STRATEGIC ACCOUNT MANAGEMENT - users.ugent.bedgosseli/Presentations/SAM3-Vlerick.pdf · Key account...

© 2000, Gosselin D.P.© 2000, Gosselin D.P.October, 2000 BelgiumOctober, 2000 Belgium

Ghent Ghent UniversityUniversity BelgiumBelgiumFaculty of Economics and Business AdministrationFaculty of Economics and Business Administration

Departement of Management and OrganizationDepartement of Management and Organization

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STRATEGIC ACCOUNT STRATEGIC ACCOUNT MANAGEMENT:MANAGEMENT:

Is it about strategic management? Is it about strategic management? oror

Is it about account management?Is it about account management?

Drs. Ir. DerrickDrs. Ir. Derrick--Philippe GOSSELINPhilippe GOSSELINGent, October 24Gent, October 24, 2000, 2000




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ContentContent

❏❏ Concepts & DefinitionsConcepts & Definitions

❏❏ Different types of Different types of Account ManagementAccount Management

❏❏ Definition ofDefinition of Strategic Account ManagementStrategic Account Management

❏❏ Strategic Account Management ProcessStrategic Account Management Process

❏❏ Case studyCase study

❏❏ ConclusionConclusionss

❏❏ SummarySummary




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ContentContent



❏❏ Definition of Definition of Strategic Account ManagementStrategic Account Management


❏❏ Case StudyCase Study






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Concepts behindConcepts behindStrategic Account Management Strategic Account Management

Marketing?Marketing?

Strategy?Strategy? Strategic AccountManagement ?

Strategic AccountManagement ? Sales?Sales?

Key Account Management?Key Account

Management?




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Concepts behindConcepts behindStrategic Account Management Strategic Account Management



Management?

Sales?Sales?Strategic AccountManagement ?

Strategic AccountManagement ?

The Strategic Concept?

The Strategic The Strategic Concept?Concept?




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Strategic concept ?Strategic concept ?

Perception

Development

Opportunities

valueCREATION

valueDISTRIBUTION

in REPEATABLEin REPEATABLEwaysways

LUCKLUCK

Adapted model from Prof. AimAdapted model from Prof. Aiméé Heene: Heene: ©© 2000 Prof.Dr. A. Heene2000 Prof.Dr. A. Heene TIMINGTIMING




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Concepts & DefinitionsConcepts & Definitions

The MarketingConcept ?

The MarketingConcept ?


Management?

Sales?Sales?Strategy?Strategy? Strategic AccountManagement ?





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Marketing concept?Marketing concept?

❏❏ The Economic viewThe Economic view (1920): Mechanism to promote trade between (1920): Mechanism to promote trade between industrial agents as a government policy tool.industrial agents as a government policy tool.

❏❏ The Consumer viewThe Consumer view (1960): Mechanism to promote sales by (1960): Mechanism to promote sales by manipulation of buyer behavior: 4P’s, STPmanipulation of buyer behavior: 4P’s, STP(*)(*), PLC, 4C’s, PLC, 4C’s (**) (**) ..

❏❏ The Transaction viewThe Transaction view (1970): Increase the number, (1970): Increase the number, the the volume and volume and the the value of transactions based on customer needs.value of transactions based on customer needs.

❏❏ The Relationship viewThe Relationship view (1980): Creating, developing and (1980): Creating, developing and maintaining a relationship (network) based on value creation andmaintaining a relationship (network) based on value creation anddistribution by solving customer problems.distribution by solving customer problems.

❏❏ The New Economy viewThe New Economy view (1995): Create value on an individual (1995): Create value on an individual basis (onebasis (one--toto--one) thru solutions based on the information depth one) thru solutions based on the information depth or information breadth of the products/services content.or information breadth of the products/services content.

(*) Segment, Target, Position(*) Segment, Target, Position(**) Customer Value, Cost to Customer, Convenience, Communicatio(**) Customer Value, Cost to Customer, Convenience, Communicationn




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RRelationshipelationship MMarketingarketing

“ In industrial markets, it is not the manipulation of the marke“ In industrial markets, it is not the manipulation of the marketing mix ting mix which brings strategic advantage, but effective ‘Relationship which brings strategic advantage, but effective ‘Relationship Management’.Management’.

This means This means creatingcreating, , developingdeveloping and and maintainingmaintaining a network based a network based on value creation thru problem solving for the customer.”on value creation thru problem solving for the customer.”

GummessonGummesson 19871987




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❏ Push products / servicesby manipulation:

! 4 P’s / 4C’s ! STP! PLC

❏ Active seller / Passive Customer❏ Atomistic market

❏ Relationship based❏ Value Creation = problem solving

! Product use! Process addes value! Transformation process

❏ Trust / credibility/ reputation

Growth = problem solvingGrowth = problem solving= Performance/ Commitment/ = Performance/ Commitment/

Trust/ LoyaltyTrust/ Loyalty

Not applicable inNot applicable inBusinessBusiness MarketsMarkets

Consumer vs Business marketingConsumer vs Business marketing

CCONSUMERONSUMER MARKETING MARKETING (C(CLASSIC 1960LASSIC 1960))

BUSINESSBUSINESS MARKETINGMARKETING(1980)(1980)




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Evolution of Marketing topicsEvolution of Marketing topicsin the USAin the USA

TrendTrend

20205500InstrumentalInstrumental

100100100100100100Total (%)Total (%)404020201010ProcessProcess

10105500ServicesServices2020404080804P’s4P’s55202055StrategyStrategy

55101055Marketing Marketing 2005 ?2005 ?19701970--1990199019501950--19701970

Instrumental: Brand equity, satisfaction, loyalty (relationship marketing)Process: New products/ information use & e-business, value management, customer managementcustomer management

Source: Marketing Science Institute: Research priorities, Prof.WSource: Marketing Science Institute: Research priorities, Prof.W.Verbeke (Erasmus University).Verbeke (Erasmus University)




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Management?

