IS KEY ACCOUNT MANAGMENT ON YOUR STRATEGY MAP?

 

A Key Customer Account  are those select  customers who a represent a disproportionate percentage of your revenue. Key account management is the process of building long-term relationships with your company's most valuable accounts. These accounts make up the majority of the business' income. Every marketing company needs to segment its portfolio and from time to time categorize some as key customers or strategic customers and on its side win the status of a strategic supplier. 

However there are some tricks and traps in getting started. Our firm Synergy Management Associates (since 1993) has help many clients to launch and execute key account management campaigns. Here are a few points from our experience: 

A COMPREHENSIVE DEFINITION OF KEY ACCOUNTS

Key Customer Account   are valuable for more than one reason. However, the word "valuable" is subjective based on your organization’s values.  The criterion should be rightly fixed: Amount or share of recurring revenue they bring in; The level of profitability you have with them (revenue taking into account cost);Customer lifetime value; Level of alignment between shared objectives  and process which in turn increase the marketeers influence and/or authority with the customers’ organisation; 

 

You should also ask yourself whether they're a strategic partner, e.g., do they have the connections, resources, and/or industry reputation to significantly alter your company's trajectory? In other words, Number of referrals the customers’ organisation  would make/or serve as a testimonial.

 

Your organization needs an explicit, strict definition of key accounts. The more detailed and specific the criteria, the better — The better the fitment   the better the deployment of the marketing company's time, energy, and resources, so you want to make sure they're the right ones. While it's tempting to label many customers as "key accounts" at once to alter your company’s trajectory significantly, it’s better to be conservative. You can't tell a key account they've been demoted, but you can tell a traditional buyer you're promoting them.

 

FITMENT WITH YOUR BUSINESS PROCESSES

Despite the potential benefits of key account management to your bottom line, it's not a good fit for every organization.If your sales cycle is relatively short and your sales reps have minimal interactions with prospects, key account management probably isn't the right choice. Key account management and selling are very different. While a salesperson focuses on the short term — by necessity — a key account manager (KAM) prioritizes the future. Sales reps also zero in on specific opportunities, while KAMs have broader goals, including collaborating with the customer on mutually beneficial projects, helping the customer meet their objectives, and making sure the customer is getting the necessary support.

You need to ask if  your product have upsell and cross-sell potential. There's little point in continuing a relationship with the customer after the sale if they're not going to buy more. (Obviously, you still want to provide excellent customer service and support to promote word-of-mouth marketing and high retention rates.)The long term potential  would lead to a  goal of  "land and expand"… If you can get your foot in the door of the prospect's company and then grow the account by selling to other departments, offices, subsidiaries, etc., a key account strategy may be a good investment.

 

 

OUTLINING A KEY CUSTOMER ACCOUNT PLAN

A key account plan helps you identify the most significant possibilities for growth, potential roadblocks, threats from the competition, and more.

You can tailor an existing framework to your own needs or create a customized plan.Whatever option you take, your account plan should include:

·         Your relationships within the account

·         The customer's current business plan, objectives, and financial health

·         Your targets for the account; Your strategy for hitting those targets

Let's delve into each of those in more detail.

MAP OUT THE CUSTOMER JOURNEY /RELATIONSHIPS

The crux is about building key relationships and nurturing them that cannot be automated. It’s not enough to have a good relationship with just one key person but across the touch points of the customer XP journey; which need to be mapped to identify  where the influencers and detractors lie .This may imply interacting with enterprise-level organizations and key buyers at the top level. This requires a CXO-level management involvement in any client and a top-down approach to Strategic Account

Map out every customer stakeholder. This information will help you figure out which relationships you need to build and maintain — as well as anyone who could potentially derail your plans. Note each person's title, role in the decision-making process, how much contact you've had within them, and how "friendly" they are.

PROFILE CUSTOMER'S BUSINESS

To provide value to the account and find mutually beneficial opportunities, you need an in-depth, sophisticated understanding of their business.Stay up-to-date on their key business goals, financial health, and current initiatives. You should also regularly run a SWOT (Strengths, Weaknesses, external Opportunities, external Threats) analysis.

