...emj.2006.03.005 European Management Journal Vol. 24, Nos. 2–3, pp. 151–162, 2006 Ó 2006 Elsevier Ltd. All rights reserved. 0263-2373 $32.00 The Underlying Vulnerabilities in Key Account Management Strategies NIGEL PIERCY, Warwick Business School NIKALA LANE, Warwick Business School Recent years have seen substantial growth in the development of Key Account Management (KAM) systems and structures to meet the escalating demands faced by suppliers from major businessto-business customers. KAM promises to replace adversarial buyer–seller relationships with cooperation, joint problem-solving and integration in a new model of buyer–seller interaction. Large expenditures have been made by many major companies in building KAM and similar strategies, in the face of ever-growing demands of powerful, large customers. However, these structures appear frequently to have been built on assumptions which are increasingly dubious. There is a compelling case for arguing that in many cases KAM strategy is fatally flawed and will, in the long term, fundamentally damage many of the supplier companies which have invested in this route to market. The challenge is to understand better the inherent weaknesses in KAM strategy to balance these against the potential benefits, and to develop more robust strategic alternatives to managing relationships with major customers. Ó 2006 Elsevier Ltd. All rights reserved. Keywords: Key account management, Strategic account management, Buyer–seller relations, Buyer–...
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...Rethinking Key Account Management: adapting and refining your Sales organization’s response to the new realities Managing the future Most executives recognize that the real assets of a company are embedded in the quality of the relationships between the company and its most important stakeholders, such as clients or customers, employees and suppliers. Developing strategic relationships with customers should therefore be a central issue on the CSO’s agenda moreover in current context. Key Account Management is a systematic process for managing key interactions and relationships with most valuable customers. It focuses on the creation, implementation, execution and evaluation of an overall plan to guide the account team in developing new relationships at the C-level, aligning the best resources to the most profitable opportunities and delivering what was promised. Everybody would agree on the strategy, even more when you know that the Pareto principle applies here also with 20% of the customers generating 80% of the revenue/profit. However when looking at our recent CSO Insights’ study, execution seems different: 51% More than half of the companies recognize that they need improvement in selecting key accounts 60% CSO interviewed understand they lose deals because their competitors have established a better relationship with their customer 52% Also recognize their Key Account plan need improvment 2 Why Key Account Management has become increasingly important ...
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...GLOBAL ACCOUNT MANAGEMENT Introduction Due to globalization of economics, advances in communication and information technologies, rapid changes in global market and consumers and availability of a transnational media, makes the world an enormous borderless marketplace. Accordingly many of multinational companies have adopted global account management as a substantial strategic account and integral part of global marketing, and have focused on global consumers’ important demands. Global vs. Nation Account Management Global account management (GAM) emerged as a plan or process of relationship focusing on future of global client’s major demands, and understands them towards to increasing the return on company’s and stakeholders’ investments. Then companies must gain proper perceive of their customer’s demands, and tailoring their approach according to their customer’s needs (Woodburn & McDonald, 2011, pp.5-7). Nation or domestic account management implies on delivering service or serving the demands of consumers that are located in a nation or region; on the other hand, global account management is refer to delivering services or serves the customer’s demand throughout the world. Accordingly multinational companies needs to adopt larger accounts based on their multiple locations around the world while domestic or nations companies doesn’t needs to (Honeycutt et al, 2003, p.102). Then it is obvious that GAM’ faces larger and more sophisticated challenges, and in compare...
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...perfect example for micromarketing. (Barrett, 1986) Introduction: Key Account Management (popularly known as KAM) is an organizational form emphasizes partnerships and strategic alliances with customers and suppliers, and focus on relationship building through repetitive, rather than single, sales transactions. It involves the sales and marketing process like customer selection, customer satisfaction, channel management, relationship management, etc. in building long-term relationships creating competitive advantage for the organization. It improves performance, which leads to shareholder value creation (Gosseling & Bauwen, 2006). This reports discusses the briefly the business of company B and its relevance to KAM, and then looks into problems which the company B is facing in terms KAM. The issues are analysed using various frameworks and recommendations made in the research articles on the topic and identifies the ways to tackle these problems. Recommendations are made for improving the status quo in terms of KAM. The real problem The company B which is being referred is into manufacturing of industrial pressure relieving devices which are used in petrochemicals, refineries, pharmaceuticals, chemicals, food, cement and power plants. The sales forces is responsible for generating MRO (Maintenance, Repair and Overhaul) businesses, following new projects in the region and handling KA (Key Accounts), which are majorly OEMs (Original Equipment Manufacturers). The company...
