Not every business needs a key accounts management function or team but many more are finding they do. Why?
In recent times we are witnessing a distinct shift to key accounts management with five major events fostering the development of key account management as a crucial business function.
- Market maturity
- Increasing cost of sale
- Customer / client negotiating power
- Pressure on margins
- Increased local, regional and global competition
In particular, customer power has changed the game. We are seeing big customers getting bigger and at the same time they are rationalising their supplier base.
Buyers are becoming much more knowledgeable, more sophisticated and are demanding tailor made solutions. This is increasing the cost of serving customers so buyers and sellers are developing new ways of working together.
So, is your business ready for key accounts management?
Many organisations made the move to key accounts management in the hope of capturing a larger slice from larger customers.
As a consequence companies geared their operations to deliver on the premise and many were disappointed when key accounts failed to deliver anything more than “big orders”.
You can’t expect to get any meaningful benefits from something that is misaligned!
So, what is key accounts management?
An important point needs to be made here: key accounts management is not selling. Confused? Well you’re not alone. Many people think key accounts management is just a fancy way to sell. It is not.
If the majority of business a company receives from its existing customers is in the form of a key accounts, then the role of the sales organisation is customer development not traditional selling!
And key accounts management is not about generating new business either. Still shocked?
Well, key accounts management is all about helping important customers improve the way they do business by providing them with easy, consistent access to the specialist domain expertise, products, services and solutions that the sales organisation has.
The consequence of providing this added value and support is reciprocity in the form of first option of more business opportunities, at better margins.
And this thinking isn’t just coming from the supply side, it is coming from the customer as well.
Buyers/customers are looking for better value, more efficiency and complete peace of mind. These demands are shifting professional buyers’ priorities and driving better management of increasingly fragile supply chains.
For instance, a typical large company spends between 40-70% of its total revenues on third party goods and services.
More and more organisations are recognising this fact, and seeing the risks and opportunities on the supply side of business. They are investing far more in better management of the supply side.
That is why key accounts management is good for business.
Key questions you need to answer before starting the key accounts management journey…
- How do you define key accounts?
- What are the objectives for your key accounts initiative?
- How will your key accounts approach differ from your sales approach?
- What do you want to achieve from your key accounts initiative?
- Do your key accounts managers have an appetite for change?
- Can your business support a totally new role for business development?
Remember, everybody lives by selling something.
Sue Barrett is a sales expert, business speaker, adviser, sales facilitator and entrepreneur and founded Barrett Consulting to provide expert sales consulting, sales training, sales coaching and assessments. Her business Barrett P/L partners with its clients to improve their sales operations.