Key Account Management: Organizational Needs

Key account management is a popular practice in sales and marketing. Key Account Management (KAM) involves identifying high-volume, high-growth customers who would require special attention from an organization and developing a sales and marketing organization to meet the needs of these customers.

Many organizations have identified such accounts and have developed ways to meet the requirements of these customers. These customers demand special attention in supply and service design. These types of accounts are very common in business-to-business or business-to-institution marketing.

Relationships with these accounts are very gradual. They don’t happen overnight. Quite a few theoretical models have been developed, but these accounts start with the vendor and vendor becoming familiar with each other and understanding their cultures and business methods. Here, both the supplier and the buyer are usually quite large and have pre-existing cultures that will require adjustment.

Both organizations must also understand each other’s long-term goals, as the relationship may be a long-term partnership that requires a considerable amount of time and capital from both. It is an investment that needs to be carefully examined. Each party must ensure that there is a good foundation for the relationship between them and that it is mutually beneficial in the short and long term.

What are the main characteristics of a Key Account?
1 These Accounts are generally large volumes of product produced by suppliers.
2. They are in a dominant position in the market with a good image.
3. They have a track record of stable financial performance
4. They demand special attention but because of the special attention they retain sellers
5. They are willing to share their technical and business plans with their suppliers and thus allow the supplier to develop with them.

What are the main requirements that the provider organization must meet? (I would prefer to call these vendors key vendors or vendors.)
1. The provider must be able to identify an account manager who can build the relationship between the two organizations.
2. The provider must be willing to commit resources to service this account
3. The provider must be willing to make a long-term commitment to remain a provider of these accounts.
4. The provider must also be willing to invest in any technical development required by these accounts.

What are the main benefits of having key accounts?
1. They provide consistent and predictable captive business.
2. These accounts can generate margin for the development of new products.
3. These customers can help maintain profitability due to economies of scale in marketing.
4. These high profile accounts can function as testimonials for key vendors.

Are there risks associated with key accounts?
1. The main risk is the business status of the key account. If there is any decrease, it would have an impact on key suppliers.
2. Significant assets and resources will be tied to the key account, therefore any reduction in activity may lead to underutilization of assets and resources unless there is sufficient flexibility built into the system.
3. Revenue inflows may also decline with a slowdown in key account activity

Impact of the key account on the sales organization
1.These accounts need dedicated people to coordinate the activity.
2.These Accounts need the participation of the entire organization from both sides. All the people involved must be involved.
3. Such Accounts must not be viewed as a threat by vendors running other accounts.
4. If there are an adequate number of such accounts, a separate organization would be needed to manage these accounts.
5. Additional, separate warehouse and transportation may be required.
6. Dedicated key account managers should be appointed and skills developed

Key accounts are a necessity for most industrial vendors and institutional providers. Given the change in the retail structure, key accounts are also becoming important in retail. It is necessary to develop adequate skills and systems in organizations to manage these accounts.

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