Can Selling Be 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. This was because consolidated sales triggered requests for greater volume discounts and because the reliance of the vendor on the account became more salient. In addition, many vendor companies were paying increased sales commissions, since now both global account teams and local sales teams were involved in sales. Furthermore, top sales executives had to accept lower