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Professionalising Key Account Management | a4kam.org

The theory of Key Account Management For AKAM Diploma students Dr Diana Woodburn

BSc, MSc, MBA, PhD, FCIM

Dr Diana Woodburn & KAM

• Specialising in Key Account Management (KAM) since 1996/
• People and company development in KAM, research, writing, new concepts, teaching and consultancy
• Founded Cranfield KAM Best Practice Club in 1998, Warwick in 2005
• Best-selling book ‘Key Account Management: The definitive guide’ and the ‘industry’ reference, the ‘Handbook of Strategic Account Management’
• Multi-sector and multi-country: taught over 2, key account managers and over 500 directors

What is KAM?

Is it worth it?

How does KAM work?

[email protected]

[email protected]

1. Defining Key Account Management

KAM definitions

An integrated approach to the profitable development of

individual customers of strategic importance to the supplier

A process of growing, managing and harvesting the supplier’s strategic customer assets. Building close relationships between the supplier and customer organisations that add superior value to the customers’ businesses as well as to yours. Who gets KAM? What do they get?

Medium

accounts

Small accounts

By number of

accounts

Large accounts

Medium

accounts

Small

accounts

By volume,

contribution

or potential

Who is a Key Account, who gets KAM?

Difference between AM and KAM

• not just personal plan/only sales & marketing aspects

Account Management Key Account Management

Business as usual Managed for growth and change 1 year supplier strategy-led action plans 3 - 5 year complete strategic business plans unique to customer, closely aligned with customer strategy* Works within normal organisation Corporate responsiveness, cross-boundary engagement and activity Good business Substantial potential, aligned with corporate strategy No investment or not much Readiness to invest Coordinated approach to account Holistic, helicopter, longer-term approach to customer Necessary relationships Many, multi-level, multi-function and senior relationships Opportunity-focused understanding Deep understanding of customer’s business Requires Account Manager Requires Key Account/ Business Manager and KAM team

Supplier Customer Strategic Operational/transactional Business relationship Scope of KAM KAM

WHY? Core offer

Alternative use of capital

Help the business

Profit

HOW? Integrated offer

Total cost of ownership

Value

WHAT? How much?

Price & performance Service levels. Selling

Strategies for key accounts

Business strategy

• What will happen?
• What value can we offer?
• Why should we get the business?
• What do we need to do?
• What will the result be? €/£/$

Relationship strategy

• How will we make it happen?
• How will the relationship help the business strategy?
• With whom do we need relationships and why?
• What will we say to them?
• Why will they care?

Internal strategies

• How can we align our KPIs with our key customer objectives?
• How can we maintain efficient processes that are flexible when needed?
• How can we measure progress and delivery to key customers specifically?
• How are non-sales functions involved? Deep understanding of the customer

2. Key Account selection and categorisation

Who gets what kind of KAM? Low High High Low

Supplier’s business strength:

account’s view

Account’s

spend

Streamline

Manage for

cash

Star

Selective

investment

Strategic

Strategic

investment

Status

Pro-active

maintenance

Key account

attractiveness

Assessing account attractiveness

Account attractiveness

criteria

Weight Account

A

Account

B

Account

C

Rating 0 - 10 Score Rating 0 - 10 Score Rating 0 - 10 Score

Total 100

Score = weight x rating (0 – 10)

Example: DHL and manufacturers

Account attractiveness

criteria

Weight Account A Account B Account C Rating 0 - 10 Score Rating 0 - 10 Score Rating 0 - 10 Score

Size of wallet 25 9 225 5

Moves small valuable items

(= need for new, valued-added

services)

Central decision-making 20 3 60 9

Global operator 15 6 90 3

Industry growth rate 15 3 45 7

Total 100 520 655 Score = weight x rating (0 – 10)

Customer's view of your business strength

Customer’s critical success

factors (CSFs)

Weight Your company Best competitor Other competitor Rating 0 - 10 Score Rating 0 - 10 Score Rating 0 - 10 Score Total 100 Score = weight x rating (0 – 10)

Who gets KAM? Low High High Low

Supplier’s business strength

from the customer’s perspective

Customer’s

spend

Streamline Star (^) Strategic Status

Key account

attractiveness

Relationship level:

Basic

Co-operative

Interdependent

Integrated

? ?