Business-to-Business Marketing Key Account Management

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Business-to-Business MarketingKey Account
Management

• Haas School of Business
• UC Berkeley
• Fall 2008
• Week 10
• Zsolt Katona

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Managing Business Customers

• Differences from B2C
• Fewer customers
• Focus on relationship and process benefits
• Can charge different prices
• Big differences in sales volume
• Cost to serve may differ across customers

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Basic Steps

• Segmentation of customers
• -Size
• -Industry
• -Other (CEO role, competition, etc.)
• Distribution of customers (e.g. size)
• -Only one customer
• -One large customer smaller ones
• -A couple of large ones smaller ones
• -Many similar customers
• Evaluate each segments profitability

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Response curve (one account)
margin
Budget
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Serving two Accounts
Account 1
Account 2
Budget
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Smaller Total Budget
Account 1
Account 2
Budget
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Budget Constrained Allocation

• Marginal profit should be the same for all
  accounts
• Smaller accounts are more costly to serve
• More focus on large accounts
• But, if there is competition
• Each supplier focuses on large buyers
• It might be more profitable serving small
  accounts

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Wesco takeaway

• Segmentation of customers
• Profitability in different stages of
  implementation
• Importance of previous relationship
• Allocation of sales force (key account managers)
  
• Applicable to different types of firms (not only
  distributors)

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Industrat
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Prediction Market
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