Key Account (2)

7/28/2019 Key Account (2)

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Key Account Selling

The key to long-term

sales success


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(I) KEY ACCOUNT SELLING

An introduction


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Definition of Key AccountWhat is a Key Account?

Key Accounts are the 20% of customers who

provide 80% of your profits Key Accounts are defined as the prospects or

existing customers who have the potential ornow fall in the 80/20 category.

Any customer that is of strategic importanceto your company loss of it of inability tosecure potential future revenue would causea significant impact.

What is Key Account Selling?


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ACCOUNTS

20%

80%

PROFITS

80%

20%



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80/20 principle For all corporations, some form of 80/20 rule

operates.

e.g. 80% of the firms revenues is suppliedby 20% of its customers.

If this rule, or a close variant (90/10; 75/25),operates in the firms customer environment,

the critical business implication is that these20% (or 10% or 25%) of customers have animportance to the firms long-run future thatexceeds that of the average customer



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80% $28K

20% $110K

$138K

A Customers

Sales

$28K80%

20%

$110K

$50KUndeveloped

Potential

$188K

$160K



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Definition of

Key Account SellingA systematic set of processes in

identification & profiling of key accounts,

design and adaptation of information-based & value-added selling strategies,profiling own market positioning for

high sustainability of growth in sales.



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In other words

Key Account Selling

Its not just calling higher in an

organization, but... when we finally get totop management, we better havesomething new to tell them about theirbusiness that will positively impact their

profits and ... we better have the datatoprove it and the support ofhis / herstaffto back us up



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Without Key Account SellingIf we cannot demonstrate our value to

our top 20% Key Accounts - in terms of

increased profits (for them) - we will beclassified as a commodity supplier andrun the risk of losing our business to a

cut rate competitor



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Why bother? Market saturation

Mere relationship selling is a relic of thepast

Bygone is the Single-Point-Contact andgood old days in sales



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Pressures on Distributors current

system for interfacing with customers

The traditionaldistributors

sales forcesystem

Increase inselling costs

Increasedcompetition

Pressure from

customers

Affirmativereductions in

number of suppliers

Changes in theprocurement process

Rising importanceof procurement

Increasing accountconcentration

higher bargainingpower



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The Changing Nature of Sales

Force ActivityCritical internal &

customer pressures

Sales Force

CustomersKey accountmanagement

Newapproaches

for smallcustomers



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The Distributor (Supplier-Firm) /

Customer (Key-Account) Relationship

DeliverSuperior ValueProducts and

Services

AddOrganizational

Value

CommodityRelationship

VENDOR QUALITY SUPPLIER PARTNERSHIP

Increased competitive pressure Deeper distributor /customer relationship



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What are the long-term benefits of

running Key Account program? Economies of scale in selling

Improved understanding of key accounts goals,and requirements

Enhanced ability to manage complex relationships

Sustainability of sales Increased key account switching costs

Credible reference for greater marketpenetration

Constant feedback to research anddevelopment for product and service

improvements What is Key Account Selling?


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What is the value of a Key Accountprogram for the individual key

account customer? A single point of contact

Lower overall costs

Enhanced value with prioritized attentionfrom distributor and Omega Division

Guaranteed delivery when capacity is short

Long-term relationship Joint identification of opportunities and solutions

to problems in win-win partnership



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What has it to do with 80/20

principle? Understand who are your 80/20 customers,

their needs and profile

Redeployment of sales efforts and resources Understand your own ranking, positioning,

growth potential or 80/20 status in your keycustomers suppliers profile seekimprovement adopt aggressive growth

strategy



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Redeployment of sales efforts

and resources High value customers should be treated

differently from the average

customers They should receive a disproportionate

share of resources and are worthy of

greater managerial attention



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How about the small

customers? 20% of your firms revenues are

derived from 80% of its customers.

Stop serving small customers?

Identify less expensive methods for thefirm to deal with these accounts



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Cautions for Key Account

Management Too many eggs in one basket

Insufficient benefits to the distributor

Insufficient benefits to the potential keyaccount

Limitation of opportunities

Cost and Bureaucracy

Significant organizational change



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Selecting Key Accounts -

Criteria Direct Sales Revenue and Profit

Current Sales Revenue

Current Profits Future Sales Volume and Profit

Financial Security

Acquisition Potential

Key account effort on firms likely to be acquired may bewasted if the acquiring organization is given thedominant procurement responsibility

Selecting potential acquirers as key accounts may bringlong-run benefits



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Criteria Organizational Interrelationships

Coherence with firm strategy

Key account selection is a strategyimplementation decision

Supplier valued by the customer

Customer believes, or can be persuaded, thatdistributor can meet its needs over the long run

Cultural Fit



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Criteria Indirect Potential Volume & Profits

Strategic Key Account

Opinion Leadership Example: Leading financial services group ICICI

was the 1st Indian company listed on NYSE. Oneof ICICIs key accounts is Infosys, Indias fastestgrowing software company, well-known for its

commercial success, product quality, and highethical standards, and the first Indian companylisted on NASDAQ. Although ICICI transacts littlebusiness with Infosys, it regards as a key accountbecause of its exemplary reputation.



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Key Account Managers Time Allocation

(%)Task Time Allocation

(%)

Within

Distributor

Company

Reps and other sales channels

Marketing department

Production and operationsOther internal departments

Subtotal

15

9

56

35

Customers Upper-level decision makers

Purchasing department

Production and operations

Customers sales channels and marketing departmentsSubtotal

11

5

5

425

Other Other / administrative

Travel

Subtotal

21

19

40



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(II) KEY ACCOUNTMANAGEMENT MODEL

Situation Analysis & Strategy

COMING SOON!

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Key Account (2)