SIEMENS Professor: Victor Noguer Castellvi
Strategic Key Account Management 20th March 2013 Joana Lemos
Lena Luehmann
Mariona Prates
Cristina Vieites
Guillem Messeguer
1. Customer inputs in meetings WHAT?
Advice / Hints / Criticism
creation of new opportunities
HOW?
Depending on ‌ Relationship supplier vs partner
Phase Lead: potential leads, briefing
supplier: tender-based relationship partner: strategic cooperation
Opportunity: potential idea, outsource Bid prep: announcement of project, define technical specifications Contract negotiation: selection
SKAM13
2. KAM - the pig in the middle? EXTERNAL CONSUMERS
convince / compel to get the deal
INTERNAL ORGANIZATION
convince BU about customer’s value (esp. when re-negotiating)
‘Account Target Agreement’ (ATA) to align targets & to help secure Business Unit´s commitment SKAM13
3. Re-negotiations OPTIONS & IMPACT refuse
overall negative affect on relationship prevent further business opportunities
accept
domino effect: other customers might ask for renegotiations need to explain ‘reason why’ to BU time consuming
SKAM13
4. Program Evolution coordinate cross-business/-country activities
STEP ONE: 1990’S communication only through IT system report directly to managing board looked for deals in every geography & BU not anchored to BU’s ! KAM’s uninformed, without career path, perceived as competitors
STEP TWO
Centralized purchasing activities & request for higher secrecy
anchored to & report to BU’s downside: silo-minded ! KAMs are well connected with sales force & BU, have deep knowledge & a career path SKAM13
STEP THREE: 2004 ‘SIEMENS ONE’ new approach: centered on cross-sector collaboration & customer centricity
Further development KAM framework based on best experiences to be adopted by each sector
STEP FOUR: 2010 ADD CORPORATE LEVEL 3 levels: regional, global, corporate top-down structure Sales board MDB KAM
SKAM13
5. Key Account selection criteria DATA
INDUSTRY
SALES
(ex: customer turnover & installed equipment)
(ex: growing market/ customer in the market)
(sales potential & crossselling opportunities potential achievement time goal)
SKAM13
5. Key Account selection criteria LEVEL (international or regional)
STABILITY
FIT
(centralized decision making)
(strategy & culture)
STRUCTURE (centralized decision making)
SKAM13
6.Maintaining & deselecting KA MDB RARELY HAPPENS
Reasons? “If so, it‘s because it‘s better for the customer to be served at a regional rather than international level or if business is too volatile or because we change our portfolio (as in 2011 when we sold our IT & comms business)...” SKAM13
7. Siemens Internal organization 4 SECTORS
SEVERAL DIVISIONS
CEO’S (in charge of several business units with profit & loss responsibilities)
Top-down structure Mixed teams - ex: CAM’s & RAM’s SKAM13
7. KAM profiles at Siemens REGIONAL
GLOBAL
CORPORATE
(national accounts)
(specific product portfolio)
(entire spectrum of Siemens portfolio across different sectors)
Involvement of the board “Involvement of board shows commitment to customer centricity, builds trust and provided us with their needs/ wants...”
SKAM13
8. KAM
SF relations & conflicts
COORDINATION WIDER VIEW THREAT
architects of a network of relations
help BU to see the bigger picture instead of being too focused on their own business
be the translator of the customer voice
BROAD KNOWLEDGE
know everything about the business SKAM13
9. KAM vs Sales force TARGET
Sustainable development of business with top customers Long-term (3 years)
CUSTOMER POTENTIAL SALES PROCESS
Sales results Efficient delivery Short-term (fiscal year)
1–5
5+
Relationship share of wallet
Transactions efficient pipeline management
Before customers‘ purchasing process (demand & opportunity creation & detection)
Early in customers‘ purchasing process
SKAM13
9. KAM vs Sales force CUSTOMER KNOWLEDGE
market drivers business requirements investment plans
technical requirements decision structure with focus on buying center
decisions & influencing structure
NETWORK COMPLEXITY
high number of internal & external contacts
positions: high-& lowlevel
low-medium number of contacts to be handled internally & at customer positions: medium-low-level
SKAM13
10. Involvement of the board HIGH reporting structure
in contact with top 90 accounts
“Involvement of board shows commitment to customer centricity, builds trust & provides us with the needs/wants...� SKAM13
11. Skills to be successful KAM Relating to others Managing tasks & processes
Leading others
inter-personal understanding customer service orientation initiative information seeking impact & influence organizational awareness relationship building
Managing others Thinking & solving problems
teamwork & co-operation team leadership ability to see the big picture think outside the box
SKAM13
Generic Model of Competencies & Subscales by Spencer & Spencer
12. Reward system BONUS CALCULATION order intake customer satisfaction feedback capacity to secure new strategic deals / new forms of co-operations
‌ vs. sales force: by volume by their BU
SKAM13
12. KAM’s authority/ empowerment Status Quo Official letter when appointed
Guidelines
Favorable reporting structure
relatively high authority
Further empowerment Strengthen internal understanding
P&L Responsability SKAM13
13. Empower & strengthen authority New KAM appointed
Official letter to all managers
