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Key account management

management of key accounts of an organisation. KAM portfolio. hierarchy of key relationships.pricing and negotiation.relationship management with key accounts.decision makers.

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Key account management

  1. 1. KEY ACCOUNT MANAGEMENT Chaitrali Gijare Dhanshree Chordiya Himani Dhande
  3. 3. INTRODUCTION TO KEY ACCOUNT MANAGEMENT • In 21st century, customer focused businesses attempt to identify few customers from the portfolio of their customer base and try to establish and nurture long term fruitful relationships. • Many companies have created positions of key account managers for this.
  4. 4. • KAM is considered as a management approach adopted by selling company. • The focus is on building relations rather than on transactions. The following Table compares characteristics of both transactional and relational approaches.
  5. 5. Transactional Focus Relational Focus Single sale Lifetime value of a customer Product Product Features Customer satisfaction Contact with customer only during sale Continuous customer contact Limited point of contact/influence Contact & influence from board room to shop floor Salesperson guards his access to customer Team approach to inter company communication Limited commitment Extensive commitment
  6. 6. DEFINITION Key account management is a strategic business approach with the objective of ensuring long-term and sustainable business partnerships with strategically important customers. Key account are those few or small number of customers which gives large amount of revenue and profit for the company.
  7. 7. Why would you want to manage Key Accounts? Key accounts are chosen because they are a key to the future of your business. You would manage your key accounts so that you can : • maintain existing contracts and build new revenue and sales opportunities • build loyalty and ensure that they feel valued as customers • understand their business needs and future strategy so that you can work out how to meet their future needs. Loyalty is rare, if you find it, keep it
  8. 8. Strategic Customers Status Customers Star Customers Streamline Customers High Low High Low KeyAccount Attractiveness Suppliers relative business strength as seen by customers KAM PORTFOLIO
  9. 9. CATEGORY DESCRIPTION 1. Strategic Customers • Very important customers, but the relationship has developed still further, to the level of partnership. The relationship is ‘win-win’, both sides have recognized the benefits they gain from working together. • Customers buy not on price but on the added value derived from being in partnership with the supplier. • The range of contacts is very broad and joint plans for the future are in place. • Products and services are developed side-by-side with the customer. Because of their large size and the level of resource which they absorb, only a few customers fall into this category.
  10. 10. 2. Status Customers • Very important customers (in terms of value). • Commit to security of supply and offer products and services which are tailored to the customer’s particular needs. • Price is less important in the customer’s choice of supplier. • Both parties have some goals in common. The two organizations have made some form of commitment to each other. • Invest as necessary in these customers in order to continue the business relationship for mutual advantage, but do not over invest.
  11. 11. 3. Star Customers • Price is still a major factor in the decision to buy but security of supply is very important and so is service. • Spend more time with some of these customers and aim to develop a deeper relationship with them in time. 4. Streamline Customers •These customers usually want a standard product, ‘off the shelf’. •Price is the key factor in their decision to buy. •The relationship is helpful and professional, but transactional. •Do not invest large amounts of time in the business relationship at this stage.
  13. 13. The key relationship gets converted from basic to integrated KAM . The development of key account relationship seems comparable with Maslow’s scheme(Maslow’s hierarchy of human needs).
  14. 14. Integrated Interdependent Cooperative Basic Needs of individual Achieves self-actualization, fulfils personal potential Receives love and esteem from fellow human being Feels safe, absence of fear Basic physiologic al needs Needs of key relationships Realization of fullest potential of both organizations Confidence in relationship, stable, valued by both side Reduction of risk, ability to forecast Operational, efficient transaction
  15. 15. The basic relationship requires the fulfillment of normal sustainable trading. At cooperative stage, are no longer in constant fear of losing relationship. The interdependent stages reflects both companies confidence and high regard for each other. At the integrated level,the 2 company act as single entity without internal barriers.
