Key Account Management: Organizational Needs
Key account management is a popular practice in sales and marketing. Key Account Management (KAM) involves the identification of high volume and growth clients that would require special attention from an organization and the development of a marketing and sales organization to meet the needs of these clients.
Many organizations have identified such accounts and developed ways to meet the requirements of these clients. These customers demand special attention in the design of supply and service. These accounts are very common in business-to-business marketing or business-to-institution marketing.
Relationships with these accounts are very gradual. They don’t happen overnight. Quite a few theoretical models have been developed, but these accounts begin when the vendor and vendor become familiar with each other and understand their cultures and business methods. Here both the supplier and the buyer are usually quite large and have pre-existing cultures that will require adjustments.
Both organizations must also understand each other’s long-term goals, as the relationship can be a long-term partnership that requires a considerable amount of time and capital from both of them. It is an investment that must be carefully considered. Each party must ensure that there is a good basis for the relationship between them and it will be mutually beneficial in the short and long term.
What are the main characteristics of a key account?
1 These Accounts are generally large volumes of product that suppliers produce.
2. They are in a leading position in the market with a good image.
3. They have a history of stable financial performance
4. They demand special attention, but given the special attention, they retain providers.
5. They are willing to share their technical and business plans with their suppliers and thus allow the supplier to develop with them.
What are the main requirements that the provider’s organization must meet? (I would rather call these vendors as key vendors or vendors.)
1. The provider must be able to identify an account manager who can build the relationship between the two organizations.
2. The provider must be willing to commit resources to service these accounts.
3. The provider must be willing to make a long-term commitment to remain a provider for these accounts.
4. The supplier must also be willing to invest in any technical development required by these accounts.
What are the main benefits of having key accounts?
They provide a stable and predictable captive business.
2. These accounts can generate margin for the development of new products.
3. These customers can help maintain profitability due to economies of scale in marketing.
These high-profile accounts can serve as testimonials for key vendors.
Are there any risks associated with key accounts?
1. The main risk is the business status of the key account. If there is any decrease, it would have an impact on key vendors.
2. Important assets and resources will be linked to the key account, so any reduction in activity can lead to underutilization of assets and resources unless there is sufficient flexibility built into the system.
3. Revenue inflows can also slow with a slowdown in key account activity.
Impact of the key account on the sales organization
1. These accounts need dedicated people to coordinate the activity.
2. These accounts require the participation of all organizations on both sides. All the people involved must be committed.
3. Such accounts should not be viewed as a threat by sellers who handle other accounts.
4. If there are an adequate number of such accounts, a separate organization would be needed to manage these accounts.
5. Additional, separate storage and transportation may be required.
6. Need to appoint dedicated key account managers and develop skills
Key accounts are a must for most industrial vendors and institutional vendors. Given the change in retail structure, key accounts are also becoming important in retail. It is necessary to develop adequate skills and systems in organizations to manage these accounts.