Current Kam Trends

BETH ROGERS is an academic and author specialising in the study of sales and marketing. She is Visiting Fellow at the School of Business and Law at the University of Portsmouth, which is an ISM Corporate Member. Email her at beth.rogers@port.ac.uk

companies should have “Automation may have some “A k e y e l e m e n t i n clear policies about how social use, but we are a long way b e i n g r e c o g n i s e d a s a media can be used. Although information technology may affect the from robots replacing key account managers” s u s t a i n a b l e b u s i n e s s i s t o u n d e r s t a n d t h e s u s t a i n a b i l i t y c r e d e n t i a l s content and style of key o f y o u r s u p p l y b a s e . T h i s account management, it does not alter the need for i s b o t h f r o m a p u r e s u s t a i n a b i l i t y s t a n d p o i n t , individuals with sophisticated business analysis and i e . w a n t i n g t o u s e s u p p l i e r s w h e r e p o s s i b l e communications skills to lead value delivery to w h o h a v e t h e s a m e v a l u e s , b u t a l s o a s p a r t o f customers. The automation of targeted offers based b u s i n e s s r i s k s t r a t e g y . ” on browsing behaviour may have some use in (cips-sustainabilityindex.com/knowledge) consumer markets, but we are a long way from robots replacing key account managers... Although the increasing complexity in many

What is more likely to happen? Higher skills levels business sectors means there is more reason for will be expected from more members of the KAM suppliers and customers to partner, there is a team and in more segments in the customer tendency for business relationships to deteriorate portfolio. According to Bryan McCrae, sales over time. During the growth phase, when things psychologist and founder of Sales Motivations: are moving fast, there are incentives for suppliers “ K A M s e l l i n g c o m p e t e n c i e s a r e b e c o m i n g and customers to make things work. The maturing i n c r e a s i n g l y i m p o r t a n t . A t t i t u d e s a n d of business relationships is usually a time for going m i n d s e t s a r e n o t n e c e s s a r i l y a s f i x e d a s w a s back out to do some market testing and making o n c e b e l i e v e d . W i t h a p p r o p r i a t e i n p u t , s u c h new demands on an incumbent supplier in order to a s c o g n i t i v e b e h a v i o u r a l t r a i n i n g a n d justify their status. Wherever there is potential for c o a c h i n g , s a l e s p e o p l e a n d t e a m s c a n b e conflict and/or an obvious power imbalance or h e l p e d t o p o s i t i v e l y r e f r a m e a n d r e i m a g i n e dependence, there must be robust risk management t h e i r a l t e r e d r o l e s . ” by suppliers – key accounts can go toxic... (sales-motivations.com) Customers also need to beware of abusing THE CHALLENGE TO CO-CREATE VALUE reconfigure the supply chain network, and there is In the past 20 years, buying decision-makers have reputational risk in being perceived as a customer become more interested in “value-in-use” and “total that drives an excessively hard bargain. Hence why cost of ownership” than an upfront trade-off some attractive brands will not do business with between benefits and price. In their terminology, some retail chains, and why some organisations get this is “value-based procurement”. They buy disappointing responses to their invitations to products and services for their outputs and how they tender. The future holds the prospect of both generate value in their company and for their longer-term co-creation of value and the risk of customers. Value is created by many people, not just short-termist commoditisation. Only customers the key account managers and engineers, but the who truly have a value-based approach can be users in the customer organisation, and other considered to have strategic importance and to be players in the supply network such as logistics worthy of key account management. partners. This is why key account teams need to be their power. Suppliers can and do find ways to cross-functional, and they need to be collaborating HOW CAN KAM BE DESIGNED INTO with cross-functional teams in customer AN ORGANISATION’S DNA? organisations and the supply chain. Many companies have tried unique KAM divisions

It is when supplier and customer are investing and various forms of hard and soft matrix together that we really know that key account management to make KAM effective and management is working. Some B2B value creation frictionless within the firm. KAM cannot be a rigid may have a very long lifespan, such as building a bureaucratic hierarchy slapped on top of other power plant. In such a case, the co-creation of company hierarchies, such as product divisions or value is not over until the plant is decommissioned, geographic divisions. In most companies, the deconstructed and the land reclaimed. In number of key accounts that require dedicated particular, the impact of a product during its use teams is few, but where they are needed, they can and how it ends its life are becoming more be substantial. In global suppliers serving global interesting to buyers, and this trend may accelerate. customers, perhaps with many partner Suppliers who can defend their environmental, organisations, it is not unusual for there to be key economic and social sustainability, ie. “planet, profit account teams of over 200 people. Those team and people”, will appear lower risk. Check out the members need to maintain consistent levels of Chartered Institute of Purchasing and Supply’s service to the customer across different physical (CIPS) Sustainability Index (CSI): environments, time zones and cultures.