SET ACCOUNT GOALS

This section should cover how much this account is currently worth, which opportunities you've lost, won, where you see potential revenue growth and your projected value for those opportunities.

It should also outline your short-, mid-term, and long-term goals and the owner of each. For example, maybe your sales engineering team is responsible for getting a meeting with the CTO by January. A less immediate goal might be getting 60% of a new department using the free version of your tool. Your ultimate objective is to transform the entire department into paying users.

ACCOUNT STRATEGY

This section is most important-  It takes your goals (in other words, your account wishlist) and breaks down the actions you need to take to reach them. Use the same structure you used for your objectives: Short-term, mid-term, and long-term.

To give you an idea, the key steps you'll take for your January meeting with the CTO might be: 

Strengthen relationship with VP of Engineering;   Develop compelling value proposition for meeting with CTO;  Ask VP to request a meeting with CTO on your behalf

The more specific and actionable these actions are, the better. Strategic account management involves juggling several initiatives, priorities, and campaigns at one time. Without clear direction, your team will go off in a thousand directions. Plus, you can continuously adapt your strategy down the line if something changes.

 

EXECUTING THE PLAN

Even when the organization has made a policy decision ; often the short-term wins as it is more achievable and managers often feel a quick sense of accomplishment. That’s exactly where the challenge lies; to choose the long-term over the short term when the situation so demands. It isn’t enough for managers to hit short-term goals and give themselves the pat on the back, it is integral to concentrate on strategic account plan goals like maximization of customer lifetime value too! Hence planning must dovetail with the execution not just relying onsoftware tools flooding the market. 

Key accounts require consultative selling techniques -- and it will be hard to teach your salespeople to adopt completely new processes for just a few clients. A key account manager (KAM) typically provides dedicated resources, unique offers, and periodic meetings to turn buyers into business partners. Since the conversion in a Strategic Account happens over a period, the scheme of  incentive planning and compensation for Strategic Account Managers cannot be the same as your Salesforce.  yet needs to be fair. Proper metrics need to be defined and implemented, which is a major HR challenge. It will keep evolving over time and will vary from organization to organization.

 

 CONCLUDING: NEED FOR A NEW SALES LEADERSHIP PARADIGM

Strategic Account Plans will remain stillborn  unless they’re put into action by a motivated Strategic Account Manager. Management. Successful key account management depends on company-wide support, executive buy-in, and a dedicated key account team. You'll also need enough runway for an investment that might take 12, 24, or 36 months to recoup. It is not devoid of challenges. Once the managers start practicing it, they realize the real-world problems or rather, challenges that they must face while creating strategic account plans.

 

With compliments

Dr Wilfred Monteiro

STRATEGIC SELLING BEGINS WITH TOTAL VALUE PROPOSITION (TVP)

 

STRATEGIC SELLING BEGINS WITH

TOTAL VALUE PROPOSITION   (TVP) 

Sales and marketing groups do their tasks well, this article shows how to stimulate sales by having Sales and Marketing operate more in alignment

 Secondly, customers define price differently. Like performance, customers will define price differently. Some customers need to keep the outlay of capital to a minimum, so initial lower cost and long-term payments represent a better price.  Others will accept lower levels of performance in order to get a lower price. Between these two extremes lies the fair value line, and, every customer is somewhere on this line. The task of Strategic Selling is to position the total cost of ownership is more important, and they can accept a large initial payment if that will lower the total cost of the product over its lifetime.

 There are  few critical dimensions or categories of  product performance  that can serve as a framework for strategic selling :

 1. FEATURES

Performance refers to a product's primary operating characteristics. For an automobile, performance would include traits like acceleration, handling, cruising speed, and comfort. Because this dimension of quality involves measurable attributes, brands can usually be ranked objectively on individual aspects of performance. Overall performance rankings, however, are more difficult to develop, especially when they involve benefits that not every customer needs.

