Key Account Management - Essay Example

Key Account Management Key account management helps a company develop long term relationships with its clients which will benefit all. Bandhu (2004) states that “Key accounts, by definition, are high value/volume accounts, and therefore require special attention.” The heart of a business is to develop key accounts as they produce the major share of revenues. A strategy must be developed and followed as dealing with key accounts requires a sales team and its manager(s) to have the knowledge to make the sale and then be able to handle an extension of the sale via managing these key accounts. In other words, these accounts must be identified, acquired, and followed up, or managed. The sales person/force and manager must also be rewarded accordingly. Key accounts are gained by developing a mutual relationship. In order to gain trust and repeat business and to “lead” the client and not the other way around (having the client lead the sales representative which results in a loss of sales), one must completely know and understand the client’s business. This can only be accomplished by having a strategy. Key Account Management (2006) lists the benefits of this type of handling such important accounts: Long-term client relationships on a preferred supplier basis (Discovering and addressing) gaps in client knowledge that are crucial to Last Name 2 developing solutions (Identifying) strategies for client loyalty based on value not price (Developing) key account planning processes and templates (Possessing) techniques for targeting and managing stakeholders in your client organisation (Understanding) the processes for developing creative solutions for your client Regarding the case study of Glaztex, the reasons for failure to win the order were many. They did not employ the strategies of proper key account management. Dr. Leblanc of Commercial SA had initially contacted sales executive John Goodman. That was an incredible “foot in the door” where Goodman should have researched and prepared before returning the call. Perhaps he did not have the proper training on key account management, which is very crucial. Most company training involves teaching staff how to sell to corporations and to large accounts which uses a skill-based training. On the other hand, key account management deals with the clients’ needs and uses strategy. (Bandhu, 2004.) Capon (2006) states that, “…it is one thing to recognize that these accounts should be treated differently, it is quite another to figure out exactly what to do.” So training is necessary. Goodman simply described the simply and gave Leblanc literature to read. As Leblanc had stated that he had already spoken with three other companies, Goodman needed to be well informed of not only what his company had to offer, he also needed to know about his possible client and the competitors. He needed to focus on value. An advantage would have been for him to tell and show Leblanc (and Atois, the production engineer, as he stated that a Last Name 3 competitor’s specifications were very similar) that a major problem with competitor products was unreliability and line breakdown, or downtime, was extremely costly. The system of a salesperson contacting the technical specialist and having technical support on demand should a problem arise would have given more additional pertinent information. Merely showing company literature and technical manuals was not enough as it did not prove why Goodman’s company offered “a cut above the rest.” Commercial SA was definitely very interested as they made the initial contact and asked several important questions. Goodman and the others (such as the production technician and purchasing agent) who spoke with Commercial SA’s employees needed to show the niche that the company has and why it would offer better services and products than the competitors. They needed to lead the client’s thinking but what had happened was the client ended up leading as they asked crucial questions, which revealed extreme interest, and even had to guide Goodman and the other staff by making comments suggesting, “What can you do for us that the competitors cannot do? What do you have to offer above the rest?” Also, when Goodman was approached with pricing, he stated that he would get back to the purchasing agent with the answers. As stated earlier, Goodman and his staff were not prepared. Salespeople were told to stress the higher speed and enhanced reliability when speaking to customers. That was all they were told. When Goodman and his colleagues did as they were told, it left the interested company unimpressed and did not give them reason to want to do business with Commercial SA. The purchasing agent met for the second time with Goodman and he stated that he did not understand why Commercial SA could not meet the competitor’s price. All Goodman knew how to do was to repeat the Last Name 4 technical advantages over the competition and the company offered ten percent faster speed and higher reliability. He had no other training than to do as he was told. Key Account Management—Best Practice (2005) lists some of the skills and qualifications that good key account managers should possess and these can only be acquired by complete cooperation of company teamwork, training, strategies, and practice: A deep understanding of the total process of key account management A practical step-by-step approach to classifying and selecting key accounts A practical approach to analysing the requirements of key accounts An appreciation of how key accounts plan their supplier strategies A step-by-step approach for