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PROFESSIONAL DEVELOPMENT Key Account Management David Wright, UKLA Director General


Key Account Management (or KAM) is the name given to a method or approach for structuring customers based on their existing or perceived value to the organisation.


The objective of KAM is to grow the business of a customer by meeting more of their needs through the products of a company, both in terms of the breadth of products available but also the depth of relationship between customer and supplier.


By developing a strategic relationship with key customers, the aim would be to demonstrate the value of a supplier/customer relationship over and above that of other suppliers.


The cost of servicing customers can be expensive given the value of supporting customer accounts with human resources and personal interactions. By prioritising those customers who provide the majority of sales volume or value, companies can gain efficiencies in the supply chain and secure economies of scale.


Typically in any KAM approach a view would be taken by the company as to the relative value of the account by way of its size in terms of absolute sales value, its importance in terms of sales volumes or its ability to deliver significant margin if neither value or volume are substantial but the products required by the customer are niche or specialist.


Organisations in adopting a KAM approach would have regard to the existing or potential value that a customer account could deliver by ranking customers in order of importance to the company in terms of value, volume or margin as well as benchmarking those customers that were capable of development.


In benchmarking potential customers a company would look to identify similar characteristics between high value customer accounts and customer accounts that were delivering lower value to the organisation.


44 LUBE MAGAZINE NO.156 APRIL 2020


This could be by way of a customer’s type of business, the sector in which they operate, the stage of economic development they are at, or even their relationships with their own customers.


Any KAM approach should support the strategic objectives of an organisation. By aligning customers with products and margin, an organisation could significantly drive its revenue growth and profitability by focusing on those areas where it has a significant competitive advantage.


At the same time as prioritising customer accounts, an organisation might also look to de-prioritise those that had little current or potential economic value to the organisation by providing low-cost order fulfilment solutions such as automated ordering, remote telephone support, or customer self-management.


In this way companies could strip out the costs of supporting low-value customers that otherwise might prove to be economically unviable to service over the longer-term.


In a survey of larger buyers in 2016, American management consultancy McKinsey reported that the sales experience is twice as important as buyers report, ranking close to price in importance. Also service and support is the most important buying factor, particularly in B2B, twice as important as price.


Although larger customers said they bought on product and price, according to McKinsey, analysis showed that value-added services and the sales experience matter much more.


UKLA will be holding a Key Account Management course in September 2020, for more details visit the link shown below.


LINK www.ukla.org.uk/events


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