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INTRODUCTION TO KEY ACCOUNT MANAGEMENT
HEIRARCHY OF KEY RELATIONSHIPS
PRICING AND NEGOTIATION
RELATIONSHIP MANAGEMENT WITH KEY ACCOUNTS
KEY DECISION MAKERS
INFLUENCING AND NEGOTIATION WITH KEY
INTRODUCTION TO KEY ACCOUNT
• 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
• KAM is considered as a management approach adopted by
• The focus is on building relations rather than on transactions.
The following Table compares characteristics of both
transactional and relational approaches.
Transactional Focus Relational Focus
Single sale Lifetime value of a customer
Product Features Customer satisfaction
Contact with customer only during
Continuous customer contact
Limited point of contact/influence Contact & influence from board
room to shop floor
Salesperson guards his access to
Team approach to inter company
Limited commitment Extensive commitment
Key account management is a strategic business
approach with the objective of ensuring long-term and
sustainable business partnerships with strategically
Key account are those few or small number of customers
which gives large amount of revenue and profit for the
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
• build loyalty and ensure that they feel valued as
• 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
Suppliers relative business strength as seen by
• 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.
• Very important customers (in terms of
• 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.
• 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.
•These customers usually want a
standard product, ‘off the shelf’.
•Price is the key factor in their decision
•The relationship is helpful and
professional, but transactional.
•Do not invest large amounts of time in
the business relationship at this stage.
The key relationship gets converted from basic to integrated
The development of key account relationship seems
comparable with Maslow’s scheme(Maslow’s hierarchy of human
Needs of individual
fulfils personal potential
Receives love and
esteem from fellow
absence of fear
Needs of key relationships
Realization of fullest potential
of both organizations
valued by both side
Reduction of risk,
ability to forecast
The basic relationship requires
the fulfillment of normal
At cooperative stage, are no
longer in constant fear of losing
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.
•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.
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
•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.
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
STEPS IN NEGOTITATION PROCESS
Purchasers must know exactly what they want and their
– Going-In position (these are you desired outcome)
– Fall-back position (when to stop negotiating)
This includes introductions, discussion and conclusion.
This involves implementing the negotiated agreement
• 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
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.
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.
• Organization provides journals ,articles, magazines to KEY
• In case of doctors, the organisation makes them International
• Arranging foreign trips for key account
key Account Management Software, like Kapta, allows Account
Managers build relationships and solve problems for their
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
KEY DECISION MAKERS
• Decision-maker is a person in a large organization who is
responsible for making important decisions : the corporation's
Types of key decision makers
1. The initiator 2. Sales Influencer
3.The Decider4. The Buyer
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
To start, the Initiator compiles a list of requirements and begins
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.
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
They aren’t usually involved in the nitty gritty of the sales decision
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
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
Influencing and Negotiating with the
• Influencing Internal and external customers.
• Internal customers consisting of various departments in the
organization like logistics
• 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
3. the relationship is essentially perceived as “transactional”
• 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
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.
EXAMPLE OF KAM PROCESS
• KAM PROCESS GIVEN BY SHIVAM
• AT ROCHE PHARMACEUTICALS
KEY ACCOUNT MANAGEMENT
HOSPITAL DOCTOR PATIENTS
PROCESS FOR PATIENTS IN KAM
Common Signs & Symptom
Approaches to Family Dr.
Detection of cancer
Family Dr. gives contact of
Organization comes to know through patients that which
medicines are been prescribed by the Dr.
PROCESS FOR HOSPTALS IN KAM
where the patients
E.g. TATA HOSPITAL
Suppose there are 5 Dr. for Breast Cancer in
How many affordable patients goes to that 5
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
• 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
• Type II Process
Organization provides journals ,articles, magazines to Dr. Sudip
• This shows how KEY DECISION IS TAKEN.
• Type III Process
• 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
Through this Sudip Gupta will get his % profit and
will commercially engaged
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
No of patients attended 100 prescribes
No of patients suffering
from breast cancer 20
• Same Process is carried out by Dr. Sachin Almul
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