Why Key Account Management?
• With Key Account Management a company focuses its efforts company on selected "key customers", These are - due to their size or importance in a segment of paramount importance for company business success.
• To do this, the company adds additional resources - in the form of key account managers, and with projects specially addressing key accounts – for example account-specific marketing, top management account sponsorships and joint development projects.
• Such investments are justified by achieving higher revenue and margins than in the "Non-Account" business.
Key account management must align to the organizational structures of the key accounts – which often is dispersed geographically, as is the key account’s customer base.
This typically leads to conflict between different parties within the company - for example:
Conflict between geographical organizations and key account management
How can for example a small country organization like in Austria justify the cost of a full time Key Account Manager, when the key account’s HQ is based in Salzburg, but its investments (and thus the purchasing decisions) are made in other countries?
Conflict between product managers and key account management
How can I, as a Key Account Manager, get product management to develop or customize a product especially for the key account – if at this time there is no other market in sight?
Conflict between service and key account management
How can I, as Key Account Manager get service management to provide guaranteed 24x7 3 hours response on the Kamchatka Peninsula, because my key account makes a significant investment there- but otherwise, no customer is found there?
Key Account Strategy
• Strategies to determine where a company wants to go.
• Our Key Account strategy determines how we can become "trusted advisors" recognized by our key account for having "significant recognizable distance" to our competitors - in relationship, products and services.
Operational Key Account Plan
• Operational plans determine how the company wants to go.
• This plan defines:
o The operational goal for the key account, and
o The actions that will take our company there.
The operational goal
• Goal to be achieved in sales (including margin, of course) achievd with the key account
• Whenever possible with detailed goals by product group, geographical and/or business domains of the key account.
• The primary responsibility of key account management is to achieve this goal year-to-date in each month.
• Then and only then key account management achieves its purpose.
• The operational Key Account Plan is the main instrument to achieve this task.
Critical success factors necessary conditions, actions
• It is helpful to clearly distinguish goal, critical success factors, necessary conditions and actions:
o Goal: the measurable sales / margin result to be achieved
o Critical success factors: conditions under which we can achieveprofitable sales in the key account. Example in an operating key account management plan: "Being listed as preferred supplier"
o Necessary conditions: measurable performance indicators, to be achieved within the critical success factors. Example in Key Account Management: "> 95% on-time installations"
o Actions: actions to which people undertake in order to achieve a certain result. Example in key account management: "Effective feed-back loop on installation problems"
The right operational plan: planning, leading through, adjusting
• Only “the right” operational will guide the business our business with the key account to the goal
• “Right” means that the plan
o Contains the right elements (CSFs, NCs, actions), and
o is “right” for implementation,
o is led through correctly and successfully, and
o is adapted to always be in “best shape”.
• Right goal: clear target, right seasonality, right accountability
• Right plan: in addition to being based on the right facts (data) the plan’s logical correctness is of paramount importance. This is best achieved by focusing the plan on the constraints to be overcome for achieving the goal. The constraints are different from country to country, from product to product and from the account’s business unit to business unit.
• Right leading through: leading through key account plans requires stubborn “stick-to-itiveness” based on impeccable personal organization of the key account manager’s daily work. This is the hard work in operational leadership. If not done properly, all effort put into designing the plan was wasted.
• Right adjustment: at least every 3 months we need to critically examine and adjust the operational key account plan.
And how does this work in practice?
To sum it up: Key Account Management has to perform three key functions: to develop the operational key account plan, lead its implementation and constantly adjust it to changed situations.
Key Account planning workshops
• For each key account we must develop an operational plan. This is best done in an intensive planning workshop, with all participants of the "operational key account teams" (responsible countries, products, services and functions such as finance, human resources, ... and the Top Account Manager).
• This creates highly integrated, conflict-free operational plans, containing the “right and vital few" obligations which will lead our company to the goal. Monthly “quick” reviews
• The Key Account Manager is responsible to lead the account team, to deliver its obligations,
• best with (at least) monthly "quick reviews" (“are we delivering what we promised?”)
Quarterly “deep” reviews
• The Key Account Manager also must lead the regular (typically quarterly) “deep” review of the operational key account plan ("Is this still the right plan?") in which each item of the plan is critically reviewed and adjusted