Key Account Management (KAM) is a professional sales approach which involves the supplier and client’s business working together to gain understanding of each others business and achieve common goals. Identifying your key clients allows you to then work with their Architects, Engineers and Contractors, taking a more holistic approach to your specification strategy.
This is not a simple Buyer-Seller relationship, you need to involve people from all aspects of your business and work together with your client’s business to find better ways of doing things. Cost savings are achieved by re-engineering processes, reducing inventory and avoiding unnecessary activity. Cost savings are also achieved as a result of a better understanding of each others business, and importantly, are shared by both parties.
Key Account Management allows you to deliver what you customer truly wants.
Why should you offer Key Account Management?
Unless your company has the lowest cost base in its sector it cannot expect to succeed with a policy of cutting prices. The alternative is to offer your customers best value. Key Account Management will help you to understand your client’s business, propose new ways of doing things and build stronger business relationships. Making it much harder for your competitors to sell to your customers.
By entering into KAM relationships you will:
- build stronger relationships with your customers
- gain an advantage over your competitors
- reduce the issue of price (because of the value you provide)
- encourage customer loyalty
Who should you offer Key Account Management to?
Because of its complexity KAM is expensive to implement and can only be applied to a select (key) number of clients. They need to be chosen carefully. The client’s organisation must be able to understand the process and have the desire to participate. They must also have the level of business, or potential, to make the cost of the exercise worthwhile.
Select your larger client’s with growth potential, those that you value and want to continue working with and propose that you work with them to take costs out of their business. It will help you to build stronger business relationships and make it much harder for your competitors to secure any of your business.
This is a win-win approach. Both companies should benefit from the savings and once you have worked with your key client’s, to find opportunities to take out cost, you can apply them to other customers, making your business offering more competitive without the need to reduce margins.
The benefits of Key Account Management are:
- Achievement of cost benefits for both you and your customers
- Streamlined business processes
- Stronger business relationships, enabling greater repeat orders
- Lessons that can be applied across your customer base
- Improved customer satisfaction
What to consider when applying Key Account Management – Key Points
As a first step you need to identify clients who have the potential to use large volumes of your product (e.g. retailers, education, healthcare) then you need to learn more about their business and the environment they work in, to understand how you can help take cost out, such as:
- New supply arrangements
- Offering them re-engineered or even new products
- Suggest new ways that they can work using your product
To be effective it is important to think outside the box. For example, one of the NHS’s biggest costs is people. Come up with a product or system that allows staff to work more effectively and the savings you contribute could potentially be far greater than the cost of your solution.
Once you have taken these steps you can work with the client’s Architects, Engineers and Contractors to ensure you support correct design, good product availability and correct installation.