The involvement of senior managers in key account teams is important in maintaining focus, resolving internal conflict and sends very positive messages to the customer. Researchers have observed that it has a significant impact on the financial performance of key accounts, especially account share. If an account is truly key, it needs to have a senior manager as a sponsor, or at least companies need a board committee to oversee key accounts. As Christoph Senn, managing director of the Competence Center for Global Account Management at University of St Gallen, observes:

“ C o m p a n i e s t h a t c o m m i t t o c r e a t i n g s u c h a n e x e c u t i v e e n g a g e m e n t p r o c e s s c a n e x p e c t t o b e n e f i t f r o m h a r d - t o - c o p y i n t i m a c y w i t h t h e i r c u s t o m e r s , w h i c h r e s u l t s i n n e w , s u s t a i n a b l e s o u r c e s o f c o m p e t i t i v e a d v a n t a g e . ”

The question then arises: how many key accounts can a board member manage? Probably not many, if the sponsorship is going to be of meaningful depth. Key account management is becoming more focused and specific because it involves investment, and the time of a senior executive is one of the most significant investments in terms of cost and symbolic status. But note, it takes a certain type of executive sponsorship to be productive – a creative, collaborative, problem-solving leader.

The involvement of a senior executive should not undermine the status of the key account manager. It is a very demanding and complex role. Today’s challenges for the key account manager include balancing short-term financial targets with longterm relational goals, being the standard-bearer for the supplier to the customer and being the standardbearer for the customer to colleagues, having credibility from the factory floor to the boardroom in both organisations, and being a change agent within the customer and their own employer. These challenges will persist into the future, with a stronger focus on being an agent of change. Also in the future, more members of key account teams may have to cope with higher levels of problem-solving and conflict resolution in their roles.

EASY KAM, EASY GO? KAM’s not easy. Nor is it going away. It is, however, evolving all the time. In the 1950s, we were told that marketing would make salespeople redundant; in the 1990s, that the internet would make their role obsolete. In fact, the number of people employed in roles that fully or partially involve selling has increased. Sales as a function has grown in terms of quantity and also quality. For the past 60 years, the emergence of KAM demonstrates that the leader at the customer interface is more strategic than ever before. Those account managers who can understand the nuances of co-creation of value will be highly valued for many years to come.

CATEGORY 2018 TRENDS

Impact of technology

Purchasing continues to shift more resource to information gathering and transaction management online, and tries to focus time spent with suppliers on major discussions.

Customer analytics help suppliers to understand customers in depth, and to fine-tune resource allocation across the customer portfolio. More business can be done automatically across interconnected software platforms. Communications take place across multiple platforms, including social media.

The Internet of Things will make processes even more controlled by gadgets themselves, without human intervention. The data gathered should help customers use the products more efficiently, and suppliers to offer more services based on customer usage patterns.

Co-creation of value

Organisation for KAM

Focus on “value-in-use”, which is co-created by the supplier, users in the customer, and the supply chain network.

Complexity creates opportunities for partnership, but the risk of commoditisation persists.

Purchasing professionals expect suppliers to compete on sustainability as an element of value.

Key accounts have, if anything, become more powerful, and therefore occupy more strategic attention. The complexity of KAM means that key accounts must have board-level sponsorship. Ability to be an agent of positive change is pivotal in the key account manager role. More will be expected of key account team members.

ACKNOWLEDGEMENTS

This article is adapted from Chapter 10 of Malcolm McDonald on Key Account Management, by Malcolm McDonald and Beth Rogers, which includes material from a number of industry and academic experts. ISM members can receive a 20% discount on this book when purchased from Kogan Page using the discount code BMKKAM20. Visit www.koganpage.com Further reading: Gueselaga R, Baillie R, Holt S, Davies K, Speakman I. (2016). The Future of Key Account Management. Cranfield School of Management, Bedford.