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...KEY ACCOUNT MANAGEMENT Key Account Management (KAM) is a professional sales approach which involves the supplier and client’s business working together to gain understanding of each other business and achieve common goals. Identifying your key clients allows you to then work with their Architects, Engineers and Contractors, taking a more holistic approach to your specification strategy. This is not a simple Buyer-Seller relationship, you need to involve people from all aspects of your business and work together with your client’s business to find better ways of doing things. Cost savings are achieved by re-engineering processes, reducing inventory and avoiding unnecessary activity. Cost savings are also achieved as a result of a better understanding of each others business, and importantly, are shared by both parties. Key Account Management allows you to deliver what you customer truly wants. 1 Why should you offer Key Account Management? Unless your company has the lowest cost base in its sector it cannot expect to succeed with a policy of cutting prices. The alternative is to offer your customers best value. Key Account Management will help you to understand your client’s business, propose new ways of doing things and build stronger business relationships. Making it much harder for your competitors to sell to your customers. By entering into KAM relationships you will: • build stronger relationships with your customers • gain an advantage...
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...The Supply Chain Management Processes Keely L. Croxton, Sebastián J. García-Dastugue and Douglas M. Lambert The Ohio State University Dale S. Rogers University of Nevada, Reno Increasingly, supply chain management is being recognized as the management of key business processes across the network of organizations that comprise the supply chain. While many have recognized the benefits of a process approach to managing the business and the supply chain, most are vague about what processes are to be considered, what sub-processes and activities are contained in each process, and how the processes interact with each other and with the traditional functional silos. In this paper, we provide strategic and operational descriptions of each of the eight supply chain processes identified by members of The Global Supply Chain Forum, as well as illustrations of the interfaces among the processes and an example of how a process approach can be implemented within an organization. Our aim is to provide managers with a framework to be used in implementing supply chain management, instructors with material useful in structuring a supply chain management course, and researchers with a set of opportunities for further development of the field. “Streamlining crosscompany processes is the next great frontier for reducing costs, enhancing quality, and speeding operations”. Supply chain management is increasingly being recognized as the integration of key business processes across the supply chain...
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...Globalized? THE PITFALLS OF GLOBAL ACCOUNT MANAGEMENT David Arnold Julian Birkinshaw Omar Toulan T o international companies, there is something both inevitable and desirable about the trend towards globalization of the sales function, usually referred to as global account management. It is inevitable because major business customers are generally well down the road to globalization in supply chain management, and from their major suppliers worldwide they increasingly demand contracts with standardized terms in areas such as product specification, price, and service standards. It is desirable because the institution of global customer management is in line with trends like customer relationship management and building customer-centric organizations, ideas which currently hold much sway with top executives in many multinational corporations. However, vendor companies should think carefully before jumping on the global customer bandwagon. Such relationships can turn out to be quite different from expectations. In many cases, vendors find that the unanticipated costs outweigh the benefits. Over the last two years, we have conducted field research into global account management from the vendor's perspective in Europe and North America. In over half the corporations, we found management struggling to figure out how to make this system work. In many cases, the major change that resulted from classifying a customer as a global account was increased downward pressure on prices...
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...An account manager is a person in a business who is responsible for the management of the sales and relationship with particular customers. They are allocated particular customer accounts, especially the key accounts which provide the most business. The Account manager varies depending on the nature of the business. The account manager builds client relationship by acting as the interface between the customer service teams and sales teams within a company. By maintaining the company’s existing relationship with a client or group of clients in order that they will continue using the company for business. It also involves identifying potential new clients and business opportunities and persuading new customers to place business with the company. Account managers are responsible for working with clients to identify their needs and work out how the company can best meet those requirements, in order that the client does not decide to place business elsewhere. Depending on the size of the company, account managers might manage a single account or they may have a whole portfolio of clients. An account manager might have responsibility for an account at national level or at global level. Global account managers and national account managers may work together in a hierarchical or matrix structure. The trend is to move responsibility for the major key accounts to the global level.[1] [edit] Key account manager Key account management goes beyond sales to plan and manage the full relationship...
