Category Archives: Business and Politics

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 | 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 | Also posted in 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 | Also posted in Sales Management, Strategy and Leadership | Tagged , , | Comments (1)

Competing with the BIG BOYS

May 23, 2009 – 4:54 am

If you are concerned with maintaining your competitive advantage, or simply staying alive like the rest of us, you most likely have considered alternative sources of revenue in the last eighteen to twenty four months. You might be a one person outfit selling a better mousetrap, or a Fortune 500 executive launching a new division to rev up growth. Discovering new markets must be part of your overall growth strategy.

Whatever the case, at some point you’ll need to go back to basic- thinking like an entrepreneur — whether it’s to launch a new product or service line, extend to a new market segment, or establish a beachhead in a new geographical territory.

The reality, as every entrepreneur knows, is that most markets already have existing competitors. Even the largest companies in the world sometimes find themselves the small fish in a big, new pond. And the bigger fish already know the territory; they have the scale, connections, and market share to make life difficult for newcomers.

Still, there are tried-and-true ways to swim with the sharks, and start and grow a business. What I will share with you, and what other readers have provided, are not only classic cases of market penetration, but some unconventional ways and some examples of how to leverage the tools that avail themselves to you.

There are three steps to effectively entering a new market in spite of what players are on the scene:

1.     Don’t buy into swinging for the fences, try for singles and doubles:

 Big companies are accustomed to hitting home runs every time they step up to the plate. They generally do not venture anywhere unless they know for certain the ROI is in place and waiting. For they have the research, the channel partners, and the consultants. What they lack as a result of their size are flexibility to change courses quickly and efficiently, flexibility to work with customers on specific needs, and the quickness necessary to meet deadlines.

As a new player, you may not have the resources some of the BIG BOYS have in place. Do not despair. There is a clear advantage to being small, cross functional, and flexible.  You can create pilot teams throughout your company, each composed of people from all the departments. Their mission: Getting a revenue project up and running in a ninety days. That is what I call “small ball” strategy, to use one of Baseball’s favorite terminologies.

90 days? I can sense some skepticism as you are reading this.

What you need to keep in mind is the purpose of the 90 day goal-line: The 90 days forces everyone in the team to confront issues that would keep you from succeeding. The clear focus and short time frame force team members from different departments to break down the walls that literally and figuratively keep them separate.

On a personal note, I always try to enlist the help of at least one stake holder from the customer side. If that is not possible, make sure the customer’s wishes are well represented through the sales representative.

2.     Be creative with execution.

There is so much to cover in this section. I want to instead focus on small organizations with scarce resources and smaller budgets.

You probably remember the case of how Red Bull decided to compete. They did not go after the soft drink market and compete head to head with the giants of that industry. They instead went after the college and athletics crowds, and distinguished themselves as an energy drink. As they established their name brand, customers, like liquor stores and super markets came calling. The rest of the story is well known to all. My point is, you need to know your competitors. You need to know your market, or a segment of it. Taking the road less traveled is often times the safer way to go.

On a recent trip, I came across a customer that was hesitant to pull the trigger on a solution that was certain to help his organization. He was reluctant due to timing, budgets, and all the reasons you are all too familiar with. I offered we customize a solution for him, provide him a sampling of our offering at no charge to his company. I needed to validate to him and his shareholders the benefits. Our down side was insignificant vise a vise the trust I needed to create. I am certain that if he does not go forward with it, it will not be because he failed to see the benefits our solution will offer his company.

3. Change your moneymaking approach to be different from the market leaders.

By not playing in the same soda markets as Coke and Pepsi, Red Bull didn’t have to compete on price, where it probably couldn’t have won.

By working with our prospects on finding unique solutions for their needs and offering proof of concepts, and even providing the hardware they need to “play with”, we have essentially increased our chances of landing future contracts exponentially.

The Game has just began

If the good news is that you’ve successfully entered or created a market, the bad news is that you’d better be ready for a competitive reaction. If you’ve been successful, you’ll almost certainly wake the sleeping giants and draw in newcomers.

Be prepared to fight

There may be times in which a new entrant’s growth stalls even though it does everything right. Innovating, moving quickly, and offering something unique — be it customer service, technology, value, brand association, or a different mix of attributes — should give the entrepreneur a good start.

But giants have a lot of power in their scope (i.e., bundling different products and services together), brands, relationships, and customer bases. Think of Microsoft’s successful battle with Netscape over the web browser market. Clearly, not every big company is slow or can’t innovate. Some are very good at figuring out new market segments and can shift huge amounts of resources — both capital and great talent — to defend whatever turf is under attack.

Not all big companies are afraid to take risks, either; indeed, because of their size and resources, they can afford to take them. GE, for example, brings those advantages to almost every market in which it competes.

