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Key Account Management (KAM): Large Global Accounts

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DOCUMENT DESCRIPTION
Key accounts represent a major chunk of revenue and margin for most suppliers. Therefore, losing an important customer can have negative repercussions on organizational growth.

The significance of key accounts is urging top B2B companies to revisit their Key Account Management (KAM) approaches. Additionally, the increasing level of sophistication of the purchase process being adopted--such as, centralized procurement, competitive bidding and auctions, and laborious negotiations--by large buyers is a crucial element for B2B companies to consider to win large accounts.

Suppliers that face declining win rates and margins with key accounts often present fairly commoditized offerings and rely more on price to win large procurement opportunities.

This presentation deliberates on the 4 drivers of growth that the suppliers can utilize to develop best-in-class key Account Management practices and increase their large contract win ratios. These drivers are actually the 4 critical imperatives that leading organizations do to fuel their growth:

1. Quantified Value Proposition (QVP)
2. Value-based Selling
3. Coordinated Account Management
4. Negotiation Preparation

The slide deck also includes some slide templates for you to use in your own business presentations.

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Key Account Management (KAM): Large Global Accounts

  1. 1. This is an exclusive document to the FlevyPro community - http://flevy.com/pro Framework Primer Key Account Management (KAM): Large Global Accounts Presentation created by 1 Quantified Value Proposition (QVP) Value-based Selling Coordinated Account Management Negotiation Preparation 2 3 4
  2. 2. 2This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview What’s Important Key Principles Drivers of Growth Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  3. 3. 3This document is an exclusive document available to FlevyPro members - http://flevy.com/pro This framework presents the 4 drivers of growth that are extremely valuable in deal negotiations and managing large, global accounts Presentation Overview Suppliers that face declining win rates and margins with key accounts often present fairly commoditized offerings and rely more on price to win large procurement opportunities. Key accounts represent a major chunk of revenue and margin for most suppliers. Therefore, losing an important customer can have negative repercussions on organizational growth. The significance of key accounts is urging top B2B companies to revisit their Key Account Management (KAM) approaches. Additionally, the increasing level of sophistication of the purchase process being adopted—such as, centralized procurement, competitive bidding and auctions, and laborious negotiations—by large buyers is a crucial element for B2B companies to consider to win large accounts. This presentation deliberates on the 4 drivers of growth that the suppliers can utilize to develop best-in-class key Account Management practices and increase their large contract win ratios. These drivers are actually the 4 critical imperatives that leading organizations do to fuel their growth: The slide deck also includes some slide templates for you to use in your own business presentations. 1 Quantified Value Proposition (QVP) 2 Value-based Selling 3 Coordinated Account Management 4 Negotiation Preparation The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  4. 4. 4This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview What’s Important Key Principles Drivers of Growth Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  5. 5. 5This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Large accounts make up a significant portion of business for B2B companies (~30-50% of revenue and margin) Appreciation of buyers’ behaviors and buying trends facilitates the B2B companies to sell better. What's Important – Stated vs. Derived Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 Key accounts represent a major chunk of revenue and margin for most suppliers. Therefore, losing an important customer can have negative repercussions on organizational growth. The significance of key accounts is urging top B2B companies to revisit their Key Account Management (KAM) approaches. Additionally, the increasing level of sophistication of the purchase process being adopted—such as, centralized procurement, competitive bidding and auctions, and laborious negotiations—by large buyers is a crucial element for B2B companies to consider to win large accounts. A 2016 McKinsey survey of over 1,000 large buyers across industries asked them “what was important in their purchasing decisions (“stated importance”). The large buyers suggested price, product features, and reliability as the most important factors, even more so than sales and service experience. However, detailed analysis of data into the actual purchasing decisions by buyers revealed that sales and service experience actually did count: 2016 LARGE-BUYER SURVEY Average importance of purchasing factors, in percent Derived importance links customer responses with their purchases by supplier to show what actually drives the purchasing decision. Product reliability Price Product features Service & support Sales experience 100% The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  6. 6. 6This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Suppliers’ sales, service, and support capabilities mean a lot to large purchasers Complex supply chains, production needs, and downstream customers make it more important for large businesses to find the right suppliers than low price. What's Important – Key Insights Investigations into the real-world procurement processes, where the suggested most-important factors in a buying decision were compared with the actual purchasing decisions (“derived importance”) of large organizations, revealed interesting results. The comparison drew 2 key insights: Service and support is the most important buying factor—even more important than price (twice as important).2 Senior level customer teams are often involved in procurement decisions, which necessitates the need for inclusion of people possessing high-quality management and sales skills while serving key accounts. The sales experience is much more significant (2 times more) than what buyers state—almost equal to the importance of price. 