 

2. AUGMENTED  FEATURES

Augmented Features are usually the secondary aspects of performance, the "bells and whistles" of products and services, those characteristics that supplement their basic functioning. The line separating primary performance characteristics from secondary features is often difficult to draw. What is crucial is that features involve objective and measurable attributes; objective individual needs, not prejudices, affect their translation into quality differences. Sometime Aesthetics  a subjective dimension of quality becomes important overruling other factors . How a product looks, feels, sounds, tastes, or smells is a matter of personal judgement and a reflection of individual preference hence  difficult to please everyone unless customization is possible .

 

3. DURABILITY & RELIABILITY

A measure of product life, durability has both economic and technical dimensions. Technically, durability can be defined as the amount of use one gets from a product before it deteriorates. Alternatively, it may be defined as the amount of use one gets from a product before it breaks down and replacement is preferable to continued repair. It also  reflects the probability of a product malfunctioning or failing within a specified time period. Among the most common measures of reliability are the mean time to first failure, the mean time between failures, and the failure rate per unit time. Because these measures require a product to be in use for a specified period, they are more relevant to durable goods than to products or services that are consumed instantly.

 

4. FITNESS FOR USE/ CUSTOMIZATION

Fitness-For-Use  or Conformance is the degree to which a product's design and operating characteristics meet established standards. The two most common measures of failure in conformance are defect rates in the factory and, once a product is in the hands of the customer, the incidence of service calls. These measures neglect other deviations from standard, like misspelled labels or shoddy construction, that do not lead to service or repair.

 

6. AFTER SALES SERVICE

Serviceability is the speed, courtesy, competence, and ease of repair. Consumers are concerned not only about a product breaking down but also about the time before service is restored, the timeliness with which service appointments are kept, the nature of dealings with service personnel, and the frequency with which service calls or repairs fail to correct outstanding problems. In those cases where problems are not immediately resolved and complaints are filed, a company's complaints handling procedures are also likely to affect customers' ultimate evaluation of product and service quality.

 

DRAW YOUR TOTAL VALUE PROPOSITION   (TVP)  CHART

 

 As information is gathered about the customer, it is essential to know the definition of Total Value Proposition  (TVP) from the customer's perspective, not your own. The perception of something is not always reality. Customers sometimes lack ability to analyse the  service or product and for comparing with the competitive products.  This is usually the case when it comes to reputation/ brand image or past customer experience  playing  a significant role when it comes to perceived quality.

Once you understand the customer's idea of value (price and performance), you can place the customer on the Total Value Proposition   (TVP)  Chart. Then assess you are relative to the customer and the competition? Clearly, if you are closer to the customer on the TVP Chart  than any of the competitors, then you have an advantage. If you are aligned with the customer on price but lower on performance, then you are offering superior performance at the price the customer wants.

If your position is not where the customer is on the TVP Chart, your overall strategy should be designed to bring your offering closer to the customer's position than any of your competitors' offerings. You might consider  redesigning  your solution, offering an attractive financing deal or providing an option for less expensive parts or equipment. The adapted offering would put you in a position of providing value that is in line with the customer's position making it possible to outsell the competition.

The key is to focus on aligning with both the customer's definition of value and their position on the TVP Chart . Then charting competitors' positions relative to your own; only then an effective competitive strategy can be crafted that will offer customers exactly what they want—and put the competition out of the running. The Total Value Proposition   (TVP)  Chart can thus help you strengthen your competitive position and go a long way toward preventing those surprise losses that companies who undertake strategic selling  dread. 

 with best compliments

 

Dr Wilfred Monteiro

 

SALES MANAGER’S ROLE IN THE SALES TEAM MEMBERS' LIFE CYCLE

 

SALES TALENT- THE WAYS TO MANAGE THE CYCLE 

Every sales manager  should be made aware of the salesforce member lifecycle as a way of making sure that their work is targeted to the specific stages of an salesforce member's interaction with the company. YOUR SALESPEOPLE  MUST COME FIRST IF THE CUSTOMER IS TO BE FOREMOST.  does your sales manager know how to play his role of a people manager?