Strategy?Strategy?What is


What isStrategic Account

Management ?The SalesConcepts?The SalesConcepts?




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Sales concept ?Sales concept ?

❏❏ Sales = Sales = The process to create a transaction. The process to create a transaction. ❏❏ The The Type of sales processType of sales process depends on the type of transaction.depends on the type of transaction.

❏ Telemarketing, e-business, order centers, customer service groupInside salesInside sales

❏ Dedicated cross functional sales force for one customer! Contract: Uniform contract terms and coordination! Program: develop business and/or relationship

Major account Major account sales sales

❏ Team based project (temporarily)❏ Sell system: product+services+integration System salesSystem sales

❏ Individual, territory ❏ Find, call, present, sell, follow up

Transactional Transactional salessales

Source: (B. Shapiro, 1988)Source: (B. Shapiro, 1988)

Types of sales processesTypes of sales processes




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Sales evolutionSales evolution

StrategicStrategicSolutionsSolutions

CommoditiesCommodities

TransactionTransactionsellingselling

SystemSystemSellingSelling

Strategic SellingStrategic Selling

Consultative SellingConsultative Selling

TechnologyTechnologyEnabled SellingEnabled Selling

Technology Technology Based SellingBased Selling

Traditional Sales

Traditional Traditional SalesSales




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Sales?Sales?Strategy?Strategy?What is


What isStrategic Account

Management ?

Key AccountManagement

concept?

Key AccountManagement

concept?




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The Key Account ManagementThe Key Account ManagementConcept: Current situation (1)Concept: Current situation (1)

❏❏ Develop and maintain businessDevelop and maintain business revenues with revenues with important important customerscustomers thru customer satisfaction and increase profits thru customer satisfaction and increase profits thru customer loyalty.thru customer loyalty.

❏❏ DDedicatededicated salespersonsalesperson for an for an important customers.important customers.

❏❏ Started inStarted in businessbusiness markets in the US markets in the US ((19651965)) and and developed developed during the 1980’s during the 1980’s due todue to increasing complexityincreasing complexity of of geographic expansiongeographic expansion (National Accounts)(National Accounts)..

❏❏ RReactiveeactive modemode:: imposed by important customersimposed by important customers to reduce to reduce business complexity (costs): one face to the customerbusiness complexity (costs): one face to the customer..




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The Key Account ManagementThe Key Account ManagementConcept: Current situation (2)Concept: Current situation (2)

❏❏ SSales driveales drivenn activityactivity exextendedtended with logistic, with logistic, accountingaccounting, , inventory management and relationshipinventory management and relationship responsibilitiesresponsibilities..

❏❏ PPositionedositioned within the within the sales departmentsales department..

❏❏ Evaluated on revenueEvaluated on revenuess and and paid on resultspaid on results (sales function)(sales function)..

❏❏ KKeyey account managers account managers promotedpromoted from the from the sales forcesales force..

❏❏ In most companies Key Account Managers are in average In most companies Key Account Managers are in average responsible for > 8 clientsresponsible for > 8 clients (and increasing).(and increasing).




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ContentContent











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Definition of Key Account Definition of Key Account Management (1)Management (1)

Important Customer (1982)

Important Important Customer Customer (1982)(1982)

Large, Big Major Account (1976)

Large, Big Large, Big Major Account Major Account (1976)(1976)

National Account (1980)

National National Account (1980)Account (1980)

KEY CLIENT KEY CLIENT KEY CLIENT KEY CLIENT (1992)(1992)(1992)(1992)KEY CLIENT KEY CLIENT KEY CLIENT KEY CLIENT KEY CLIENT KEY CLIENT KEY CLIENT KEY CLIENT (1992)(1992)(1992)(1992)(1992)(1992)(1992)(1992)

International Account (1994)

International International Account Account (1994)(1994)

Global Global Global Global Key Key Key Key Account Account Account Account (1996)(1996)(1996)(1996)

Global Global Global Global Global Global Global Global Key Key Key Key Key Key Key Key Account Account Account Account Account Account Account Account (1996)(1996)(1996)(1996)(1996)(1996)(1996)(1996)

Worldwide Account (1998)

Worldwide Worldwide Account Account (1998)(1998)

Multinational Account (1998)

Multinational Multinational Account (1998)Account (1998)

GLOBAL GLOBAL GLOBAL GLOBAL STRATEGIC STRATEGIC STRATEGIC STRATEGIC ACCOUNT ACCOUNT ACCOUNT ACCOUNT (1999)(1999)(1999)(1999)

GLOBAL GLOBAL GLOBAL GLOBAL GLOBAL GLOBAL GLOBAL GLOBAL STRATEGIC STRATEGIC STRATEGIC STRATEGIC STRATEGIC STRATEGIC STRATEGIC STRATEGIC ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT (1999)(1999)(1999)(1999)(1999)(1999)(1999)(1999)

Strategic Strategic Strategic Strategic Account Account Account Account (1999(1999(1999(1999----2000)2000)2000)2000)

Strategic Strategic Strategic Strategic Strategic Strategic Strategic Strategic Account Account Account Account Account Account Account Account (1999(1999(1999(1999(1999(1999(1999(1999--------2000)2000)2000)2000)2000)2000)2000)2000)

Are those different names for the same phenomena?Are those different names Are those different names for the same phenomenafor the same phenomena??