1 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  7. 7. 7This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview What’s Important Key Principles Drivers of Growth Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  8. 8. 8This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Today’s complex procurement environment necessitates suppliers to manage their large accounts effectively These strategic Account Management principles allow the sellers to implement a systematized process to manage their key accounts. Key Principles – Overview In future, with intensifying sophistication of the procurement process at large businesses, the buyers will keep trying to cut costs and gain significant advantage while negotiating deals. However, the suppliers can create a win-win situation by providing first-rate, key Account Management (KAM) sales and service. This enables them to develop their key accounts into major opportunities of growth. Teams that are most successful in managing big deals follow a consistent set of Account Management principles: 1 2 3 4 Use standardized sales process Be selective on deals Rely on facts, not emotions Focus on post- deal learning Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  9. 9. 9This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Effective management of strategic accounts warrants adopting a stringent, fact-based deal selection criteria Top firms organize quarterly sessions to review the most important deals and then organize and share the insights with deal teams. Key Principles – Details Since strategic accounts are quite resource intensive, big-deal teams need to be fairly selective of the deals they pursue. They should analyze a number of factors prior to finalizing the strategic deals—such as margin thresholds, likelihood of winning, and client willingness to partner. Successful key account managers consider including stage gates with go/no go points for their companies to withdraw from unfruitful or hard to win deals. They, rather, invest in more lucrative deals. These strategic deals should be based on sound data analysis. Price and margin sensitivities, competitive insights, and historical account performance data are critical in big-deal decisions. It is important for the suppliers to carry out a thorough investigation of every deal to learn about their customers. Use standardized sales process Be selective on deals Rely on facts, not emotions Focus on post- deal learning 1 2 3 4 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  10. 10. 10This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview What’s Important Key Principles Drivers of Growth Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  11. 11. 11This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Sellers can develop best-in-class KAM practices by appreciating and taking advantage of the 4 drivers of growth By mastering the drivers of growth, organizations can significantly improve their large account revenues. 4 Drivers of Growth – Overview Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 A key role of the strategic Account Management team is to manage the entire customer experience, from front-end sales to ongoing service and support. This focus facilitates the organizations in enhancing strategic account revenue (by 5 to 10% or more) and sustaining margins. Leading organizations utilize the 4 growth drivers in key Account Management to increase their win rates and fuel growth: 1 Quantified Value Proposition (QVP) Value-based Selling Coordinated Account Management Negotiation Preparation 2 3 4 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  12. 12. 12This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Most sellers don’t quantify the values of their service—a clearly outlined, quantified value proposition (QVP) is a definite metrics of success Quantifying value proposition helps develop key accounts as the growth engine for the business. Drivers of Growth – Quantified Value Proposition (QVP) Over-reliance on price to secure large accounts isn’t sufficient in today’s challenging environment. This leads to declining win rates and margins. Sellers and suppliers should implement the quantification of value proposition for the products and services they offer. QVP offers various benefits to the suppliers, including: Allows the sales teams to focus on engaging business leaders concerned with the overall profit and loss rather than price. Service offerings—e.g., index-based pricing options, on-site inventory management, and custom product bundles—differentiate companies from the rivals. Positively impacts winning and sustaining customers. Significantly enhances strategic account margins. Creates advantage in this low-margin industry. Quantified Value Proposition (QVP) A few sellers have taken the QVP to the next level where they link a portion or all of their fees to value delivery. Not many organizations have mastered this risky approach, and thus it is another major differentiator in key account sales. DESCRIPTIONGROWTH DRIVER The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  13. 13. 13This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Value-based Selling Value-based sales are focused on a shared understanding of the value of the product or service Successful KAM formalizes cross-functional teams by clearly outlining the expectations from them, monitoring progress, and gauging the effectiveness of various roles. Drivers of Growth – Value-based Selling Most organizations desire to be the primary suppliers of large accounts provided they can sell on value. But, not many sales people are proficient in value selling. To train the existing sales people to become value sellers, leadership needs to accomplish the following: Equipping sales teams with ready-to-use quantified value propositions. Updating the QVPs by automating templates and data collection. Financing frequent trainings and in-field coaching of sales teams on using the QVPs appropriately. Creating cross-functional sales teams—comprising of people from R&D, sales, marketing, and senior executives—to recognize the full value potential of a strategic account. Assigning the best reps to the highest-potential accounts: Many teams are reluctant to realign key-account coverage for fear of disrupting existing relationships, but in our experience, the risks are minimal and the upside is significant. Matching the best value sellers with the biggest opportunities can yield quick dividends. DESCRIPTIONGROWTH DRIVER The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  14. 