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...and Sales Management Personal Selling involves the two way flow of communication between a buyer and the seller, often in a face to face encounter, designed to influence a person’s or group’s purchase decision’ (Roger A. etal). It is a highly human intensive activity. The tasks involved in managing personal selling include; Setting objectives, organizing the sales force, recruiting, selecting, training, compensating sales people and evaluating the performance of the sales people What does sales management involve? 1. Planning the selling programme 2. Implementing the programme 3. Controlling the personal selling effort of the firm The role of Personal Selling in Marketing * Sales people critical link between firm and its customers * In the customers’ eyes sale people are the company * Play dominant role in the overall marketing programme. Relationship Selling: a practice of building ties to customers based on sales person’s attention and commitment to customer Involves mutual respect and trust. Focuses on creating long term customers, not on one time sale Partnership Selling/Enterprise Selling Buyers and sellers combine their expertise and resources to create customized solutions. Commit to joint planning, sharing of customer competitive and company information for mutual benefit X’tics of Modern Selling * customer retention and deletion * Data base and knowledge management * Customer relationship management *...
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... What is Strategic Account Management? * Strategic account management is a systemic process for managing key interactions and relationships with critical accounts * 20% of customers generate 80% of the revenue/profit * Strategic accounts tend to provide a disproportionate share of a firm’s revenue/profit * Must manage account relationships, and be accountable for ongoing and long-term financial growth 2. 3. What are the benefits of Strategic Account Management? * Strategic account management can offer a competitive advantage, the key to greater loyalty, and the road to higher profitability * A well-designed and well executed strategic account management program can minimize, or in some cases, eliminate competition 4. What are the challenges of implementing Strategic Account Management? * Programs falter when firms underestimate the time, resource requirements, and complexity of rolling out the program * Creating a systemic way to manage strategic accounts is a little like putting down the road as you’re driving on it * You must maintain your firm’s financial performance while reinventing the way it serves its most critical customers. This is perhaps the greatest challenge in implementing strategic account management. 5. Create cross-functional executive leadership * This leadership helps create and communicate the urgency that ensures organizational commitment to strategic account management * These cross-functional...
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...Key to key account management: relationship (guanxi) model Y.H. Wong Department of Business Studies, Hong Kong Polytechnic University, Kowloon, Hong Kong Introduction There are three major marketing problems facing most international firms today: the difficulty, arising from product range diversity, of segmenting its customers and maintaining long-term relationships with key customers; second, the obstacles of obtaining long-term business contracts from big multinationals; and third, how do the firms evaluate the relationship quality of their key customers? McDonnell Douglas, Peugeot and Japanese retailer Yaohan are all fighting for higher market shares in China because they are shaken down by the Government’s policy swings and railroaded into bad partnerships with key customers who mainly squeeze for advanced technology (Clifford et al., 1997). Many companies receive a big percentage of their sales from relatively few customers. Key account management has been increasingly important in international markets. Key account programs differ considerably across countries and firms, but all organizations have to decide how to identify their own major accounts and how to organize for effective relationship building with them. The purpose of this article is to assist organizations to determine the positioning of their major customer relationships so as to formulate key account relationship marketing strategies and implement them effectively in China and other Asian countries. This...
