Major Account Management Is a Long Term Process – It Takes Time:
We must recognise that we are in Major Account Management for the long term. It takes time to manage a major account and we will only receive a payback on our investment in time if we can have a long term result. In some of the organisations we have worked with this produces a tension because the whole culture is about creating a short term sales result in which product and profit are the main drivers and measures of success. We should not underestimate what a challenge Major Account Management can be to the corporate culture. It emphasises relationship more than product, profit more than volume, and team more than individual, long term more than short term. At the same time the practical short term realities of business life need to be recognised.
One of the best ways of managing this tension is to have someone who acts as a mentor, conscience or guide to the account manager and account team. They are not involved in the day to day management of the account but are invited in to look at and comment on major proposals and presentations. Their main role is to be involved in reviewing the long term plan every few months to ensure that the relationship is as productive as possible and is reflecting the values of the organisation as a whole.
The role of the major account manager is to be responsible for the overall relationship. They influence all those involved in the account to ensure a co-ordinated, synchronised approach. The major account manager is responsible for drafting the account plan, gaining the agreement and commitment of the team and then monitoring implementation
Major Account Management Involves Relationships Not Just a Mechanical Approach:
Under this heading we should discuss three main aspects of major account management.
o The importance of relationships in Major Account Management.
o The complexity of relationships in Major Account Management.
o Mapping relationships in Major Account Management.
In Major Account Management it is essential that we manage people as well as processes. Of course we must get the product pricing right. We need to be excellent at administration. Our customer service and product range need to be strong. But “people buy from people” and “we are in a people business”. To manage the complex range of relationships within a major account is difficult and demanding but our ability to manage relationships will define whether or not we sustain success.
In a reactive sale there is only one relationship – that between the seller and the buyer. In major accounts the situation is much more complex. There are often contacts going on at many levels and many locations. In one major account, we have identified 1000 relationships between the account team of ten people and individuals representing the client. But it is not just a problem of numbers, it is often a problem of politics. Some contacts do not want us to talk to people in other departments or at different levels. It can also be that the complexity is caused by product range. The users of one product rarely speak to the specifies for another product. In any complex relationship some people will like us more than others. This is to say nothing of inter-departmental tensions. All these things make major account relationships complex and we need to recognise their complexity.
If relationships are important and if relationships are complex then it is essential that we find a way of mapping, analysing, planning and monitoring those relationships. Over recent years we have found that an approach based on the game of chess allows a very practical way of identifying the key issues.
If we can answer these questions confidently and communicate our thinking across the account team simply and clearly then we will be half-way to success. This approach has given people across a broad spectrum of organisations a common language and way of working
It Can Only Be Done With Selected Customers:
The final word from this definition is selected. Choosing the right key accounts is of critical importance for three main reasons:
o We do not have the resources to treat every customer as a key account.
o Not every customer wants to be treated as a key account.
o Selection allows us to prioritise our activities in line with our overall business objectives.
Many organisations grade their major accounts simply by the size of sales for the year but the organisations we see that are really moving forward in Major Account Management take a number of other factors into account. They also make sure that everybody knows who the major accounts are and why they are major accounts. It is important to be rigorous with the selection criteria you use! You will also need to apply some form of weighting to reflect your priorities. The fact that a major account does not meet all your criteria will not disqualify it from being a major account. It will just need to score higher in other areas to qualify.
On the basis of this scoring, organisations can grade their accounts. They might be Premier, 1st and 2nd Division like a football league, or Gold, Silver and Bronze like Olympic medals or First Class, Club Class, Economy and Standby like an airline. The analogy of an airline is a good one because on one flight you can have people on Standby being entirely happy with the service they are getting, even though they know there are people getting “better” service in Club Class. Grading your accounts is not a matter of giving some customers better or worse service. It is a matter of giving all your customers appropriate service. When we select our major accounts and consistently deliver what we promise, we are managing our accounts professionally and effectively.
In Summary – Success Factors In Key Account Management:
o Successful Development Of The Role:
o Effective working relationships with other members of the team.
o A continuing drive to improve account team productivity.
o Management commitment to the account team’s role with opportunities for career progression.
o Re-enforcement of the role through authorised career structures, job descriptions and core training programmes.
o The Key Skills:
o Understanding the financial and legal requirements of the account.
o Understanding of the company’s business objectives.
o Understanding of the company’s commercial policies.
o Build high levels of product awareness.
o Understanding of the customer’s business objectives.
o Identify the decision makers.
o Understand the customer’s purchasing strategy.
o Assess competitive activities.
o Put together an account development plan.
o Ensure effective sales order processing.
o Build the right levels of revenue and profitability.
o The Core Skills:
o Interpersonal skills.
o Financial control & analysis.
o Project management.
o Man management.
o Initiative & creativity.
The Secondary Skills:
E.g. Industry knowledge, competitive knowledge, product knowledge etc.
Success Factors In Key Account Development:
o The Stages Of A Long Term Process
o Contract negotiation.
o Implementation / Delivery.
o Objectives For An Account Team
o Ensure that the customer is presented with a coherent and professional image of your Company as a business partner.
o Secure a long term business relationship with the customer as the basis for growing business.
o Penetrate the customer’s organisation and decision making unit creating new opportunities that can be exploited to accelerate account growth.
o Understand and document, on an ongoing basis, the customer organisations strategic business direction and organisation.
o Provide the company’s senior management team with feedback on the long term growth potential in the customer’s market sector and on critical success factors for exploiting it.
o Ensure that the company’s solutions are technically solid and based on a proper understanding of the current requirements and re-inforce the customer’s perception of the benefits of the company’s market focus.
o Ensure that the company’s total resource is delivered in a way that satisfies customer requirements and supports the objectives of the account plan.
An effective Major Account Management strategy depends on selecting your major accounts intelligently, creating a strong, consistent, flexible way of working with both major accounts and other customers and then implementing the plan in a disciplined, effective, efficient manner.
One of the successes of the Major Account Management programme has been the creation of common models and language that facilitate discussion and planning across units and departments. It has also stimulated a commitment for our clients to plan long term for key relationships. Major Account Management has many implications for individuals, departments and the business as a whole. It will always be demanding, but done right it will be highly rewarding
Copyright © 2006 Jonathan Farrington. All rights reserved