Managing salesforce performance begins with managing the satisfaction of the sales team. The costs component of a company's Sales force can be as large as 80% for a market intensive company. A large proportion of these costs will relate to the hiring, firing and everything in between for the recruitment, retention and release of an salesforce member. It is important, therefore, to understand and appreciate the benefits of knowing and understanding the basic elements of an salesforce member lifecycle and how managing managing salesforce member satisfaction can help to create a winning sales performance

 

Although models and descriptions of an salesforce member lifecycle will vary, the most common terms that will be found include the following stages: recruitment, orientation, development, progression and departure. From this last point, the cycle will start over: a new salesforce member for the company, a new company for the former salesforce member. It is important to remember that different keywords may be used in examples of salesforce member lifecycles but the basic concept remains the same. From one company to another, it is possible to adapt the salesforce member lifecycle to suit the individual needs of each company and HR department.

RECRUITMENT

The beginning stage of the salesforce member lifecycle is, quite obviously, the recruitment stage. It is during the recruitment phase that the salesforce member-employer relationship is first established. First impressions are possible, introductions are made and, depending on how all stages of the recruitment are conducted, it becomes the starting point for the salesforce member lifecycle. In regards to the salesforce member lifecycle, the recruitment stage may cover more than just the traditional methods of hiring an salesforce member. For example, the first stage of the salesforce member lifecycle could also cover scenarios where the salesforce member is transferred to a new department or subsidiary company as the salesforce member process starts over from the beginning once more.

ORIENTATION

Once a decision is made to accept the transferral or hire a new recruit, the orientation phase begins. Alternatively known as the settling-in stage or the induction; this part of the salesforce member lifecycle is about allowing the salesforce member to familiarise themselves with the company and explore the responsibilities of the role. Decisions need to be made about the time for the orientation to last and how quickly to share information with the new salesforce member. It also important to strike the right balance between being involved in your salesforce member's induction period while also giving them enough space to find their own way in the company. My experience has  shown that the orientation can offer long term benefits in terms of company retention.

 

 

DEVELOPMENT

In order to increase the likelihood of salesforce member retention, it is necessary to invest time in the development of an salesforce member. Both personally and professionally, if a company enables its salesforce members to develop, it will be able to satisfy the needs of those salesforce members. This could range from allowing salesforce members time off to develop new personal skills or further any established hobbies or set time aside for professional training courses funded by the company as part of its commitment to the future of its salesforce members. Engaging the workforce by presenting them with a visible focus on their professional development will help to ensure that the salesforce members are invested in the success of the company as much as the managers are.

PROGRESSION

The future prospects for salesforce members will often dictate how long a person will spend with any particular company. Progression opportunities could refer to financial benefits (increase in salary, monetary bonuses, etc.) or to psychological success (supervisor title, managerial responsibilities, etc.). Most importantly, progression for the salesforce member lifecycle should reflect the tenure of their stay with the company and the educational qualifications that would make an salesforce member a good candidate for progression within the company. Other positive targets for progression could include rewards and similar forms of recognition that highlight their achievements and outline the future.

DEPARTURE

At some point, every salesforce member will leave their job. The only difference between salesforce members is the how, why and when that is involved in leaving the job and ending the salesforce member lifecycle. At this point, the salesforce member has gone full circle from starting out with the company, continuing along the chain and finally reaching the end stage. The relevance of this point is to minimise the risks on both sides. Where the parting is done on pleasant terms, the separation can be a positive opportunity for both company and salesforce member. The salesforce member will venture out into another part of the business world, while the company could gain from having someone who could forge new networking possibilities. This works both ways - the former salesforce member and the company should always remember that word of mouth is the strongest tool in promotion.

The journey of an salesforce member from the start of their relationship with a company right through to the very end is just one example of the most common lifecycles in the business world. It easily defines the contributions of both salesforce member and company to the success in the salesforce member-company relationship. Every sales manager  should be made aware of the salesforce member lifecycle as a way of making sure that their work is targeted to the specific stages of an salesforce member's interaction with the company.

 With best wishes

Dr Wilfred Monteiro