Strategic Key Account Management Training | Sales Training in Malaysia | How Do You Define and Selec
Key accounts are customers in a business-to-business market identified by selling companies as of strategic importance. Of course, this doesn’t mean that all large customers are consider key accounts. This it can be seen that in most cases the bulk of accounts will be either small medium enterprises (SMEs) or larger, mid-sized accounts, with only a few very large, powerful customers.
The first question most companies get the wrong answer to is “How many key accounts should we have?” One global telecommunications company claimed to have a thousand! But, as will be seen just from the amount of data alone that has to be collected in order to prepare a plan which aligns the supplier’s resources with the customer’s, it will never be possible to have more than at most, 20 or thereabouts. At one stage, DHL Worldwide had only 18 integrated key accounts globally, and each of these made more revenue and profit than any country managing director.
A little thought about our own private lives will confirm that whilst we each have hundreds of “friends” (from school, university, work, sports, etc.), we have the capacity for real love, warmth, and intimacy with only a few, maybe five or six. In the case of companies, all of whom have limited resources for R&D, IT, HR, logistics, etc., it would be impossible to commit them to more than a handful of projects in carefully selected key accounts.
The criteria for selecting which accounts should go into a company’s key account programme are not set in concrete, but should obviously take account of the potential for growth in future time periods. So, in the main, they will be large and powerful. But frequently there are grounds for including smaller, more influential customers on the basis of the prestige that attaches itself to all their suppliers, or on the basis of future growth. For example, neither Petronas nor AirAsia would have been in many suppliers’ key account programmes 10 years ago.
Even then, however, it isn’t easy. Consider the different structures and setup. Multinationals often have several subsidiary companies around the world, sometimes with the same name, sometimes with different names.
It is clearly inefficient to have several independent key account managers dealing with one group buyer, who can often take advantage of the lack of integration and coordination on the part of the supplier. This often results in lower prices as a result of the buying company’s superior knowledge about overall purchases from the supplying company’s different units. So, the first task of the supplying company is to define precisely the form of the customer. If the customer prefers each of its subsidiaries to buy independently, so be it. But if not, sellers beware!
To conclude this section on how to select and define key accounts:
Do not include too many customers in your key account programme.
Do not put in it only customers you already have good relationships with.
Take account of potential growth in your selection.
Understand the buying preferences of the customer (i.e. centralized or decentralized).
Understand the customer’s own category definitions.
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