developing a strategic plan for success in key accounts An in-depth understanding of how to measure the real profitability of key accounts A framework for characterising key relationships that suggests which strategies are appropriate to which relationships A better understanding of the organisational issues surrounding key accounts An introduction to the processes through which key account strategies are actually implemented New tools and techniques to manage the vital soft factors in successful relationships. Last Name 5 As Commercial SA asked some very important questions which revealed their extreme interest, Leblanc and colleagues were not listening to the messages and concerns that they had. It appears that Commercial SA was almost pleading, “Please give us some reasons to believe in you and to want to do business with you, please.” Broad Job Area: ICT Sales Management (n.d.) reports, “The Salesperson and Key Account Managers’ job means she/he spends most of her/his time listening and talking to customers, either on the phone or in person. Some roles are exclusively telephone based, some exclusively customer site based, most are a mixture of the two. For those roles involving meeting customers there is often a lot of travel, as well as a lot of corporate entertaining as the salesperson seeks to better understand his customers’ needs and build a relationship where both parties can trust each other.”  Key account managers are the single point of contact. They should be highly skilled and qualified in order to meet the challenges and needs of the customers. They should have the knowledge and skills to build long-term relationships with key account customers. (Shenker Logistics, n.d.) A meeting was “hastily prepared arranged” by LeBlanc to meet with Mike Bull to discuss the situation. Once again, instead of pro-acting and leading the client, LeBlanc was ill-prepared and reacted. LeBlanc and the other staff members should have been trained and prepared. The company Last Name 6 did not have a strategy in place. Business Gateway—Key Account Management (n.d.) lists some topics that key account management should address: You also need to write down everything you know about the clients business and its business strategy. Be honest - note down the strengths and weaknesses of your relationship with your client. Do any of your competitors have a similar relationship with your client? Its all very well collecting information and treating your clients like royalty, but ask yourself what you really want to achieve. For example, would you like key clients to sample a service theyve never bought from you before?... What strategies will you need to help you meet these objectives? These are your most important clients, so its vital they get what they need - and what your people promise. One person should also be responsible for the relationship, keeping a close eye on quality control issues… Dont lose track of how the new approach is working. Keep your processes alive, and make sure everyone is completely committed. They did not have what Kamcity.com (2006) suggests, “Pro-active techniques for building productive, multifunctional business relationships within… major customer.” As Gama, Evsuckoff, andMotta (2004) suggests, key account management is “the strategic marketing approach which provides an effective, practical and rather simple method for Last Name 7 companies interested in increasing their profits by correct customer and relationship management.” Key Account Management and Key Account Selection (2006) reports that the activities of key account management are “undoubtedly more complex and more difficult than simple sales activity” and this is where the company should invest in strategies and training procedures for all of its staff members. Apparently, there were many lessons to be learned from what happened throughout this experience, it is upon the company and management to invest in training and implementing procedures which will allow staff to incorporate strategies that will prevent the loss of key accounts in the future. References Bandhu, A. (2004). Key account management - no child’s play. Available from: < http://147.208.132.198/news/674_107313800310003.htm> [Accessed 29 May 2006] Broad Job Area: ICT Sales Management (n.d.). Available from: < http://72.14.203.104/search?q=cache:lU3LhqLQc8cJ:www.career- space.com/downloads/salesmanag.doc+key+account+management&hl=es&gl=mx&ct=clnk&cd=9 Business Gateway—Key Account Management (n.d.). Available from: < http://www.bgateway.com/bg-home/bg- sales-and-marketing-planning-and-action/bg-sales-action/bg-key-account-management.htm> [Accessed 30 May 2006] Capon, N. (2006). Managing Global Accounts. Available from: < http://www.keyaccountmanagement.com.htm> [Accessed 29 May 2006] Gama, C.A.F.; Evsuckoff, A.; and Motta, J.P. (2004). A naive KDD approach in Key Account Management Framework: a case study. Available from: [Accessed 30 May 2006] Kamcity.com (2006). EMR-NAMNEWS Ltd.: 1997-2006. Available from: < http://www.kamcity.com/> [Accessed 30 May 2006] Key Account Management (2006). Executive Education. Available from: < http://www2.agsm.edu.auagsmweb.nsfContentExecutiveEdPrograms-kam> [Accessed 29 May 2006] Key Account Management and Key Account Selection (2006). Available from: < http://www.themarketingprocessco.com/key%20account%20management/kam.htm> [Accessed 30 May 2006] Key Account Management—Best Practice (2005). Cranford University. Available from: < http://www.som.cranfield.ac.uk/som/executive/course/overview.asp?id=52> [Accessed 30 May 2006] Shenker Logistics (n.d.). Available from: [Accessed 30 May 2006] Read More