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Definition of Key Account Definition of Key Account Management (2)Management (2)

❏❏ There is no concensus on the definitions but 3 main There is no concensus on the definitions but 3 main characteristics arecharacteristics are common on Key Account Management:common on Key Account Management:

!! Commercial focus:Commercial focus: key accounts are customers representing a large key accounts are customers representing a large potential or actual sales volume as well in money terms as in potential or actual sales volume as well in money terms as in percentage of the total revenues. Sometimes they are the most percentage of the total revenues. Sometimes they are the most profitable customers profitable customers

!! Relational focus:Relational focus: key accounts expect special treatment and services: key accounts expect special treatment and services: inventory management, logistic support, special prices, special inventory management, logistic support, special prices, special reporting and customer specific applications and solutions. Key reporting and customer specific applications and solutions. Key accounts will centralise the purchase from different geographic accounts will centralise the purchase from different geographic areaarea’’s s and will involve different departments and different skillsand will involve different departments and different skills

!! Strategic marketing Strategic marketing focus:focus: key accounts can be selected because of key accounts can be selected because of their status, market leader position, to open new markets, as retheir status, market leader position, to open new markets, as ref. To f. To open new markets, for diversification, technological leadership,open new markets, for diversification, technological leadership,because they will invest.because they will invest.




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What Do We Know? (1)What Do We Know? (1)

❏❏ Relationship is key in marketing to business marketsRelationship is key in marketing to business markets❏❏ Competence is key to create a competitive advantage and to buildCompetence is key to create a competitive advantage and to build

strategic relationships in business marketsstrategic relationships in business markets❏❏ business markets: pareto distribution of customersbusiness markets: pareto distribution of customers❏❏ Hypercompetition is changing nature of relationships Hypercompetition is changing nature of relationships ❏❏ CRM is about customer information not about relationshipCRM is about customer information not about relationship❏❏ Trust is at the hart of relationship building, takes time and isTrust is at the hart of relationship building, takes time and is

always based on performance, if well done, generates loyalty.always based on performance, if well done, generates loyalty.

❏❏ Limited research on relationship building with key accounts in Limited research on relationship building with key accounts in business marketsbusiness markets

❏❏ No research on impact of competences applied to key account No research on impact of competences applied to key account managementmanagement




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What We Don’t Know (2)What We Don’t Know (2)

❏❏ What is the nature of a key account management process:What is the nature of a key account management process:

!! Sales driven ?Sales driven ? To manage the sales activities towards To manage the sales activities towards important customers? important customers?

!! Marketing drivenMarketing driven ?? focus on relationship building and value focus on relationship building and value creation in order to create a competitive advantage? creation in order to create a competitive advantage?

!! Strategy driven ?Strategy driven ? To manage a portfolio of strategic well To manage a portfolio of strategic well selected customers based on competence leverage together selected customers based on competence leverage together with the customer?with the customer?

❏❏ Is it profitable to build a relationship with a customer ?Is it profitable to build a relationship with a customer ?




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Why was Key account Why was Key account management created? management created?

❏❏ Key account management emerged at the end of 1960 in the Key account management emerged at the end of 1960 in the US because of environmental changes which are still valid US because of environmental changes which are still valid today:today:

!! Increased concentration of buying companiesIncreased concentration of buying companies!! Increased geographic dispersion of buyers of same companyIncreased geographic dispersion of buyers of same company!! Increased pressure on costs and communicationIncreased pressure on costs and communication!! Increased desire to develop partnershipsIncreased desire to develop partnerships!! Increased complexity of buyers operationIncreased complexity of buyers operation

Assign one person: Assign one person: Key account managerKey account manager to handle to handle interface with customer from a sales point of viewinterface with customer from a sales point of view..




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Why will It becomeWhy will It becomemore important? more important?

❏❏ Importance of key account management will continue to increase Importance of key account management will continue to increase because of 5 trends:because of 5 trends:

Importance Importance of Key of Key

account account managementmanagement

Industry StructureIndustry Structure

Technology ICT/ (ETechnology ICT/ (E--com & ecom & e--business)business)

GlobalisationGlobalisation

Maturity of Maturity of Industrial Industrial MarketsMarkets

Increase in Increase in Buying PowerBuying Power




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Why will It becomeWhy will It becomemore important?more important?

More competitionMore competitionMore complexityMore complexityMore concentration thru M&AMore concentration thru M&AMore central purchasingMore central purchasingMore outsourcing of servicesMore outsourcing of servicesElimination of low value activitiesElimination of low value activities

Less but moreLess but moreimportantimportantcustomerscustomers

Less but moreLess but moreimportantimportantsupplierssuppliers

Account managementis an efficient and effective

process to implement

Account managementAccount managementis an efficient and effective is an efficient and effective

process to implementprocess to implement

5 Trends5 Trends5 Trends




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Current view on Current view on Key Account Management (1) Key Account Management (1)

current views on “Key Accounts” are mainly Local or International oriented, Supplier Focused and have a Sales or Relationship Approach.

current views on current views on ““Key AccountsKey Accounts”” are mainly are mainly LocalLocal or or InternationalInternational oriented, oriented, Supplier FocusedSupplier Focused and have a and have a SalesSales or or RelationshipRelationship ApproachApproach..

Strategy DrivenStrategy Strategy DrivenDriven

GeographyGeographyGeography

FocusFocusFocus

ApproachApproachApproach

LocalLocalLocal

GlobalGlobal

Sales DrivenSales Sales DrivenDriven

Relationship Marketing DrivenRelationship Relationship Marketing DrivenMarketing Driven

CustomerCustomerCustomer

InternationalInternationalInternational

SupplierSupplierSupplier

Regional/NationalRegional/NationalRegional/National

©© Gosselin, Heene, 2000Gosselin, Heene, 2000




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ContentContent











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Definition of a Strategic Account Definition of a Strategic Account

Strategic accounts :Strategic accounts : are potential or existing are potential or existing customerscustomers identifiedidentified by the by the suppliersupplier based on strategic criteria and where the supplier has based on strategic criteria and where the supplier has indicationsindications that that he is of strategiche is of strategic importanceimportance for the for the customercustomer as well.as well.

