Monthly Archives: July 2009

Rethinking Major Accounts Strategy, part 2d

July 25, 2009 – 8:23 am

As we come to a close of the Congruence Model, our last section being the Processes and Systems that allow for all other elements of this model to flow freeely and coherently. I would like to quickly say thank you to some of you who have actually taken the time to phone or email me, and in some cases, post a comment. For this is exactly the kind of forum I was hoping to create. A free exchange of ideas spanning many industries, experiences, and skill levels.

Processes and Systems:

This final element of the congruence model includes systems and processes for planning, managing information flows, identifying opportunities, measuring customer satisfaction, and many others. These systems and processes enable key account managers to effectively develop and implement strategies and plans for individual accounts.

The analysis of the key account helps the key account manager identify the full scope of potential opportunities and threats at the key account. This identification, together with analyses of competitors as well as your own firm, leads to a series of decisions regarding which opportunities to pursue (and which to avoid), which threats to combat, and the particular strategic approaches to pursue.

The key account manager needs to have complete understanding of the fundamentals that constitute the key account: they include organization, ownership, top management, locations, corporate culture, financial performance, and future prospects.

To develop the appropriate depth and breadth of data to conduct these analyses, the manager should attempt to become intimately involved with the key account’s strategic planning process.

The strategic key account analysis comprises four major elements: identification of mission, external analysis, internal analysis, and an analysis of strategic coherence.

These analyses will lead you and your team to a set of planning assumptions on which the key account strategy will be based.

Conclusion:

The material presented here is extensive and even overwhelming, in scope. It takes us back to the 80/20 rule and the value of key accounts. If it would hurt your bottom line to lose more bids, or be of immense value to gain a potential key account, then performing a full-blown situation analysis, isolating planning assumptions, and carefully identifying opportunities and threats is surely worth the effort.

Having a group of dedicated Business Development Managers is a short sighted solution- transactional sales that might increase revenue in the short term, but fail to garner any long term relationships- therefore future contracts and revenue. Because of the very nature of the payment plan BDOs receive, it contributes very little to company loyalty, and that contradicts what most mission statements has set to achieve. Additionally, it should be pointed out, that this approach was tried and abandoned by most  in the early 1990s. BDOs do not provide what most companies stands for and represents in their mission statement and value proposition. They are not the long term solution.

Increasing, or changing the incentive plan, is also a short term band aid, which does not address the core issues. Sure, consultants would be more motivated by additional financial compensations; however, a lot of what a consultant does is very subjective, and therefore hard to quantify. This front-loaded plan will most certainly motivate consultants to be more productive, and may increase utilization ratios across the company, but will fail to establish what you have established as a financial goal- positive, suatainable cash flow. 

Each of these two possible solutions has value to it, but will not on its own solve the current revenue crisis. Both solutions must not be considered as mutually exclusive. I mention this because of the remaining 20/80 of the equation- the other 80% of the customers that provide 20% of your companys sales, or Non Key Accounts.

What should be done next is provide a strategy, combining both the BDO and new incentive plans with the traditional “seller-doer” model to address the non-key accounts, which will increase revenue and position the firm more competitively.

The following publications have been used as references to the prior 4 blogs pertaining to Major Account Management:

  1. Capon, Noel. Management and planning
  2. The Wall Street Journal,
  3. The Economist,

      4.   Ingram, LaForge, Avila, Williams. Sales Management analysis and decision making. Sixth Edition

      5.   Forrester research, January 23, 2003

      6.  http://www.cnn.com/business/marketing

By lotfi saibi | Posted in Business and Politics, Sales Management, Strategy and Leadership | Tagged , , , | Comments (0)

Rethinking Account Management Strategy, Part 2c

July 18, 2009 – 4:19 am

Today I tackle the third part of the Congruence model, that is the Human Resources piece. Thank you all for the kind words and flattery. I understand that some of you actually enjoyed the prior posts, while others actually went back and revisited, compared notes, and even used some of the methods I provided to further drive the effectiveness of their strategies.

Recruitment and Selection of Key Account Managers                              

As a leader, manager or owner, you must put in place appropriate procedures for recruitment, selection, and training to generate key account managers who can effectively carry out their several roles and responsibilities. You must also develop ways of retaining them. In particular, reward systems must be carefully thought out. Clearly, financial compensation is an important issue, but you must also consider several other types of reward mechanisms.

Candidates for this position could be recruited either internally or externally.

  1. Internal Candidates: Typically, sales consultants make the easy transition to key account managers. However, the capability profile of successful key account managers is quite different from that of successful seller-doers; not all successful salespeople are able to make the transition. Since relationship building is such a critical factor in key account management, your company’s needs for high-caliber managers in other positions must be carefully weighed against both the key account manager’s personal development goals, and the requirements of key account relationship.
  2. External Candidates: The second source of key account manager candidates is executives working for other organizations. Such candidates may have significant key account management experience and/or considerable knowledge, experience, and relationships at the key account, developed with a competitor, a noncompetitive company, or as an employee. Such candidates may lack intimate knowledge of the account, but balance this deficit with powerful key account credentials.