By lotfi saibi | Also posted in Sales Management, Strategy and Leadership | Tagged , | Comments (0)

Size does not matter

May 19, 2009 – 10:41 pm

I have recently returned from a trip abroad researching new markets for our company. I visited three countries to be exact. I have found that in our domain expertise, there are already several key players embedded in to the fabric of the local markets. At first glance, I was discouraged – who wants to deal with a small custom software solution provider with no real fooprint in this part of the world. I began my usual recon mission about the potential, customers, existing vendors, the solutions they are selling, the business model they are offering, the service packages they claim to support. I realized that we can play in this arena, and possibly give the big boys a real competitive game. (Sorry, too many playoff games)
Competing against the BIG BOYS will be the subject of my next post. I am hoping you will share your own ideas and personal experiences, what side were you on, and how did you deal with it. Please send any posts directly to me and I’ll put them on the site: lotfisaibi@gmail.com

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Qualifying a Sale

May 16, 2009 – 12:56 am

In short, the decision a sales representative has to make is based on a set of preexisting criteria, whether or not your products and services are right for the prospect; and equally important, whether or not your prospect can benefit from this relationship.

Deciding this is a reciprocal relationship, may be one of the toughest and hardest decisions you will ever have to make as a sales person (some other time we will discuss ethics and integrity of a sale). It is also the one that will define you as a sales person. I warn you here, that if you are selling some sort of consultative service, make sure you realize that the benefits to your potential customer are well defined over time, and that real expectations are set prior to consummating the deal. What you do not want to happen is for your prospect realizing that his/her needs were not considered during the qualifying process.
How successful you are in qualifying prospects depends on how much pre-qualifying leg work you are willing to do. In a nutshell, get to know everything about your prospect and his business. I have divided successful qualifying into 3 steps:

Step 1:

Some sample questions I have found useful. You may add or omit some of them
depending on what you might already know and on the type of business it is:
What prompted you/ your company to look into this?
What are your expectations/ requirements for this product/ service?
What process did you go through to determine your needs?
How do you see this happening?
What is it that you’d like to see accomplished?
With whom have you had success in the past?
With whom have you had difficulties in the past?
Can you help me understand that a little better?
What does that mean?
How does that process work now?
What challenges does that process create?
What challenges has that created in the past?
What are the best things about that process?
What other items should we discuss?

Step 2:

At this point, you should be comfortable drilling down to the more technical, and vertical
specific questions. Make sure you discuss timelines, budgets, expectations, etc…If you
had prepared carefully during the prior phase, there should not be too many qualifying
questions, and they should be to the point.
Here is a sample of what I have found to be effective, and to the point. Again, use your
discretion to decide whether or not some these apply to your type of business:
What is your timeline for implementing/ purchasing this type of service/ product?
What other data points should we know before moving forward?
What budget has been established for this?
What are your thoughts?
Who else is involved in this decision?
What could make this no longer a priority?
What’s changed since we last talked?
What concerns do you have?
OK. You are not there yet. The next part is to analyze the answers. Personally, I assign
numeric values to each answer, say 1 through 5. 1 being least favorable match and 5
being most favorable match. You can now add them up. The next step is completely
subjective analysis: determining whether or not there is a fit. I assume this is how dating
sites matches potential dates. What you have done here is build a profile. Next, ask
your self, do my products and services best match the needs of this prospect. If you
decide to continue with the sale process, the next part of the is no less important.

Step 3:

This is where you must establish rapport, trust, and credibility. Please notice that in this
line of questions, you are specifically addressing the individual and his/her concerns. This
shows empathy and caring, not apathy or indifference.
How did you get involved in…?
What kind of challenges are personally you facing?
What’s the most important priority to you with this? Why?
What other issues are important to you?
What would you like to see improved?
How do you measure that?

By lotfi saibi | Also posted in Sales Management, Strategy and Leadership | Tagged | Comments (6)

Better Strategy for a Healthy Growth Rate

May 13, 2009 – 2:23 pm

Whether you make products or deliver services, you are at the mercy of how well you get your message through to your potential customers. That is why you need an adept sales force.

By that I do not mean a well structured sales organization comprised of a sales manager, regional directors, and the foot soldiers we have all been at some point in our careers. Look at any successful organization, from the brick-and-mortar, traditional Fortune 500, to the nouveau riche companies like Google and Amazon. The organizational lines that define departmental functions are not as clearly defined.

This is to say that everyone in the organization, from CEO to admin, from IT to deployment, are all sales people. They all share the same vision, the same mission, and speak the same tongue. They have consumed the proverbial kool-aid. If this sort of culture is not what you are accustomed to seeing in your company, be assured you most likely do not work for a top notch organization.

What is at play here is the unmistakable belief that these folks may not make a commission on the sales, but they all get rewarded equally when a sale gets finalized and the check clears the bank. Continue reading →

By lotfi saibi | Also posted in Sales Management, Strategy and Leadership | Tagged , , , | Comments (1)