Tag Archives: market share

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 | Also 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 | Also 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 | Posted in Business and Politics, Sales Management, Strategy and Leadership | Also 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

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