 sales of $1.8 million, in another region, Sarah Frost earns $27,000 after a total sale of $900,000. In this regard, this indicates varied earnings rates against revenue generated. Therefore, this is a vital focus area. As such, payment should be developed and adjusted based on the total annual sales. In this context, the alignment would ensure the application of the accounting matching concept that holds that organizational revenues should be based and matched against the expenses incurred in generating and acquiring them. Similarly, a salary, annual increment is currently fixed across for all the employees. However, despite offering a job satisfaction and security aspect, the approach has no viable and lasting merits on the organization. In this case, the realignment of the practice will be based on the development and establishment of a target based annual increment, as an approach to increase overall employee performances in the long run period. Future Recommendations, Challenges and Solutions Based on a critical evaluation of the furniture and office appliances market changes, it is clear that an organizational operational sales strategy is inevitable. In this case, this evaluation recommends the application and adoption of a mixture of both key account and missionary account sellers into the future. On one hand, a key account management approach should be based on the established target 728 accounts in 2015. As such, the focus should be placed in ensuring that the key account managers and sales representatives are qualified and dedicated into establishing lasting relationships with the key account consumers, who form a vital share of the organizational revenues and future strategic market success and competitiveness. On the other hand, missionary sellers should be developed and incorporated in the organizational management and expansion structure 2015. In this regard, the sellers should be charged with managing and establishing the 325 emerging and 960 prospect accounts for the venture in 2015. In this case, the selected and recruited sellers should be visionary individuals with the charisma and ability to attract an increased consumer base, thus achieving the organizational 10% turnover. In particular, the missionary account sellers should be based in the untapped areas such as Northern England. In order to increase and promote their effectiveness and reach across the market, the selected sellers should apply an online platform through which to market and relate with the consumer base. As such, the online platform should offer two basic product propositions. On one hand, it should offer a relationship platform through which communication, based on the allocated calls with the customers can be extended. As such, this offers a platform through which the sellers can answer and respond to frequently asked questions to all customers. As such, this would ensure quality on the calling rates in that specific consumer calls would be based on unique consumer needs rather than on standard general questions common to a majority of the consumer base. On the other hand, the platform would offer a marketing platform for the missionary account sellers for the emerging and prospect accounts. Besides the opportunity for organizational expansion in the year 2015, a wide range of challenges need to be addressed. One of the challenges is the current sales representatives’ autonomy that is likely to derail the development and standardization of an online organizational platform. As such, in order to overcome the challenge, despite allowing for the development of unit profit centres, a centralized strategic management centre charged with offering strategic organizational directives to the regional sellers should be established under the leadership of the new sales and marketing manager. In addition, a challenge in the aspects of dissatisfaction by the existing sales representatives on the proposed changes is likely to reduce its efficiency. Therefore, the organization should develop a compromise approach through which to ensure that the respective representative interest are aligned with the organizational goals to reduce resistance which Sharma (2007, p.55) stated as among the major causes of organizational market failures. References Aswathappa, K., 2005, Human resource and personnel management: Text and cases, Tata McGraw-Hill, New Delhi. Dumont, M., Stojanovska, N. & Cuyvers, L. 2011, "World inequality, globalisation, technology and labour market institutions", International Journal of Manpower, vol. 32, no. 3, pp. 257-272. Emery, C.R. & Oertel, S. 2006, "An Examination Of Employee Culture-Based Perceptions As A Predictor Of Motivation", Journal of Organizational Culture, Communication and Conflict, vol. 10, no. 2, pp. 13-29. Sharma, R. R., 2007, Change management: Concepts and applications, Tata McGraw-Hill, New Delhi Read More