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...Supply Chain Management in a Wal-Mart World HBSWK Pub. Date: Aug 4, 2003 The Wal-Mart supply chain management structure is not one size fits all. How do you keep everyone else happy? Apply service differentiation to your strategic accounts. by Jonathan Byrnes Here's a supply-chain dilemma: Now that you've learned how to do business with Wal-Mart, what do you do with everyone else? Over the past decade, Wal-Mart has famously invited its major suppliers to jointly develop powerful supply chain partnerships. These are designed to increase product flow efficiency and, consequently, Wal-Mart's profitability. Many companies have stepped up to the challenge, starting with the well-known Wal-Mart/Procter & Gamble alliance, which incorporated vendor-managed inventory, category management, and other intercompany innovations. P&G even fielded a dedicated account team in Bentonville, AR. In a very creative approach, the team members represented key P&G functions: sales/marketing, distribution/supply chain management, IT, and finance. In the eyes of one P&G vice president who was centrally involved at the time, Wal-Mart's CFO became a key customer as P&G's objective became maximizing Wal-Mart's internal profitability. Increasingly, top managers have learned how to integrate their supply chains with major customers like WalMart. (For an example from the hospital supply industry, see my column, "Profit from Customer Operating Partnerships.") Much has been written about the need to develop...
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...How to Succeed at Key Account Management Key account management (KAM) is one of the most important changes in selling that has emerged during the past two decades. KAM is a radically different organizational process used by business-to-business suppliers to manage their relationships with strategically-important customers, and it produces measurable business benefits. Not surprisingly, smart suppliers are keen to implement KAM. But, sadly, many KAM implementations fail and are abandoned. In other cases, suppliers find that they have to make big changes to the KAM programs to get them to function. The good news is that many of these failures are unnecessary. KAM is a major change, but the chances of success can be dramatically increased by following the seven steps described here: Step One: Recognize that KAM is an organizational change, not a sales technique. KAM implementations take years, not months. The companies which have implemented KAM most successfully have been those who thought of it as a change in the way they did business, not as something that is confined to the Sales department. Suppliers who fail at KAM tend to think of it as being an initiative within the sales department. This approach is doomed to failure. KAM is a commitment to work differently with certain priority customers and, to fulfill this promise, other supplier divisions have to understand and support KAM. One obvious example is supply chain management. If a key account is promised priority access...
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...not limited to, consumer care, biotechnology and industrial applications. Clariant is split into 6 separate global divisions, which contain, in total, 19 different businesses. The purpose of this case study is to answer the questions; what the cost to implement each of the strategic options facing Clariant Corporation? What revenue growth is necessary to break even and to maintain or improve profitability? And what non-financial criteria might be used to evaluate strategic options Clariant faces issues with its marketing departments structure. The current model is hampering Clariant. We have found that a change in structure is required to deal with the issue. The theory used to deal with the issue is the national accounts system and customer relationship management. Findings In September 2000, Vincent Thompson, vice president of operations said that Clariant had failed to develop its full potential in meeting its sales and profit margin growth based on these two critical performance trends. For example, Functional Chemical (FUN) had negative 3.9% growth in 1999. In 2000, sales growth had dropped further to negative 12.0%. What’s more, Masterbatches sales growth in 1999 was 12.9% while in 2000; it had fallen to negative 1.1% (appendix 1.1) The chemical industry has failed to meet its growth objectives for over 30 years. As a result, Thompson felt that Clariant should pursue overall structural changes to both the sales and marketing functions. Three factors need to be considered;...
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...environment, assess problems and to evaluate the feasibility of implementing an ERP solutions, including SAP and the administrative information systems of Oracle ERP. The Bandon Group is a family owned office machine distributor, with four decentralized divisions in four different markets in the western United States, Portland, Oregon; Phoenix, Arizona; Salt Lake City, Utah; and Denver, Colorado (Sumner, 2005). The Bandon Group objective is to provide high quality equipment, excellent customer service, and excellent sales organization professional service organization at cost-effective prices. The Bandon Group initially distributed office machine such as copiers, electronic printers and faxes, but because of their exceptional growth in sales, reputation for quality and superior service, they began expanding into information systems consulting, digital imaging, color graphics, document outsourcing and management services. By 1994, the Bandon Group had outgrown its information systems and customers were requesting more streamlined operations such as web-based interface online meter readings, online invoicing, and e-business solutions. Also, there was a problem with integration among the four different sales prospecting/CRM environments and the central administrative information systems. Also, the administrative systems were not grounded with a relational database technology that would allow cross-functional integration (Sumner, 2005). Therefore the scope of this study is to...
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