PotentialSupplier

PotentialSupplier

Existing SuppliersExisting

Suppliers

Strategic AccountsStrategic Strategic AccountsAccounts

SUPPLIERSUPPLIERSUPPLIER

CUSTOMERCUSTOMERCUSTOMER

Gosselin, Heene 2000Gosselin, Heene 2000

Existing CustomersExisting

Customers

Potential CustomersPotential

Customers

Important/Key Accounts

Important/Key Important/Key AccountsAccounts

SS SSNSNS

SS

SS

NSNS

NSNS

NS

S: StrategicS: StrategicNS: Non StrategicNS: Non Strategic

Important/Key Suppliers

Important/Key Important/Key SuppliersSuppliers

=

+




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Definition of StrategicDefinition of StrategicAccount ManagementAccount Management

‘’Strategic account management ‘’Strategic account management : is the : is the processprocess that that identifies and identifies and selectsselects strategic accounts and develops thru strategic accounts and develops thru competencecompetence building and competence leveraging a set of building and competence leveraging a set of specific and specific and uniqueunique value value propositionspropositions in in partnershippartnership with with a strategic account ‘’a strategic account ‘’

Gosselin, Heene 2000Gosselin, Heene 2000




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Classification of Classification of Account ManagementAccount Management

❏❏ We believe there are 3 different processes at work which are notWe believe there are 3 different processes at work which are notidentified as such in practice, creating a lot of confusion, identified as such in practice, creating a lot of confusion, mismanagement and failures.mismanagement and failures.

Long Term Strategic

Dynamic/InteractiveProactiveCompetitive

Advantage

Strategic Strategic Account Account

ManagementManagement

Mid TermMarketing

Static/Supplier driven

OffensiveCoordination/Relational

Key Account Key Account ManagementManagement

Short Term Sales

Static/ Supplier driven

DefensivePerformanceKey Account Key Account SellingSelling

Time FocusTime FocusBehaviourBehaviourObjectiveObjectiveNatureNatureProcessProcess




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Current views onCurrent views onAccount Management (2) Account Management (2)

❏❏ Confusion on account management is due to non recognition of 3 Confusion on account management is due to non recognition of 3 different processesdifferent processes

Strategic Strategic ManagementManagement

Strategic Strategic Account Account

ManagementManagement

Relationship Relationship ManagementManagement

Key Account Key Account ManagementManagement

Sales Sales ManagementManagement

Key Account Key Account SellingSelling

GlobalGlobalInterInternationalnational

RegionalRegionalNationalNationalLocalLocalFocusFocusProcessProcess

ComplexityComplexity

Scop

eSc

ope

Tim

e Fo

cus

Tim

e Fo

cus




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Implications ofImplications ofStrategic Account ManagementStrategic Account Management

"" SelectionSelection of Strategic Accounts: of Strategic Accounts: Portfolio/ResourcesPortfolio/Resources"" Business Business DevelopmentDevelopment Process: Process: ProactiveProactive"" StrategicStrategic Process: Process: Competitive advantageCompetitive advantage"" CompetencesCompetences of Strategic Account Manager and of Strategic Account Manager and

Organisation: Organisation: Competence drivenCompetence driven"" Organizational impact: Organizational impact: ChangeChange ManagementManagement"" Interaction with other functional departements: Interaction with other functional departements:

Competence Building and LeverageCompetence Building and Leverage..

Strategic Account Management is about creating a Strategic Account Management is about creating a customer driven organizationcustomer driven organization




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ContentContent











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Characteristics of the processCharacteristics of the process

## Selection of Strategic accountsSelection of Strategic accounts

## Process & Resource allocationProcess & Resource allocation

## Competence Competence

## Advanced ResearchAdvanced Research




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Account RelationshipAccount RelationshipDevelopment ModelDevelopment Model

Synergetic AMSynergetic AM

Early AMEarly AM

ComplexComplex

Level ofLevel ofInvolvementInvolvementwith thewith thecustomercustomer

SimpleSimple

Systems/SolutionsSystems/SolutionsTransactionTransactionNature of the customer RelationshipNature of the customer Relationship

Mid-AMMid-AM

Partnership AMPartnership AM

Account Relationship Development Model of

Millman & Wilson (1994)

Account Relationship Development Model of

Millman & Wilson (1994)




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Account Relationship Account Relationship Development ModelDevelopment Model

Pre-KAM Early KAM Mid-KAM Partnership KAM Synergistic KAM Uncoupling KAM

0% business 5% business 35% business 90% business 100% business

After one year Year 2 Year 3 Year 4

Product need established

Transactions commence

Selling company now one of a few "preferred suppliers"

Selling company is now in partnership with buying company

"Quasi-integration" Selling company and buying company together deliver value to the end customer

Relationship disintegrates or product fails to keep up with the market

Buying Company scrutinize price and other terms

Key account manager / key contact relationship strengthens

Operational staff get to know their opposite numbers

Contacts at all levelsFocus teams at all interfaces between supplier and customer

Key account manager's focus is to establish relationship

Key account manager working to increase volume of business

Key account manager working to establish distinctive business

Key account manager looks for opportunities for process advantage

Key account manager looks for opportunities for process advantage

Source: Prof. Malcom McDonald, Cranfield 1999, Millman & Wilson Source: Prof. Malcom McDonald, Cranfield 1999, Millman & Wilson 19941994




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Strategic selection (1)Strategic selection (1)

• Not all customers have same value• Volume is not the selection criteria• The more complex the product and the morecomplex the customer, the more chance thereis to build a partnership and create value

• Not all customers have same value• Volume is not the selection criteria• The more complex the product and the morecomplex the customer, the more chance thereis to build a partnership and create value

