Rethinking Major Accounts Strategy, part 2d

As we come to a close of the Congruence Model, our last section being the Processes and Systems that allow for all other elements of this model to flow freeely and coherently. I would like to quickly say thank you to some of you who have actually taken the time to phone or email me, and in some cases, post a comment. For this is exactly the kind of forum I was hoping to create. A free exchange of ideas spanning many industries, experiences, and skill levels.

Processes and Systems:

This final element of the congruence model includes systems and processes for planning, managing information flows, identifying opportunities, measuring customer satisfaction, and many others. These systems and processes enable key account managers to effectively develop and implement strategies and plans for individual accounts.

The analysis of the key account helps the key account manager identify the full scope of potential opportunities and threats at the key account. This identification, together with analyses of competitors as well as your own firm, leads to a series of decisions regarding which opportunities to pursue (and which to avoid), which threats to combat, and the particular strategic approaches to pursue.

The key account manager needs to have complete understanding of the fundamentals that constitute the key account: they include organization, ownership, top management, locations, corporate culture, financial performance, and future prospects.

To develop the appropriate depth and breadth of data to conduct these analyses, the manager should attempt to become intimately involved with the key account’s strategic planning process.

The strategic key account analysis comprises four major elements: identification of mission, external analysis, internal analysis, and an analysis of strategic coherence.

These analyses will lead you and your team to a set of planning assumptions on which the key account strategy will be based.

Conclusion:

The material presented here is extensive and even overwhelming, in scope. It takes us back to the 80/20 rule and the value of key accounts. If it would hurt your bottom line to lose more bids, or be of immense value to gain a potential key account, then performing a full-blown situation analysis, isolating planning assumptions, and carefully identifying opportunities and threats is surely worth the effort.

Having a group of dedicated Business Development Managers is a short sighted solution- transactional sales that might increase revenue in the short term, but fail to garner any long term relationships- therefore future contracts and revenue. Because of the very nature of the payment plan BDOs receive, it contributes very little to company loyalty, and that contradicts what most mission statements has set to achieve. Additionally, it should be pointed out, that this approach was tried and abandoned by most  in the early 1990s. BDOs do not provide what most companies stands for and represents in their mission statement and value proposition. They are not the long term solution.

Increasing, or changing the incentive plan, is also a short term band aid, which does not address the core issues. Sure, consultants would be more motivated by additional financial compensations; however, a lot of what a consultant does is very subjective, and therefore hard to quantify. This front-loaded plan will most certainly motivate consultants to be more productive, and may increase utilization ratios across the company, but will fail to establish what you have established as a financial goal- positive, suatainable cash flow. 

Each of these two possible solutions has value to it, but will not on its own solve the current revenue crisis. Both solutions must not be considered as mutually exclusive. I mention this because of the remaining 20/80 of the equation- the other 80% of the customers that provide 20% of your companys sales, or Non Key Accounts.

What should be done next is provide a strategy, combining both the BDO and new incentive plans with the traditional “seller-doer” model to address the non-key accounts, which will increase revenue and position the firm more competitively.

The following publications have been used as references to the prior 4 blogs pertaining to Major Account Management:

  1. Capon, Noel. Management and planning
  2. The Wall Street Journal,
  3. The Economist,

      4.   Ingram, LaForge, Avila, Williams. Sales Management analysis and decision making. Sixth Edition

      5.   Forrester research, January 23, 2003

      6.  http://www.cnn.com/business/marketing

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