In a Nutshell – What is Basic Account Management?
Basic account management is a long-term process – it takes time:
We have to admit that we are in major account management for the long haul. It takes time to manage a large account and we will only get a return on our investment in time if we can have a long-term result. In some of the organizations we’ve worked with, this creates tension because the entire culture is about creating a short-term sales result, where product and profit are the primary drivers and measures of success. We should not underestimate what a challenge Major Account Management can be to corporate culture. It emphasizes the relationship over the product, profit over volume, and the team over the individual, the long term over the short term. At the same time, the practical short-term realities of business life must be recognized.
One of the best ways to manage this tension is to have someone act as a mentor, conscience or guide to the account manager and the account team. They are not involved in the day-to-day management of the account, but are invited to review and comment on key proposals and presentations. Their primary role is to participate in the long-term plan review every few months to ensure that the relationship is as productive as possible and reflects the values of the organization as a whole.
The role of the primary account manager is to be responsible for the overall relationship. They influence all actors in the account to ensure a coordinated, synchronized approach. The Key Account Manager is responsible for drawing up the account plan, getting team buy-in and commitment, and then monitoring execution
Key account management involves relationships, not just a mechanical approach:
Under this heading we need to discuss three main aspects of basic account management.
o The importance of relationships in managing large accounts.
o The complexity of relationships in managing large accounts.
o Mapping relationships in Basic Account Management.
In core account management, it is essential that we manage both people and processes. Of course, we need to price the product right. We must be excellent in administration. Our customer service and product range must be strong. But “people buy from people” and “we are in business with people”. Managing the complex range of relationships within a major account is difficult and demanding, but our ability to manage relationships will determine whether or not we sustain success.
In reactive selling, there is only one relationship – that between the seller and the buyer. With basic accounts, the situation is much more complicated. Contacts are often made at many levels and in many places. In one large account, we identified 1,000 relationships between the ten-person account team and customer representatives. But it’s not just a problem of numbers, it’s often a problem of politics. Some contacts don’t want us to talk to people in other departments or at different levels. It is also possible that the complexity is caused by the product range. Users of one product rarely talk about the specifications for another product. In any complex relationship, some people will like us more than others. Not to mention interdepartmental tension. All of these things make basic account relationships complex, and we need to recognize their complexity.
If relationships are important, and if relationships are complex, then it is important to find a way to map, analyze, plan, and monitor those relationships. In recent years, we have found that a chess-based approach allows for a very practical way of identifying key issues.
If we can confidently answer these questions and communicate our thinking across the account team simply and clearly, then we are halfway to success. This approach gave people in a wide range of organizations a common language and way of working
Can only be done with selected customers:
The last word of this definition is selected. Choosing the right key customers is extremely important for three main reasons:
o We do not have the resources to treat every customer as a key customer.
o Not every customer wants to be treated as a key customer.
o Choice allows us to prioritize our activities in line with our overall business goals.
Many organizations evaluate their key accounts simply by the amount of sales for the year, but the organizations we see really making progress in key account management consider a number of other factors. They also make sure that everyone knows who the main accounts are and why they are main accounts. It is important to be strict with the selection criteria you use! You will also need to apply some form of weighting to reflect your priorities. The fact that a primary account does not meet all of your criteria will not disqualify it as a primary account. It will just have to score higher in other areas to qualify.
Based on this assessment, organizations can rate their accounts. They can be Premier, 1st and 2nd Divisions like a football league, or Gold, Silver and Bronze like Olympic medals, or First Class, Club Class, Economy and Standby like an airline. The airline analogy is a good one because on a flight you can have people on standby who are perfectly happy with the service they are getting, even though they know there are people who are getting “better” service in Club Class. Ranking your accounts is not a matter of providing better or worse service to some customers. The point is to provide all your customers with appropriate service. When we select our key accounts and consistently deliver on what we promise, we manage our accounts professionally and efficiently.
In a Nutshell – Key Account Management Success Factors:
Fr Successful role development:
o Effective working relationships with other team members.
o Continuous drive to improve the performance of the account team.
o Management commitment to account team role with career opportunities.
o Strengthening the role through authorized career structures, job descriptions and core training programmes.
Fr The key skills:
o Understanding the financial and legal requirements of the account.
o Understanding the company’s business objectives.
o Understanding the company’s commercial policies.
o Build high levels of product awareness.
o Understanding the client’s business objectives.
o Identify decision makers.
o Understand the customer’s purchasing strategy.
o Evaluate competitive activities.
o Create an account development plan.
o Ensure efficient processing of sales orders.
o Build the right levels of revenue and profitability.
Fr The basic skills:
o Interpersonal skills.
o Financial control and analysis.
o Project management.
o Human management.
o Initiative and creativity.
For example, industry knowledge, competitive knowledge, product knowledge, etc.
Key Account Development Success Factors:
Fr The stages of a long-term process
o Contract negotiations.
Fr Goals for an account team
o Ensure that the client is presented with a consistent and professional image of your company as a business partner.
o Ensure long-term business relationship with the client as a basis for growing business.
o Delve into the client’s organization and decision-making department, creating new opportunities that can be leveraged to accelerate account growth.
o Understanding and documenting, on an ongoing basis, the strategic business direction and organization of client organizations.
o Provide the company’s senior management team with feedback on the long-term growth potential of the client’s market sector and on the critical success factors for its utilization.
o Ensuring that the company’s solutions are technically sound and based on a proper understanding of current requirements and enhance the customer’s perception of the benefits of the company’s market focus.
o Ensure that the company’s overall resource is delivered in a manner that satisfies customer requirements and supports account plan objectives.
An effective key account management strategy depends on intelligently selecting your key accounts, creating a strong, consistent and flexible way of working with both key accounts and other clients, and then implementing the plan in a disciplined, effective and efficient manner.
One of the successes of the key account management program has been the creation of common models and language that facilitate discussion and planning across units and departments. It also drives our clients’ commitment to plan for long-term key relationships. Key account management has many implications for individuals, departments and the business as a whole. It will always be demanding, but done right it will be very rewarding
Copyright © 2006 Jonathan Farrington. All rights reserved
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