PartnershipJoint RelationPartnership

Joint Relation

OpportunisticPrice Driven

OpportunisticPrice Driven

ComplexComplex

CustomerCustomerRelationshipRelationshipComplexityComplexity

SimpleSimple

Systems/SolutionsSystems/SolutionsTransactionTransactionProduct/Service ComplexityProduct/Service Complexity




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Strategic Segmentation (2)Strategic Segmentation (2)

Model of CespedesModel of Cespedes

1.1. Assessment of the direct and indirect Assessment of the direct and indirect profitabilityprofitability potential of the potential of the customer;customer;

2.2. Assess the potential for Assess the potential for organizational learningorganizational learning thru the key thru the key customer: depends on the degree of services and the potential tocustomer: depends on the degree of services and the potential tostandardize the service processes of the customer;standardize the service processes of the customer;

3.3. Analyze the type of Analyze the type of transactiontransaction: is it possible to increase the : is it possible to increase the profitability of this customer based on the transaction cost profitability of this customer based on the transaction cost drivers?drivers?

Source: F. Cespedes, 1995 HBS PressSource: F. Cespedes, 1995 HBS Press




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Strategic Segmentation (3)Strategic Segmentation (3)

Outsource these customersOutsource these customersNNNNNN

Marginal interesting do not investMarginal interesting do not investNNYYNN

Increase volume if possibleIncrease volume if possibleYYNNYY

Keep and invest in those customersKeep and invest in those customersYYYYYY

Important but not strategicImportant but not strategicYYYYNN

Keep but Do not further investKeep but Do not further investYYNNNN

Increase volume and profitabilityIncrease volume and profitabilityNNNNYY

Keep but Increase profitabilityKeep but Increase profitabilityNNYYYY

Generic strategyGeneric strategyProfitableProfitableSignificantSignificantStrategicStrategic

Model of WhitneyModel of Whitney

Source: J. Withney, 1996, HBRSource: J. Withney, 1996, HBR




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Strategic Selection (4)Strategic Selection (4)

7 S Model of Gosselin7 S Model of Gosselin

Do the supplier and customer have and do they Do the supplier and customer have and do they agree on a common strategy for the long term?agree on a common strategy for the long term?Strategic FitStrategic Fit

If volume is low value with the customer, your value If volume is low value with the customer, your value could be very low as well?could be very low as well?Significant Significant

Margin or Potential MarginMargin or Potential MarginSoundSound

Do we want to be seen as a partner with this Do we want to be seen as a partner with this customer? Do we put enough resources to get him?customer? Do we put enough resources to get him?SustainableSustainable

Do you want this type of customer? Is it a reference Do you want this type of customer? Is it a reference for future business?for future business?SympathySympathy

Cultural compatibilityCultural compatibilitySynergySynergy

Size of the customer marketSize of the customer marketScale Scale




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Account Management PortfolioAccount Management Portfolio

Model of McDonaldModel of McDonald

Manage for Manage for cash/withdrawcash/withdrawMaintainMaintain

SelectivelySelectivelyInvestInvestInvest/GrowInvest/Grow

Competitive strengthCompetitive strength

Customer Customer AttractivenessAttractiveness

H

H

L

L

Model is Model is based on based on

the classic the classic McKinsey McKinsey

modelmodel

Key /Strategic accountsKey /Strategic accounts




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Positioning of StrategicPositioning of StrategicAccount ManagementAccount Management

Positioning Model of Gosselin & Heene (2000)Positioning Model of Gosselin & Heene (2000)

Captive Captive CustomersCustomers

Transactional Transactional CustomersCustomers

Strategic Strategic AccountsAccountsKey AccountsKey Accounts

Relationship willingnessRelationship willingness(Customer)(Customer)

Competence Competence Leverage Leverage WillingnessWillingness

(Supplier)(Supplier)

H

HL

L

Not stable: Invest in specific

solutionsor managefor profit

Not stable: Invest in specific

solutionsor managefor profit

Invest in relationship

or reduceinvestments

Invest in relationship

or reduceinvestments




Page 44









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The Principles ofAccount Management Process

SourceSource: Senn & : Senn & ZeierZeier 20002000

Winning and

keeping Strategic

Customers

Winning and

keeping Strategic

Customers

Building LongBuilding Long--term Relationsterm Relations

Developing Consistent Products/ServicesDeveloping Consistent Products/Services

Providing a Network OrganizationProviding a Network Organization




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Where do successful Where do successful Companies perform better?Companies perform better?

Study conducted by the University of St.Gallen: Senn 1998 & 1999, Senn & Arnold 1999:• N = 200, CS = Customer Satisfaction. High-low pairs significantly different at .01 level• Avg. CS of High Performing Group = 79%, Avg. CS of Low Performing Group = 63%• Results based on supplier performance resp. customer satisfaction ratings by their key accounts

65 % 40 %

68 % 42 %

69 % 46 %

Building LongBuilding Long--term Relationsterm Relations

Developing Consistent ProductsDeveloping Consistent Products & Services& Services

ProvidingProviding a Network a Network OrganizationOrganization

High Performers

(Avg. Performance)

Low Performers

(Avg. Performance)Account Management Processes




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Building the Framework (I)Combining Processes

with the Implementation View

Defining Goalsand Objectivestogether withStrategic Accounts

Step I Step IIAligning BusinessProcesses betweenSupplier & Customer Organization

Step IIILeveraging Know-how and accelerating Learning Processes

Building Long-term Relations

Developing ConsistentProducts & Services

Providing a Network Organization

1

2

3

4

5

6

7

8

9

SourceSource: Senn 1994 : Senn 1994 –– 1999, Senn & 1999, Senn & ZeierZeier 20002000




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Building the Framework (II) Nine Areas to allocate

Account Resources

Defining Goalsand Objectivestogether withStrategic Accounts

Step I Step II Step IIIAligning BusinessProcesses betweenSupplier & Customer Organization

Leveraging Know-how and accelerating Learning Processes

Building Long-term Relations

Developing ConsistentProducts & Services

Providing a Network Organization

1

2

3

4

5

6

7

8

9

SourceSource: Senn & : Senn & ZeierZeier 20002000

CustomersCustomers

SolutionsSolutions

PeoplePeople

RelationshipsRelationships

ProcessesProcesses

StructuresStructures

KnowledgeKnowledge

SystemsSystems

InformationInformation




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Key success drivers

"" Successful Strategic Account Management goes beyond Successful Strategic Account Management goes beyond „traditional“ customer relationship and sales management. „traditional“ customer relationship and sales management.