  16. 16. •At the cooperative stage, equivalent to Maslow’s need for safety, relationships reach a point where the parties are, at least, no longer in constant fear of losing the relationship. Supplier and customer act in a cooperative way, rather than being constantly suspicious of or threatening towards each other. As the companies get to know each other better, they begin to understand each other’s modus operandi and can predict the future, up to a point. It becomes possible to discuss forecasts of demand. •Basic: At the lowest level, which can be compared with the individual’s physiological needs, the basic relationship requires the fulfillment of normal sustainable trading as a minimum; i.e. the efficient handling of transactions (orders, deliveries, payments and so on). If your company cannot manage ordinary transactions adequately it will, quite rightly, have little success in developing the business further
  17. 17. •At the highest or integrated level, the relationship is so close that the two companies act as a single entity without internal barriers although, by definition, it stops short of being an actual, legal merger. The companies trust each other and do not feel the need to operate protective measures against opportunism. The relationship can now be at its most creative, using the potential of both partners to develop innovative, mould-breaking strategies. •The interdependent stage is perhaps equivalent to Maslow’s need for ‘love and esteem’. Both companies recognize their on- going relationship and this is reflected in their confidence and high regard for each other. Since neither company anticipates or considers termination of the relationship, both can adopt behaviour appropriate to longer term business development.
  18. 18. PRICING AND NEGOTIATION Negotiation as “A process by which parties with mutual interest try to reach an agreement about something.” Although a negotiation can involve just one issue, often it involves several issues ,such as service, delivery and payment terms.
  20. 20. • Preparation: Purchasers must know exactly what they want and their positions: – Going-In position (these are you desired outcome) – Fall-back position (when to stop negotiating) • Participation: This includes introductions, discussion and conclusion. • Follow-up: This involves implementing the negotiated agreement
  21. 21. APPROACHES • Win-Win Approach: Both the parties get some or all of what they want • Win-Lost Approach: one party gets what they want, while the other party does not
  22. 22. RELATIONSHIP MANAGMENT Managing the relationship with the customer an Account team (A team) is needed to manage the strategic accounts. There are Complex customer and this team engage with them strategically on a multiyear basis. So a right kind of a person is required to manage the relationships. increase in number of corporate hospitals will result in a structure where players will not only require a hospital sales force, but also the key account managers to handle relationships with wider set of stakeholders like purchase managers, administrative staff, and nursing staff.
  23. 23. Building sustainable relationships with customers for the long term This is the ultimate goal of key account management and the main value of investing so much time and effort. It should be one of the main objectives for the KAM to secure a long-term business partner relationship that can endure short-term difficulties, e.g. price rises, operational problems, industrial disputes, quality failures and so on. To maintain consistency in your allocation of key account managers to customers (and also their teams). Allocating well trained and highly regarded professional experts also sends a message to the key account customer that they are valued by your business.
  24. 24. Industrial disputes Quality failure Price rise
  25. 25. • Organization provides journals ,articles, magazines to KEY ACCOUNTS • In case of doctors, the organisation makes them International speakers. • Arranging foreign trips for key account
  26. 26. key Account Management Software, like Kapta, allows Account Managers build relationships and solve problems for their customers. KAM software provides visibility into the relationship dynamics, suggests ways to strengthen key relationships, and shows a holistic view of complex, multi-team, multi-stakeholder dynamics. Software used to manage key account relationships confirmation/
  27. 27. KEY DECISION MAKERS • Decision-maker is a person in a large organization who is responsible for making important decisions : the corporation's key decision-makers.
  28. 28. Types of key decision makers 1. The initiator 2. Sales Influencer 5. User 3.The Decider4. The Buyer
  29. 29. The Initiator This is the person who decides to start the buying process. He or she could potentially be at the director or senior VP level They’ve likely been put in charge of solving a business challenge, with the assignment coming from someone higher up in management To start, the Initiator compiles a list of requirements and begins the search
  30. 30. Sales influencer The person who tries to convince others they need the product. The Sales Influencer is usually an end user and so has a vested interest in getting the “right” product in place. They have been up close and personal with the inefficiencies in the business, likely on a regular basis.