Training of Key Account Managers

The specific training required by newly appointed key account managers is in part a function of the major customer, its key accounts, and the nature of the desired relationships. It also depends on the knowledge, skills, abilities, and experience of those executives appointed to be key account managers. Some key account managers may require specific training in planning, others may benefit from better negotiating skills, proposal development, and time management. Of course, training should not be a one-time event, and periodic educational and training programs should be considered.

 

Retaining Key Account Managers

Well trained effective key account managers are an extremely valuable corporate resource. To executives in major account, if the relationship is successful, key account managers often will be the face of your company. If a key account manager leaves his or her job, the potential exists for any value residing in the relationship to disappear overnight.

Management must realize that in their plan to establish successful KAM, if  your compnay lags the market in rewarding key account managers, you will surely lose critical personnel. Certainly, you will have to maintain a database on the destination of departing employees to ascertain where noncompetitive situations exist.

In addition to financial compensation, you must consider the full range of available reward systems—promotions, other formal rewards, and intangible personal rewards— so as to preempt unexpected key account manager resignations. Management should also consider processes such as identifying role models and developing mentoring relationships, as well as assisting the key account manager in balancing personal and family life with work responsibilities. 2

Rewarding Key Account Managers

The starting point for developing a reward system is clarity on the requirements of the job. In particular, you must be clear about the appropriate performance metrics. Let’s discuss performance measurement before turning to reward systems.

Performance Measurement: Using the “balanced score card” approach, you will have to measure:

  • Financial performance– including sales revenues and profit contribution.      
  • Growth– including new applications developed and sales to previously unsold customer divisions.
  • Customer– including customer satisfaction
  • Internal– including the quality of internal firm relationships, inventory management, and team leadership.

In measuring key account manager performance, you should select metrics that meet four often-competing objectives:

  • Alignment with the vision, mission, strategy, and objectives at the key account
  • Controllable by the key account manager
  • Trackable by the firm’s reporting systems
  • Focused, meaning avoiding too many measures

Reward Structure: Should be highly motivating and should generate high levels of effort and performance. Some of the more popular and highly sought after rewards include financial rewards, promotions, recognition, and other intangible personal rewards.

Compensation should involve mainly three principal variables (base, commission. bonus). The greater the amount of revenue the key account manager can impact, the greater should be his or her financial compensation. The more importance given to current sales revenues as the key account manager’s objective versus long-run development, the greater should be cash compensation.

By lotfi saibi | Posted in Business and Politics | Tagged , , , | Comments (0)

Rethinking Account Management Strategy, Part 2b

July 9, 2009 – 7:16 pm

In our pursuit of better account management, we continue with the second of the four major points that, together, comprise the Congruence Model.

Organization of Key Accounts Management

Certain “actions-of-choice” have to be taken for your company to survive in this increasingly fast-changing, complex, and turbulent environment. Your organization has to develop a heightened awareness regarding the importance of a small subset of their customer base, those firms that currently do, and in the future will, account for a large percentage of your revenues and profits.  The critical business implication is that these customers have an importance to the firm’s long-run future that exceeds that of the “average” customer.

Typically, introduction of a key account management program cuts across existing lines of responsibility and authority, and various organizational systems and processes. Power bases are affected and, as a result, turf wars and individual political agendas may get in the way of successful key account program introduction. Strong committed support from the top of the organization can ease the introduction of key account management but, nonetheless, considerable skill is required to get a key account management program up and running.

Aside from the top down approach in support for the program, selecting the right mix of key account management is crucial. Focus should be on three critical roles—top management, the key account director, and key account managers. 

Top Management: For a key account strategy to realize its potential, senior management must fully and openly support the key account program in a tangible manner. This support must be multifaceted and may be evidenced in a key account program champion. Top Management must openly and consistently support the program in the following manner:

  1. Commit to a key account strategy
  2. Provide a positive internal environment for securing high quality Human Resources
  3. Fund the development and/or purchases of systems and processes
  4. Support the development of a key account culture
  5. Be directly involved with key accounts
  6. Secure the firm’s objectives at the key account. These may go beyond sales and profit margins
  7. Develop strategy and action plan from a micro-level.
  8. Ensure the implementation of strategy and action plans.
  9. Develop and manage relationship with key account.
  10. Build and manage key account team.

 Key Account Director: The person assigned to this position must have full support of the top management, be an executive with considerable business acumen, and must assure the congruence among the four elements of key account strategy: organization, human resources, and systems and processes.