"" It is essential to assess the relevant business drivers and It is essential to assess the relevant business drivers and allocate account resources accordingly.allocate account resources accordingly.

CustomersCustomers

SolutionsSolutions

PeoplePeople


ProcessesProcesses


KnowledgeKnowledge

SystemsSystems


Benchmarks from an International Research Project; Measures based on Industrial Supplier Performancerated by Key Accounts, n = 200; Senn & Arnold (1999), Thexis No. 4, University of St.Gallen.

Key Success DriversKey Success Drivers

Classic Focus Classic Focus




Page 50









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RoleRoleRole IssuesIssuesIssues

Role of the Role of the Strategic Account ManagerStrategic Account Manager

AMAMSupplierSupplier CustomerCustomer

• Sales person• Product seller• Interface• Relationship?• Team player?• Administration • Co-ordinator

• Sales person• Product seller• Interface• Relationship?• Team player?• Administration • Co-ordinator

• Culture• Management

Support• Communication• Systems/Process• Turf wars• Authority• workload/focus• Credibility

• Culture• Management

Support• Communication• Systems/Process• Turf wars• Authority• workload/focus• Credibility

TraditionalTraditional Key Account SellingKey Account Selling




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Strategic Account ManagerStrategic Account ManagerCompetencesCompetences

Source: A. Millman & K. Wilson, 2000Source: A. Millman & K. Wilson, 2000

99Industry & Market KnowledgeIndustry & Market Knowledge

22Global Team leadership & ManagementGlobal Team leadership & Management

1010Customer KnowledgeCustomer Knowledge

77Cultural EmpathyCultural Empathy

55Strategic Vision & PlanningStrategic Vision & Planning

33Business & Financial KnowledgeBusiness & Financial Knowledge

88Selling SkillsSelling Skills

66Problem Solving CapabilitiesProblem Solving Capabilities

44Relationship management skillsRelationship management skills

11Communication skillsCommunication skills

Importance RankingImportance Ranking

1 = Most Important1 = Most Important10 = Less Important10 = Less Important

SellingSelling




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Strategic Account Manager:Strategic Account Manager:Competence ProfileCompetence Profile

Analyst

PoliticianCoordinator

Strategist POLITICALPOLITICALENTREPRENEUR:ENTREPRENEUR:

•• Influence powerInfluence power•• Take opportunitiesTake opportunities

The strategic account manager must have the capability to The strategic account manager must have the capability to solve problemssolve problems for the customer and realize for the customer and realize entrepreneurial entrepreneurial opportunitiesopportunities thru the thru the coordinationcoordination and application of personal, and application of personal, team and organizational competences, team and organizational competences, withoutwithout having the full having the full controlcontrol over all resources.over all resources.




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Impact of the context onImpact of the context onCompetencesCompetences

pEpEEntrepreneurEntrepreneur

pepeSalesSales

PEPEPotential CEO ?Potential CEO ?

PePeRelational Relational ManagerManager

Degree of organisational Degree of organisational Interdependence and IntegrationInterdependence and Integration

Levels of Levels of Organisational Organisational complexitycomplexity

H

H

L

LP: Political P: Political E: EntrepreneurialE: Entrepreneurial

Strategic AccountManagement

Strategic AccountStrategic AccountManagementManagement

Key AccountKey AccountManagementManagement

Key Account SellingKey Account Selling

Source: SAMA, K. Wilson, 2000Source: SAMA, K. Wilson, 2000




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Market Performance inMarket Performance inStrategic Account ManagementStrategic Account Management

Preliminary Research on Strategic Account Management at Ghent Preliminary Research on Strategic Account Management at Ghent University, Department of Management and OrganizationUniversity, Department of Management and Organization (FEB)(FEB) suggests suggests a high probability a high probability that:that:

Source: D.P. Gosselin, 2000Source: D.P. Gosselin, 2000 (*) Growth in % Customer Market Share and % of Company Portfolio(*) Growth in % Customer Market Share and % of Company Portfolio sold to the Accountsold to the Account

1.1. The market performanceThe market performance (*)(*) of a suppliers with a strategic customer is of a suppliers with a strategic customer is related to the related to the PLC of the customerPLC of the customer. This implies a process of dynamic . This implies a process of dynamic allocation of resources: different relationalallocation of resources: different relational behavioursbehaviours at at different different timestimes and the willingness to invest in specific and time related and the willingness to invest in specific and time related customers customers solutionssolutions using all available company competences.using all available company competences.

2.2. The The market performancemarket performance of a supplier is higher with strategic selected of a supplier is higher with strategic selected customers if the supplier customers if the supplier adjust his offeradjust his offer and performance according and performance according to the to the PLC of the customer’sPLC of the customer’s Decision Units.Decision Units.

3.3. Market performanceMarket performance with strategic customers is higher if awith strategic customers is higher if an explicit n explicit and recognizedand recognized fitfit exists between the exists between the strategies of bothstrategies of both the supplier the supplier and the customer.and the customer.