  31. 31. THE DECIDER This is the person who makes the final decision to purchase—or not. The Decider is obviously the most important person in the sales decision making process. They might be the director of a department and their team will be the one to use your product, should you make the sale. The Decider might wear two hats They can also be Initiator, setting up the whole process to find and decide upon a solution. I’m the decider and I decide what is best
  32. 32. THE BUYER They aren’t usually involved in the nitty gritty of the sales decision making process. Once the decision has been made, they’ll sign off on it but other than that, they put all of their trust into the Decider to make the best decision.
  33. 33. THE USER The person who will be using your product whether they had a say in the buying process or not. To the user, the interface is product
  34. 34. Key decision makers in hospitals
  35. 35. Influencing and Negotiating with the key account • Influencing Internal and external customers. • Internal customers consisting of various departments in the organization like logistics
  36. 36. • The most effective Key Account negotiations result from: 1. mutual respect 2. creating synergies for both sides 3. the wish to progress the relationship 4. rational people working together for mutual satisfaction The least effective Key Account negotiations arise when: 1. there is a singular wish to win at the expense of the other party 2. limited planning and creative thinking time has been invested beforehand 3. the relationship is essentially perceived as “transactional”
  37. 37. COCA-COLA • As per the associate director of key account management of coca-cola, communication is the key for influencing the external as well as internal customers to convince them to follow and implement the idea which is a difficult task. They focus on logistics because they believe that if they produce insufficient volume then the logistics wont have anything for the production and ultimately they wont be able to implement their ideas to the customers. How is negotiation process done They first listen to the customers that what are their needs, objective and long term prospective , to make sure that on the short term they are aligning those strategies and their strategies to fid out the growth periods. Investment needs and after this it becomes easy to negotiate with the customer.
  40. 40. PROCESS FOR PATIENTS IN KAM Common Signs & Symptom Approaches to Family Dr. Detection of cancer Confirmation Family Dr. gives contact of Oncologist Organization comes to know through patients that which medicines are been prescribed by the Dr.
  41. 41. PROCESS FOR HOSPTALS IN KAM (NON-COMMERCIAL) • Government/NGO Affordable Non affordable Segmentation from where the patients are coming
  42. 42. E.g. TATA HOSPITAL Suppose there are 5 Dr. for Breast Cancer in TATA How many affordable patients goes to that 5 individual Dr. Find out which Dr. prescribes innovator drugs Dr. Sudip Gupta prescribes the innovator drug If Dr.Sudip Gupta prescribes innovator medicine,the key account manager will engage with Dr. Type I process of Maintaining Key Account Relationship
  43. 43. • Now through segmentation we came to know that most of the patient come from Dadar • So we will request Sudip Gupta to give lectures about our product in Gynecology association in that area. • Collaboration with other hospital or NGO. • Now other hospital/NGO prescribes our product through reference of Sudip Gupta • i.e. Here Sudip Gupta is a SALES INFLUENCER/KEY ACCOUNT
  44. 44. • Type II Process Organization provides journals ,articles, magazines to Dr. Sudip Gupta • This shows how KEY DECISION IS TAKEN. • Type III Process International speakers
  45. 45. Commercial • Type I Process Dr. Sudip Gupta wants money Organization will make Sudip Gupta a speaker for marketing our product So for this process Dr. Sudip Gupta is paid around 1 Lakh(i.e. honorarium) Through this Sudip Gupta will get his % profit and will commercially engaged
  46. 46. • Type II process Arrange foreign trips.
  47. 47. Private Hospitals (Non commercial) • From above 5 Dr, we will analyze which is doctor is attached to different private hospitals. e.g. through analysis we came to know • Dr. Suresh Advani has many patients • Suppose No of patients attended 100 prescribes No of patients suffering from breast cancer 20 Affordable 10 prescribes • Same Process is carried out by Dr. Sachin Almul Innovator drug of our organization
  48. 48. From above process , we analyze this Dr. i.e. At which stage of cancer does the Dr. prescribes our product. If he prescribes at first stage , he will come to know that our product is effective and thus he will prescribe our product at every stage Therefore Product sale increases. i.e. Win –Win Approach Same process for commercial oriented that is been shown before like Sudip Gupta.
  49. 49. REFERENCES • • decision-maker/ •
  50. 50. THANK YOU!!!