Key Account Manager: Typically, this is a formally appointed position. A consultant or senior executive may assume the key account manager role in addition to other responsibilities. Regardless, the key account manager is the lynchpin around which the entire inter-organizational relationship revolves. This function may vary considerably depending on the client, or area of interest. However, the following responsibilities remain:

Necessary Key Account Manager Skill Sets:

1. Business skills – The increasingly important yet difficult role played by key account managers makes it imperative that individuals of the highest caliber staff this position. Management must be very clear about the particular set of knowledge, skills, and abilities that it requires in the key account managers. Skill sets requirements should be determined based on the priorities set by senior management; that is, build a relationship or acquire new business. Management should also be very clear about the results expected out of each KA manager and each Key Account relationship. For example, the skills necessary to ensure that current sales levels are maintained and increased may be quite different from those required to identify opportunities within a client’s other business sectors.

2. Leadership skills – Leadership and team building skills are necessary qualities for key account managers. Team leadership “requires a complementary mix of skills, a purpose that goes beyond individual tasks, goals that define joint work products, and an approach that blends individual skills into a unique collective skill—all of which produces strong mutual accountability.” To successfully lead a key account team, the key account manager should possess strong interpersonal skills that engender trust, resolve conflict, and bring about the required behavior. In addition, such personal traits as assertiveness, attractiveness, charisma, energy, flexibility, integrity, persistence, personal discipline, and toughness improve the chances for success.

By lotfi saibi | Posted in Business and Politics, Sales Management, Strategy and Leadership | Tagged , | Comments (0)

Rethinking Account Management Strategy, Part 2a

July 2, 2009 – 2:35 pm

First, a note to all the loyal readers of this blog, about 30 by now:). I have been abscent for a few weeks, and for that I am sorry. To my surprise, I received some inquiries about future posts. With no further delay, here is part 2.a) of  Major accounts management & strategy:

CONGRUENCE MODEL FOR KEY ACCOUNT MANAGEMENT

Effective key account management requires consideration of several complex elements in an overall management process. Consideration must be given to several interconnected building blocks that I term the key account congruence model.

  • Strategy                      
  • Organization of Key Accounts
  • Human Resources
  • Systems and Processes

Successful implementation of this model will be achieved only if senior corporate executives fully understand the issues involved in key account management and are prepared to put in place the organizational, technological, financial, and human resources necessary to manage the firm’s key accounts on a long-run basis.

I have personally witnessed on more than one occasion SMB suffer in acquiring and managing major accounts, because senior management failed to understand their roles in the success of the model.

Today, I will share my thoughts on the strategy, as a key point of the congruence model.

The following four major points are necessary to the success of the congruence model management must make sure are in place. They are what I refer to as KPIs, or key performance indicators, which if measured properly, will form the basis of a successful strategic plan.

  1. Defining Key Accounts Values:
  1. Identify target clients and corresponding profits they represent to your organization.
  2. Develop factual understanding of what the most profitable customers expect and value from company.
  3. Identify which of these expectations impact their decisions to partner with organization.
  4. Formulate and quantify how key accounts rate your company’s performance versus its competitors.

        2. Designing Key Accounts Experience:

  1. Thoroughly understand the experiences your best customers currently have with your company.
  2. Identify the critical touch points which make up the customer’s experience touchline.
  3. Design new service experiences that will deliver your company’s promise in a way that is consistent, differentiated, and valuable to targeted key accounts.
  4. Identify specific team members’ behavior required to deliver the key account promise at each point.
  5. Develop fully integrated and comprehensive change strategy to implement the new relationship and assure success.

       3. Equipping People and Delivering Experience:

  1. Develop internal communication plans to build commitment, understanding, and clarity around the implementation of the new relationship.
  2. Assure that leaders/managers at all levels understand their roles and champion the key account experiences.
  3. Prepare all team members with the skills and knowledge required to deliver the key account experience.
  4. Be proactive in improving people, processes, and services to deliver the key account experience.

       4. Sustaining and Enhancing Performance:

  1. Develop systems to continually collect customer and employee feedback and how it can improve the relationship.
  2. Implement a balanced set of performance metrics that provide executives on both sides with objectives, timely feedback, and how ENSR measures against its promises.
  3. Have a reliable, effective training program that continually builds capabilities to deliver customer experience.

Because of the increasing importance of key accounts to your firm’s longterm success, management must make critical resource allocation decisions around KAM. At a fundamental level, it must decide on the level of corporate commitment to key accounts in general, on a vision for the key account program as a whole, and on the types of key account relationships it wishes to develop. More specifically, it must identify specific criteria and selection processes for choosing key accounts, considering both current and potential revenue and profit streams, and other important issues. Both in making critical key account selection decisions and for allocating resources among its key accounts, a variety of portfolio approaches may provide significant managerial guidance.

Potentially useful criteria that can be used in the key account selection process are grouped into two major categories—direct sales revenue and profit, organizational interrelationships.

1.      Direct sales revenue and profits

  • Current Sales Revenue.
  • Current Profits.
  • Future Sales Volume and Profit.
  • Financial Security.

 2.     Organizational interrelationships

  • Coherence with Firm Strategy.
  • Cultural Fit.
  • Your company valued by potential customers
By lotfi saibi | Posted in Business and Politics, Sales Management, Strategy and Leadership | Tagged , , | Comments (1)