Guideline on Manager’s role
Managing Board
Direct contact Strengthen understanding of KAM’S value Provide KAMs with P&L responsibility
Business Units Division Heads
Fast decision-making Prompt support from Executives Fully informed and invited to meetings SKAM13
14. P&L Responsability KAMs with P&L responsibilities More power inside Siemens Difficult to calculate P&L of accounts handled by KAMs Conditions of the contracts are negotiated by the sales force Usual targets of a KAM could interfere with P&L targets
KAMs should NOT be responsible of it Regional KA’s
Clients not too complex Higher authority
SKAM13
15. Account Business Plan Description of the customer
CUSTOMER’S BASIC INFORMATION
BUSINESS STATUS
ACCOUNT STRATEGY & MEASURES
Analysis of the industry Customer’s SWOT analysis, and description of their strategy SWOT analysis of Siemens vis à vis the customer, Customer satisfaction - interaction description Customer’s ongoing projects Account development strategy Customer’s business not covered by us Account penetration by business unit and division List of top opportunities – action list
SKAM13
16. Role of KAM in sales process lEAD MGT
Identify/Suggest/Develop leads Help BUs to identify right contract
CONTRACT NEGOTIATION
Not involved in negotiation details Important presence in meetings though Explain importance of customer (how to take ad. risk and how to afford it)
OPPORTUNITY MGT What can be provided? Coordination BUs Set up projects’s organization Customer relations mgt
BID PREP
Advisory role Coordination internal/external activities Presence in meetings & negotiations Customer relationship mgt
SKAM13
17. Importance of CRM system CRM key strategic tool in the whole process Share information: company & sales department Categorize & organize clients Maintain & cultivate relationships Avoid redundancy Organize KAM job and relations SKAM13
18. Relationships & KAM EXTERNAL RELATIONSHIP
GENERAL RELATIONS
New start in relationship Set up workshops Grow with the customer Goal: Siemens as a partner
Few customers Long term Customer relationship network Team work
INTERNAL NETWORK
Misunderstanding of CAM’s added value Sometimes are not informed by BU Share all info Solving internal problems CAM act like role models
SKAM13
19. From quality supplier to partner EXAMPLE 1 Siemens was a sophisticated product supplier of high voltage equipment.
New relationship: new focus on turnkey solutions Today: partner Partnerships: R&D investments Future goal: real businesses -> maybe with Kratos in solar systems?
SKAM13
20. Categorizing Kratos RELATIONSHIP Kratos asked Siemens for advice: new Win-win Cross-selling and growing potential
KRATOS Leader in Europe of power utilities Several businesses Strategy: renewable energy (EU) & expand presence (outside EU) Aggressive future investment strategy; BUT reduce costs Strong financial condition
ACCOUNT Recent customer Av. annual order intake : â‚Ź500mn Top 10 energy accounts Order intake & products variations (stable in the last 2 years Account penetration 58%
SKAM13
21.
Should Balton try to convince the FPG division to revise the O&M contracts? PRO’S
CON’S
Ongoing, unclosed business deals & pipeline of Kratos would probably still cooperate with 500 projects until 2018 -> not revising the Siemens as they are an important supplier (high contract could jeopardize the relationship switching costs for Kratos) Customer is a good fit in terms of strategy -> Some other customers or other departments possible to expand together (geographically and within Kratos will ask Siemens to revise the portfolio-wise) & in line with global trends contract Should see Kratos as a global account, not tunnel vision on the affected BU; might secure further deals
Negative impact on fossil power generation division (give up current revenue) Timing – would have to announce a 9% drop in order intake at next shareholder meeting
Should Balton try to convince the FPG division to revise the O&M contracts? Conclusion: he should convince them to revise! Kratos is an important customer with a great strategic fit and high future potential SKAM13
22. If so, how should he approach the division to convince them? APPROACH Meet face-to-face 2 meetings: CEO of BU + entire BU Explaining reasons why -> be transparent Don‘t push - use good, clear arguments
ARGUMENTS Calculate estimations of pipeline project revenue Show potential of the customer Importance to the company (renewable energy, international expansion, etc.)
SKAM13
23. Our overall opinion GOOD Practical implementation of Ongoing cultivation of customer customer proximity at the Managing relationships Board level
“businesses start with customers“ “if the customers grow we can grow with them“ “we want to be a trusted and sustainable partner“
Recommendations Improve internal co-operation & flow of information BU (esp. sales) & KAMs should work together more closely
Eliminate competitive perception to strengthen empowerment
Improve internal understanding of value added by each role
Further suggestions Ensure to foster promising & talented sales employees Provide training opportunities Anticipate market changes & possible implications for KAM program Develop cross-division incentive system, focusing more on the bigger picture instead of P&L targets
Joana Lemos Lena Luehmann Mariona Prates Cristina Vieites Guillem Messeguer SKAM13