Key Account Selling

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Key Account Selling
OMEGA COST SAVINGS PROGRAM
Key Account in Action

• The key to long-term
• sales success

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(I) KEY ACCOUNT SELLING

• An introduction

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What is Key Account Selling?

• Definitions
• Why bother?
• What are the long-term benefits?
• What has it to do with 80/20 principle?
• Cautions

What is Key Account Selling?
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Definition of Key Account

• What is a Key Account?
• Key Accounts are the 20 of customers who provide
  80 of your profits
• Key Accounts are defined as the prospects or
  existing customers who have the potential or now
  fall in the 80/20 category.
• Any customer that is of strategic importance to
  your company loss of it of inability to secure
  potential future revenue would cause a
  significant impact.

What is Key Account Selling?
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ACCOUNTS
PROFITS
What is Key Account Selling?
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80/20 principle

• For all corporations, some form of 80/20 rule
  operates.
• e.g. 80 of the firms revenues is supplied by
  20 of its customers.
• If this rule, or a close variant (90/10 75/25),
  operates in the firms customer environment, the
  critical business implication is that these 20
  (or 10 or 25) of customers have an importance
  to the firms long-run future that exceeds that
  of the average customer

What is Key Account Selling?
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A Customers Sales
138K
20
110K
28K
80
What is Key Account Selling?
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Definition of Key Account Selling

• A systematic set of processes in identification
  profiling of key accounts, design and adaptation
  of information-based value-added selling
  strategies, profiling own market positioning for
  high sustainability of growth in sales.

What is Key Account Selling?
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In other words

• Key Account Selling
• Its not just calling higher in an organization,
  but... when we finally get to top management, we
  better have something new to tell them about
  their business that will positively impact their
  profits and ... we better have the data to prove
  it and the support of his / her staff to back us
  up

What is Key Account Selling?
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Without Key Account Selling

• If we cannot demonstrate our value to our top 20
  Key Accounts - in terms of increased profits (for
  them) - we will be classified as a commodity
  supplier and run the risk of losing our business
  to a cut rate competitor

What is Key Account Selling?
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Why bother?

• Market saturation
• Mere relationship selling is a relic of the past
• Bygone is the Single-Point-Contact and good old
  days in sales

What is Key Account Selling?
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Where Have We Been?

• Relationship Based Selling
• Good old boy network
• Friendships with key people
• Take them out to lunch
• Entertainment
• Based on personal relationships
• Weve got the best products, service and people

What is Key Account Selling?
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Where Have We Been?

• Problems
• No one has time to be entertained any more
• Our old friends are retiring
• New, young blood coming in
• They want to make a name for themselves
• Management is forced to look at value
• Credibility of what a sales rep says is fading
• Lots of competitors have good products and
  services and all are less expensive
• Mergers and acquisitions

What is Key Account Selling?
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Where Are We Today?

• Problems
• Our value doesnt make up the difference between
  competitors price and ours
• Competitors are now offering some of the same
  services as we do
• Competitors ask to be just a second source for a
  percent of the business
• Our customers must cut costs in all areas
• Our past strengths are becoming minimum
  requirements
• Our customers are also 80/20 ing, and are
  reducing their number of vendors

What is Key Account Selling?
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Pressures on Distributors current system for
interfacing with customers
Increase in selling costs
Increased competition
The traditional distributors sales force system
Increasing account concentration higher
bargaining power
Affirmative reductions in number of suppliers
Pressure from customers
Changes in the procurement process
Rising importance of procurement
What is Key Account Selling?
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The Changing Nature of Sales Force Activity
Critical internal customer pressures
Sales Force Customers
Key account management
New approaches for small customers
What is Key Account Selling?
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The Distributor (Supplier-Firm) / Customer
(Key-Account) Relationship
VENDOR
QUALITY SUPPLIER
PARTNERSHIP
Deliver Superior Value Products and Services
Add Organizational Value
Commodity Relationship
Increased competitive pressure
Deeper distributor / customer relationship
What is Key Account Selling?
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What are the long-term benefits of running Key
Account program for Omega distributors?

• Economies of scale in selling
• Improved understanding of key accounts goals,
  and requirements
• Enhanced ability to manage complex relationships
• Sustainability of sales
• Increased key account switching costs
• Credible reference for greater market penetration
• Constant feedback to research and development for
  product and service improvements

What is Key Account Selling?
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What is the value of a Key Account program for
the individual key account customer?

• A single point of contact
• Lower overall costs
• Enhanced value with prioritized attention from
  distributor and Omega Division
• Guaranteed delivery when capacity is short
• Long-term relationship
• Joint identification of opportunities and
  solutions to problems in win-win partnership

What is Key Account Selling?
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What has it to do with 80/20 principle?

• Understand who are your 80/20 customers, their
  needs and profile
• Redeployment of sales efforts and resources
• Understand your own ranking, positioning, growth
  potential or 80/20 status in your key customers
  suppliers profile seek improvement adopt
  aggressive growth strategy

What is Key Account Selling?
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Redeployment of sales efforts and resources

• High value customers should be treated
  differently from the average customers
• They should receive a disproportionate share of
  resources and are worthy of greater managerial
  attention

What is Key Account Selling?
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How about the small customers?

• 20 of your firms revenues are derived from 80
  of its customers.
• Stop serving small customers?
• Identify less expensive methods for the firm to
  deal with these accounts

What is Key Account Selling?
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Cautions for Key Account Management

• Too many eggs in one basket
• Insufficient benefits to the distributor
• Insufficient benefits to the potential key
  account
• Limitation of opportunities
• Cost and Bureaucracy
• Significant organizational change

What is Key Account Selling?
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Selecting Key Accounts - Criteria

• Direct Sales Revenue and Profit
• Current Sales Revenue
• Current Profits
• Future Sales Volume and Profit
• Financial Security
• Acquisition Potential
• Key account effort on firms likely to be acquired
  may be wasted if the acquiring organization is
  given the dominant procurement responsibility
• Selecting potential acquirers as key accounts may
  bring long-run benefits

What is Key Account Selling?
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Selecting Key Accounts - Criteria

• Organizational Interrelationships
• Coherence with firm strategy
• Key account selection is a strategy
  implementation decision
• Supplier valued by the customer
• Customer believes, or can be persuaded, that
  distributor can meet its needs over the long run
• Cultural Fit

What is Key Account Selling?
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Selecting Key Accounts - Criteria

• Indirect Potential Volume Profits
• Strategic Key Account
• Opinion Leadership
• Example Leading financial services group ICICI
  was the 1st Indian company listed on NYSE. One
  of ICICIs key accounts is Infosys, Indias
  fastest growing software company, well-known for
  its commercial success, product quality, and high
  ethical standards, and the first Indian company
  listed on NASDAQ. Although ICICI transacts
  little business with Infosys, it regards as a key
  account because of its exemplary reputation.

What is Key Account Selling?
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Compensatory Approach for Calculating Key Account
Attractiveness
What is Key Account Selling?
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Key Account Managers Time Allocation ()
What is Key Account Selling?
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(II) KEY ACCOUNT MANAGEMENT MODEL

• Situation Analysis Strategy

COMING SOON!