Key Account Management and International Selling Flashcards
the power of the few
• Often about 70% of a company’s sales come from only a few customers
• These customers (accounts) are therefore crucial for the
company’s profits
• Loss of a single account can lead to dramatic losses
• These accounts require special treatment
• Seller’s and buyer’s goal is to develop relationship over time
key account management
- Target and service high-revenue customers with complex needs
- Providing them with special treatment in marketing, administration and service
- Often complex buying behaviour
- Special treatment to key accounts that is not offered to other customers
- E.g., pricing, products, services, distribution, …
- Serviced by dedicated key account managers
T or F: key account management is a sales technique
False, it is an organizational change
distinctions between transactional selling and key account management
Transactional selling
- overall objective: sales
- sales skills: asking questions, handling objections, closing
- nature of relationship: short, intermittent
- salesperson goal: closed sale
- nature of sales force: one or two salespeople per customer
Key account management:
- overall objective: preferred supplier status
- sales skills: building trust, providing excellent service, nergotiation
- nature of relationship: long, more intense interaction
- salesperson goal: relationship management
- nature of sales force: many salespeople; often involving multifunctional teams
conditions needed to ensure success of KAM
• Integration of the key account programme into the company’s overall sales effort
• Senior management needs to understand and support the KA unit’s role
• Establishment of objectives and missions
• Compatible working relationships between sales management and field
salespeople
• Clear definition and identification of customers to be designated for key account
status
how to select key accounts?
• Accounts with growth prospects through potential to build sales and market share in their existing markets
• Accounts with growth potential through their position as major player in smaller but
expanding markets
• Potential partners in innovation -> R&D
• Accounts with compatible direction and value chain (helps with positioning)
• Accounts that are early adopters of new products and therefore help the diffusion of these
products in the market place
• High prestige accounts -> potential for marketing
• High contribution to supplier’s profit accounts
• Competitors’ key accounts
advantages of KAM to sellers
- Close working relationship with the customer
- Better follow-up on sales and service
- More in-depth penetration of the decision-making unit
- Higher sales
- Lower costs
- Cooperation
- Integrated systems
dangers of KAM to sellers
- Risk of increased dependence on relatively few customers
- Increasing demands by key accounts -> important to remain monitoring profit margins
- Misdefining customer accounts as key accounts
- Risk of neglecting high potential non-key accounts
- Team approach may be at odds with career aspirations of individuals
Side notes:
• Not all major customers may actually want to be key accounts
• Might prefer to leverage market power to get best deal (supermarkets)
advantages of KAM to customers
- Improved service
- Improved communication and coordination
- Improved terms
- Avoidance of switching costs
- Customised offerings
- Integrated systems
- Cooperation on R&D
dangers of KAM to customers
- Risk of supply problems if overly reliant on a single or just a few sellers
- Risk of complacency on the seller’s side over time -> lower service levels
- Risk of complacency on the customer’s side -> missing out on better opportunities
tasks performed with KAM
- develop long-term relationships
- engage in direct contact with key customers
- maintain key account records and background information
- identify selling opportunities and sales potential of existing key accounts
- monitor competitive developments affecting key accounts
- report results to upper management
- monitor and/or control key account contracts
- make high-level presentations to key accounts
- coordinate and expedite service to key accounts
- coordinate communications among company units servicing key accounts
skills of KAM
- relationship building
- coordination
- negotiation
- HR
- focus on specific objectives
- diagnosing customer problems
- presentation skills
- generating visibility, reputation
- communication
- working in a team
culture
the accumulation of shared meanings, rituals, norms and traditions among the members of an organization or society
–> the lens through which individuals see the world
different levels of culture
- Cultural differences
• Across countries (cross-cultural differences)
• within specific groups - Over time (development & history)
- As object of study (the cultural lense)
Hofstede’s cultural dimensions
- Power distance
- Collectivism vs individualism
- Uncertainty avoidance
- femininity vs. masculinity
- short-term vs long-term orientation
- restraint vs. indulgence