14. 14This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Coordinated Account Management Disjointed relationships, lack of follow-up, multiple point of contact, and poor communication are the biggest concerns for large buyers Digital collaboration tools help grow opportunity pipeline, win rates, and customer satisfaction. Drivers of Growth – Coordinated Account Management Poor coordination across business units of large organization is a common issue. A sales unit in a certain geography may propose a price increase without informing other regions, irritating the customer. Likewise, suppliers often miss large deals owing to lack of resource alignment across silos. These challenges can be tackled by adhering to the following key steps: Appoint a common account leader to run a cross-functional sales team with agents across key regions globally. Create a key account with clearly defined owners, plans, deadlines, and team communication schedule. Evaluate performance across geographies. Incentivize performance and alignment between the teams. Deploy digital collaboration (Salesforce, CRM) tools to coordinate teams. DESCRIPTIONGROWTH DRIVER The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  15. 15. 15This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Negotiation Preparation Price is a major concern for buyers alongside sales and service These negotiation preparation guidelines aid the suppliers in competing with large procurement organizations, accurately pricing the deals, and increasing margins. Drivers of Growth – Negotiation Preparation Most large buyers lead the negotiation process, as they spend a considerable time understanding supplier costs and getting ready for a large contract discussion. They are now using robust methods to carry out large deals—issuing RFPs, inducting sourcing specialists, and seeking cost transparency from suppliers. Most suppliers lack the same rigor and expertise to win negotiations. For instance, they: Lack standardized deal processes and feel the large deals as a burden. Enter bad deals due to inadequate preparation and a mindset to win by hook or crook. Fail to improve pricing or launch new products. The suppliers can leverage negotiations on large deals to their benefit by: Creating big deal teams. Establishing negotiation strategies and standardized tools for strategic deals. Evaluating industry cost structures and gathering market insights. Modeling scenarios to understand and quantify the buyer’s alternatives, prior to the actual negotiations. DESCRIPTIONGROWTH DRIVER The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  16. 16. 16This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview What’s Important Key Principles Drivers of Growth Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  17. 17. 17This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. KAM Key Principles – TEMPLATE 1 2 3 4 Use standardized sales process Be selective on deals Rely on facts, not emotions Focus on post- deal learning • Insert filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  18. 18. 18This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. KAM Key Principles – TEMPLATE ALTERNATE Use standardized sales process 2 Be selective on deals 1 Rely on facts, not emotions 3 Focus on post- deal learning 4 • Insert filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  19. 19. 19This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. KAM 4 Drivers of Growth – TEMPLATE Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 1 Quantified Value Proposition (QVP) Value-based Selling Coordinated Account Management Negotiation Preparation 2 3 4 • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  20. 20. 20This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. KAM 4 Drivers of Growth – TEMPLATE ALTERNATE Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 Quantified Value Proposition (QVP) Value-based Selling Negotiation Preparation Coordinated Account Management 1 3 24 • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text.The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  21. 21. 21This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. KAM 4 Drivers of Growth – TEMPLATE ALTERNATE Source: How to Unlock Growth in the Largest Accounts, McKinsey, 2016 Quantified Value Proposition (QVP) Value-based Selling Coordinated Account Management Negotiation Preparation 1 2 3 4 • Insert filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. •Insert filler text, filler text, filler text, filler text. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  22. 22. 22This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Download 100s of similar frameworks from the FlevyPro Library: https://flevy.com/pro/library/frameworks The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  23. 23. 23This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Need more frameworks? Download our Complete Business Frameworks Reference Guide, a 350+ slide compilation of 50+ frameworks, on Flevy The Complete Business Frameworks Reference Guide is a best selling document on Flevy. It is 350+ slides--covering 50+ common management consulting frameworks and methodologies. A summary is provided for each business framework. The frameworks in this deck span across Corporate Strategy, Sales, Marketing, Operations, Organization, Change Management, and Finance. This reference guide is great for those who need a refresher on common frameworks, as well as be introduced and learn new useful frameworks. You can find this document here: http://flevy.com/browse/business-document/complete- consulting-frameworks-toolkit-644 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  24. 24. 24This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/key-account-management-kam-large global-accounts-3765
  25. 25. 1 Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com

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