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ContentContent











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Schurter Group: Profile

❏ Founded 1933 in Lucerne, Switzerland❏ Privately held company❏ Worldwide active supplier of passive components for

electronics industry❏ Sales turnover (1999) = USD 91.5 Mio❏ Number of employees worldwide (1999) = 1000❏ 11 subsidiaries and more than 100 agencies around the world❏ About 5‘000 components and parts for 10‘000 customers ❏ Highly competitive market, global perspective is mandatory❏ Strong customer demand for globally coordinated sales efforts

This Case study was Developped by Dr. C. Senn and Dr.R. Zeier This Case study was Developped by Dr. C. Senn and Dr.R. Zeier ©© 2000, Account Management Center, Zurich2000, Account Management Center, Zurich




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Schurter Group: Product Range

CONNECTORS/CONNECTORS/POWER ENTRY POWER ENTRY MODULESMODULES

INPUT SYSTEMSINPUT SYSTEMSINPUT SYSTEMS

CIRCUIT BREAKERS CIRCUIT BREAKERS FOR EQUIPMENTFOR EQUIPMENT CBECBE

FUSE-LINKS / FUSEHOLDERSFUSEFUSE--LINKSLINKS / / FUSEHOLDERSFUSEHOLDERS




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The Challenge

„Although we were doing a good job in the market, we faced an increasing demand for coordinated international marketing and sales activities.Our most important customers were explicitly asking Schurterto implement a Key Account Management Program.The only problem was that we thought we were already doing it.“

H.R. Schurter, President and CEO




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The Mission

„First, the Implementation of a Strategic Account Management Program must help us to cope successfully with the increasing trend to reduce suppliers. Second, we also want to strengthen our position as a global supplier in the global market.In any case, however, we are expecting results and not just brilliant concepts or management buzzwords!“

A. Lauber, COO




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SolutionsSolutions

What would you have done?

CustomersCustomers

PeoplePeople


ProcessesProcesses


KnowledgeKnowledge

SystemsSystems


According to an extensive internal and external analysis a few years ago, the Schurter group showed improvement potential in three SAM areas: Solutions, Structures and Knowledge. In this session, we are going to focus on resource allocation problems in the following two areas : (1) Solutions and (2) Structures.




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What would you do, if ... (I)

Initial Situation:Most recently, two of Schurter‘s main customers in the Telecom market segment merged, forming one of the world‘s leaders for mobile phones and related equipment. After having examined the actual purchasing processes, the customer declared international supplier prices as an urgent issue and approached Schurter to discuss the massive price differences for Schurter products in Europe and Asia.

Would you ...(a) Develop arguments for pursuing a price discrimination strategy?

(b) Establish a three-year plan and go for a step-wise harmonization?

(c) Establish a uniform world-price for all customers as soon as possible?(d) ...




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After a highly disputed Decisionfor a World-price List Key Account

Revenues increased dramatically

1996 1997 1998 19990

50

100

150

200

250

300

350

400

450

500

Growth Rate of PilotCustomer X = + 303 %

Turnover 1996 = Index 100

Avg. Growth Rate ofSchurter = + 7%

Avg. Industry Growth Rateper Year = + 5%

403

127115100




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What would you do, if ... (II)

Initial Situation:After having successfully solved the international pricing issue, Schurterfaced another request from customer side. As one customer said: „We want our suppliers to take care of our business on a global level. Anything else is not acceptable!“

Note: Schurter sells to global customers like Ericsson, Nokia, Philips,Siemens, etc.

Would you ...(a) Promote Schurter‘s best sales people to Global/Strategic Account Managers?

(b) Established multi-functional account teams?

(c) Set up a separate Strategic account business unit?(d) ...




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Basic Configuration of Schurter‘s Account Team

for Customer Philips

R&D/Production

CustomerSupportServices

TopManagement

Strategic Account Manager(Team Leader)

Local SalesReps

ProductManagement/Marketing

Finance andAdministration

TeamTeamPhilipsPhilips




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Mirroring the Customer‘s Organization was essential for long-term Success

Dedicated Schurter Account Teams consist of the same basic configuration as in the Philips example but finally mirror the customer‘s organization.

R&D/Production

CustomerSupportServices

(Customer,if possible)

Key Account Manager(Team Leader)

Local SalesRep(s)

ProductManagement/Marketing

Top Management

AccountAccountTeamTeam

11

......

22




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SolutionsSolutions

Schurter Group Key Account Management:Project Goals and Milestones

Project Goals:

1. Improved Coordination at Group Level= World price list

2. Better Integration of Customer Needs = Focus on Design-in Stage

3. Increased Revenues= + 20% turnover and profit with all pilot accounts by end of 1999

CustomersCustomers RelationshipsRelationships KnowledgeKnowledgeStrategicLevel

PeoplePeople StructuresStructures InformationInformationOrganizat.Level

ProcessesProcesses SystemsSystemsFunctionalLevel

Step I(1997)

Project Milestones:

Step II(1998)

Step III(1999)

Yearly project focus (mostresources allocated)




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Results (I)

❏ Better internal coordination at group level fully achieved. All prices for global customers are harmonized (max. +/- 5 percent).

❏ Better integration of customer needs fully achieved.

❏ Lost / New business in South America and Asia regained.

❏ Revenue objective exceeded by three times. Average growth ofturnover and profits per customer = + 69%, while overallcompany growth rate = + 7 % and industry growth rate = + 5%.

❏ In two cases also “Preferred Global Supplier” status achieved.

❏ Much more stable business relationships.




