Relationship management: planning vs. persuading.
Some organizations have adopted or are thinking about key account management (KAM) as a way of deepening important customer relationships; others hope to accomplish this by asking a traditional sales force to be more relationship-focused. A better understanding of some of the specific behaviors that distinguish key account management from traditional selling may be useful to organizations or managers who are considering a relationship management approach.
Sometimes companies take a marketing-oriented approach to getting closer to customers, using customer information systems to design and communicate value propositions that will be attractive to individual customers who fit a certain profile based on demographic and behavioral criteria. These profiles can be quite complex, utilizing hundreds of datapoints on each customer to help make decisions. Traditional salespeople may use information and resources provided by marketers about these targeted customers in order to better persuade them that their organization's solutions to problems are the best.
DEFINING KEY ACCOUNT MANAGEMENT
KAM often differs from traditional sales. Key account managers work with marketers to develop a strategy for individual customers that is consistent with the company's objectives, but they also develop strategies to build relationships with key accounts, deciding which components of a value proposition will be most appealing to them. Key account management relies on contact staff in the field to make strategy decisions, not just to persuade. That is both its strength and its weakness.
In truth, key account managers aren't salespeople, though that does not mean that the purpose of their effort shouldn't result in revenues. The opposite is true! A key account manager's task is to determine strategies for earning higher revenues, while investing the minimal resources necessary to obtain them now and in the future. Therefore, profitable relationships are the goal rather than transaction volume. This goal is accomplished not by problem solving and persuading but by good decision-making and investment of resources allocated toward the relationship.
Producers, even large ones, operate on a continuum of preferences ranging from price-based decisions in some cases to partnership-level preferences for others (they can't have both--that's not a partnership and is a short trip to economic failure). A key account manager must operate on a similar continuum. They don't serve all customers and must determine where they can afford to invest resources (time, money, expertise, organizational or technical contacts) at a partnership level, or how to find alternative transactional services for customers when that's more appropriate. This is a dynamic circumstance, with the preferences changing as rapidly as new information becomes available.
In addition, key account management requires a high level of intelligence, and there's nothing like a human being to understand complex interactions. Humans can process more datapoints than any technology-based system and can react to them as they are occurring. We can use judgment and experience to develop probable and alternative courses of action. Still, research shows that some humans are better than others at being able to utilize higher order thought processes to make decisions about how to approach complex relationships. Not all salespeople possess the ability to maintain a focus on profitability, for example, while making decisions about how to allocate limited support resources in a multi-layered, long-term customer relationship. Some salespeople are better suited to traditional selling where decisions tend to center around which products fit a customer's situation best. Problems occur for organizations that try to turn capable traditional salespeople into key account managers. Not everyone possesses the expertise necessary to balance key account management responsibilities.
Key account managers make decisions consciously. The only way to be successful with this approach is to invest preparation time on the strategy and planning components for each key account. Product knowledge, persuasion and problem solving are the basic tools of traditional salespeople. Planning--customer goal discovery, communication and measures useful for assessing relationship milestones--is the primary tool for a key account manager.
Another difference is that key account managers know their customers' goals, while traditional salespeople know their customers' needs. Where needs are fairly impersonal to discuss, goals require an investment in the relationship. Just because a supplier says to the customer, "I'm here, I'm ready to listen to what you want to accomplish over the next five years," it doesn't mean the customer is ready to talk. Most farmers I know, even the large, business-minded ones, view their goals as private. That means account managers must develop plans for how to put themselves in a position to show a producer that there is value in having a frank discussion about goals.
Key account managers also understand message consistency. The more complex the relationship, the more people there are from the supplier organization who have contact with the account. Whether it's technical people, billing clerks, truck drivers or marketing departments, the messages communicated to a key account must be consistent. So, key account managers lead the charge, coordinating these messages by using their persuasive skills inside their own organizations. Appropriate use of an occasional basket of flowers, box of donuts or kind word are delivered thoughtfully rather than spontaneously. Key account managers coordinate the organization's efforts to deliver the desired message. They work very closely with marketers to develop messages that match up with their company's overall efforts.
With a relationship focus, key account managers must decide what to measure in order to determine that the relationship is progressing. This could mean getting an appointment with an important farm manager, or involving an owner, or sitting in on land rent negotiations, or the chief of that big distributor relationship calling to ask for advice--anything that will significantly demonstrate progress toward objectives for the relationship. Those milestones should be determined in advance, recorded and monitored in the same manner that critical sales volumes are monitored. Often these measurements aren't easy. Relationships are hard to quantify, and sales volumes for key accounts may cross service areas or territories.
WEIGHING THE OPTIONS
As consolidation continues, agribusinesses must utilize a variety of tools to be successful. Perhaps the proportion of key accounts in an organization should result in a similar proportion of key account managers. In other organizations, it may make more sense to ask seasoned veterans to play the roles of both salesperson and key account manager. While it is often difficult to play dual roles, we're creatures of habit after all, sometimes it is necessary to try. In any event, planning some key aspects of the approach and understanding some of the ways key account management differs will help marketing leaders make better decisions and result in a higher likelihood for success.
Key account management is only one form of relationship management, which is a general term used to define approaches that seek to profitably deepen relationships with individual customers. The "key" portion of the title represents that the approach is reserved for customers who meet specific thresholds of size or influence. The management component of the title implies that there will be analysis, planning and strategy tools utilized to accomplish specific relationship objectives. This distinction is not true for every organization that has adopted key account management, of course, The term, "key" could mean key for the entire organization or key for a particular salesperson's territory. Often key account management is really key account selling, where the task is to get more sales from key customers rather than focusing on growth of the relationship.
W. Scott Downey is associate director of the Center for Food and Agricultural Business at Purdue University. He teaches sales and marketing courses and has worked with numerous agribusinesses to improve their approaches to targeted customer relationships.
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|Title Annotation:||Sales/Marketing Insights|
|Author:||Downey, W. Scott|
|Date:||Jan 1, 2005|
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