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Results (II)

„We had to learn that implementing Strategic Account Management is an investment. It takes usually years until the desired results are achieved. Today, however, we consider SAM as an important management process which clearly helps us to secure our partnerships with strategic customers as well as to grow our most important business.“

H.R. Schurter, President and CEO




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Lessons from the Case

❏ By focusing on global customers, sales and profits can increase up to + 300 % with one Strategic account

❏ SAM implementation at global level takes 2 - 3 years

❏ A sound implementation framework can save 1 – 2 years of work

❏ Selling the SAM program to the internal organization is more important than selling it to customers

❏ Improved internal coordination needs clear top-down decisions

❏ When conducting a pilot project, always start with 3 – 5 customersto prevent from internal „sabotage“

❏ A CRM-tool is a helpful support instrument, but definitely nota prerequisite for a SAM program at any level




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ContentContent






❏❏ Conclusions Conclusions





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Conclusions (1)Conclusions (1)

❏❏ Develop Strategy, based on Develop Strategy, based on customer portfoliocustomer portfolio and not on and not on products.products.

❏❏ SelectSelect your customers and focus, based on relationship your customers and focus, based on relationship potential.potential.

❏❏ Think in terms of value for the customer, using Think in terms of value for the customer, using all all capabilitiescapabilities of the company to solve problems.of the company to solve problems.

❏❏ Trust = Be immediately available for the customer with the Trust = Be immediately available for the customer with the same teamsame team..

❏❏ Use Account Management for the most important customer Use Account Management for the most important customer portfolio who are willing to develop a relationship.portfolio who are willing to develop a relationship.




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❏❏ AAccountccount managers are managers are notnot salessales pepeopleople●● focus on relationshipfocus on relationshipbuildingbuilding●● SolutionsSolutions/coordination/coordination●● long termlong term●● EntrepreneurshipEntrepreneurship

❏❏ LimitLimit the number of key the number of key customerscustomers! Not applicable for ! Not applicable for everyone: everyone: very expensivevery expensive

❏❏ Key account management only possible if Key account management only possible if operationsoperations are are integrated in the process !integrated in the process !

❏❏ A key account is a market on its own => Develop a A key account is a market on its own => Develop a customer business plan to approach and deliver in a customer business plan to approach and deliver in a consistent wayconsistent way




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❏❏ It takes a lot of It takes a lot of commitmentcommitment to implement a strategic account to implement a strategic account organization: time, resources, top management focusorganization: time, resources, top management focus

❏❏ Internal communicationInternal communication is key (80% of success)is key (80% of success)

❏❏ Selection of Selection of strategic accountsstrategic accounts:: criteria!criteria!

❏❏ CRM is not about Strategic Account Management. A customer CRM is not about Strategic Account Management. A customer database software can not compensate for a bad process or database software can not compensate for a bad process or strategy.strategy.




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ContentContent






❏❏ ConclusionsConclusions





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Summary (1)Summary (1)

❏❏ 55--7 times more easy and cost effective to grow the existing 7 times more easy and cost effective to grow the existing customer base.customer base.

❏❏ Value of a “Strategic Relationship” is worth 15% price increase.Value of a “Strategic Relationship” is worth 15% price increase.

❏❏ Select customers on “Relationship” potentialSelect customers on “Relationship” potential, strategic fit and , strategic fit and your willigness to invest in specific competence leverageyour willigness to invest in specific competence leverage

❏❏ Strategic account management is a different process compared to Strategic account management is a different process compared to key account management or key account sellingkey account management or key account selling

❏❏ Its nature is more strategic, interactive, dynamic, proactive anIts nature is more strategic, interactive, dynamic, proactive and d competence driven than a sales or marketing processcompetence driven than a sales or marketing process




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Summary (2)Summary (2)

❏❏ Building a customer focused organisation for competitive Building a customer focused organisation for competitive advantage in business markets implies to manage a customer base advantage in business markets implies to manage a customer base thru strategic account managementthru strategic account management

❏❏ The strategic account manager should coordinate the dynamic The strategic account manager should coordinate the dynamic resource allocation and solution adjustment related to the PLC oresource allocation and solution adjustment related to the PLC of f the customer: This is a top management function.the customer: This is a top management function.

❏❏ Top management should understand their role, the change impact,Top management should understand their role, the change impact,investments and process implications needed to introduce investments and process implications needed to introduce Strategic account management: It takes time, money, vision and Strategic account management: It takes time, money, vision and leadership to succeed.leadership to succeed.




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ReferencesReferences

❏❏ SAMA: Strategic Account Management Association : SAMA: Strategic Account Management Association : http://www.nams.orghttp://www.nams.org❏❏ Research on Strategic Account management Ghent University: Research on Strategic Account management Ghent University:

http://studwww.rug.ac.be/~dgosselihttp://studwww.rug.ac.be/~dgosseli❏❏ Research on Sales & Account Management Erasmus University: Research on Sales & Account Management Erasmus University:

http://www.erasmusforum.nl/index.htmlhttp://www.erasmusforum.nl/index.html❏❏ Sales Research Trust of Dr. Kevin Wilson: Sales Research Trust of Dr. Kevin Wilson: http://www.saleshttp://www.sales--researchresearch--

trust.org/trust.org/

❏❏ Lewis, J.D. (2000) «Lewis, J.D. (2000) « Trusted Partners, How Companies build Mutual Trust Trusted Partners, How Companies build Mutual Trust and Win Togetherand Win Together », Free Press: New York», Free Press: New York

❏❏ Verbeke, W and Nagy, J. (2000) «Verbeke, W and Nagy, J. (2000) « Adaptief en Strategisch Adaptief en Strategisch AccountmanagementAccountmanagement », Samsom: Alphen a/d Rijn, Netherlands.», Samsom: Alphen a/d Rijn, Netherlands.

❏❏ McDonald, M. and Rogers, B. (1998) «McDonald, M. and Rogers, B. (1998) « Key Account ManagementKey Account Management », », Butterworth Heinemann: Oxford, UK.Butterworth Heinemann: Oxford, UK.

❏❏ Day, G.S. (1999) «Day, G.S. (1999) « The Market Driven OrganizationThe Market Driven Organization », Free Press: New York», Free Press: New York

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