Key Account Management and Planning: The Comprehensive Handbook for Managing Your Company's Most Important Strategic Asset - Hardcover

Capon, Noel

Hardcover

ISBN 10: 074321188X ISBN 13: 9780743211888

Publisher: Free Press, 2001

Synopsis

A practical and timely handbook for modern-day sales managers explains how to transform key accounts, in both domestic and global markets, into business success, providing step-by-step guidelines for developing strategy, managing a sales force, analyzing key accounts, and more. 12,500 first printing.

About this title

About the Author

Noel Capon is Professor of Business at Columbia University's Graduate School of Business. He is the director for Columbia's executive training programs in Key Account Management, Sales Management, and Competitive Marketing Strategy. He also teaches and consults to major corporations throughout the world. With James M. Hulbert, he coauthored the recently published Marketing Management in the 21st Century. Visit Professor Capon online at www.keyaccountmanagement.com.

Reviews

Capon, an academic and consultant, provides a framework for managing key accounts, which he describes as a company's single most important asset, since these accounts produce the major share of sales revenue. He offers a planning process that aids in developing strategies to enhance profitable results from these prized customer relationships. Central to his thesis is his congruence model for key account management, which has the following four elements--identifying key accounts; organizing and managing key accounts; identifying, managing, and rewarding account managers; and maintaining human and information based systems and processes. Capon also addresses the issues of key account-management partnering and global account management. The book concludes with exercises for developing key account management skills and an appendix containing a guide for developing a key account plan. This book could serve as a textbook for the author's executive training programs in key account-management and clearly is an infomercial for his consulting activities. Mary Whaley
Copyright © American Library Association. All rights reserved

Excerpt. © Reprinted by permission. All rights reserved.

Chapter One: The Rationale for Key Account Management

On August 21, 1998, it was announced that telecommunications supplier Ciena would not be receiving an expected $100 million worth of business from key account AT&T. As a direct result of this news, Ciena's stock price plunged 45%, from $56.78 to $31.25. On August 28, a planned merger between Ciena and Tellabs based on a one-for-one stock swap that valued Ciena at $7.3 billion was being renegotiated at $4.7 billion. Shortly afterwards, Ciena announced the loss of a $25 million sale to key account Digital Teleport. On September 14, the merger was abandoned with Ciena's share price at $13.19.

On January 4, 2000, General Motors announced that it was ceasing participation in B2B auctions managed by Freemarkets Inc. Freemarkets' share price dropped from a high of $370 that week to $164, two weeks later.

In August 2000, AT&T's stock price hit a fifty-two-week low. An article in The Wall Street Journal attributed the decline to problems in the Business Services Group, responsible for over half of AT&T's 1999 revenues and profits. Among the causes: lack of service to major customers in part due to severe downsizing and layoffs to meet short-term profit targets.

Securing and retaining customers is increasingly recognized as the fundamental requirement for improving shareholder value, the primary objective for many corporations around the world. All firms develop their own methods of communicating with customers, but typically in business-to-business marketing, an on-the-road sales force is a critical element in this process. However, in recent years significant pressure has been placed upon the traditional sales force system. As powerful forces have raised the perceived importance of sales and customer management, many firms are reevaluating their sales force processes. As a result, the traditional sales force system is fragmenting and many corporations are developing key account management programs as a new way of organizational life.

In this chapter, we discuss traditional communication systems, the pressures facing them, and the nature of the resulting fragmentation. We see that the development of key account management is a natural response to these pressures, with benefits for both supplier firms and key accounts. We also raise a series of cautions. Finally we present a structure for guiding those firms wishing to invest in key account management; this also doubles as the structure of the book.

ORGANIZATIONAL OBJECTIVES

The critical objective for most publicly held corporations is increased shareholder value. To increase shareholder value, the organization must survive and grow. However, survival and growth are possible only if the firm both makes profits today and is perceived as likely to make profits tomorrow. Profits are earned only when the firm outperforms its competitors in securing and retaining customers.

Over the years, corporations have developed numerous forms of nonpersonal and interpersonal communications in attempts to influence both the purchase and recommendation behavior of current and potential customers. Nonpersonal communication embraces such methods as advertising, direct mail, publicity and public relations, and, more recently, the Internet, in which an individual or group within the firm typically controls the firm's message. Interpersonal communication, by contrast, has traditionally been largely under the control of individual sales representatives. In many industries, the sales force is the principal vehicle for contact between the supplier firm and its customers, and has historically enjoyed the sole responsibility for managing long-term customer relationships.

THE TRADITIONAL SALES FORCE SYSTEM

The traditional sales force system typically comprises a hierarchical organization in which a number of "on-the-road" salespeople report to a first-line sales manager. First-line managers in turn report to more senior managers, for example, regional or zone, ultimately to a national sales manager. The number of managerial levels varies from firm to firm and depends on such factors as sales force size and management's philosophy regarding decentralization and salesperson empowerment. In recent years, downsizing efforts have led to increases in managerial spans of control and a flattening of the hierarchy in many sales organizations.

Furthermore, in any particular sales force, the responsibilities of individual salespeople differ according to whether or not they are specialized in their tasks and the type and degree of specialization -- for example, by product, market segment, channel member, or maintenance-new business. Specialization often makes more effective use of individual salespeople but also leads to reduced flexibility and increased sales force costs. The decision of whether or not to specialize the sales force and what form of specialization to employ is typically governed by judgments regarding the balance of effectiveness benefits versus increased costs. Several major options are available for organizing the sales force:

Geography. The simplest and most cost efficient way of organizing the sales force is geographically. Individual salespeople are responsible for sales of all the firm's products and services, in all applications, to all customers, in a defined geographic area.

Product. In a sales organization specialized by product, an individual salesperson is responsible for the sales of some portion of the firm's (or division's) products, in all applications, to all customers in a defined geographic area. Another salesperson or group of salespersons is typically responsible for sales of some other portion of the firm's products, in all applications, to all customers in the same or an overlapping geographic area.

Market segment. In the market segment-based organization, an individual salesperson is responsible for sales of all the firm's (or division's) products to all customers in a particular market segment, for example, industry or product application. Another salesperson is typically responsible for sales of all the firm's products to all customers in another market segment, in the same or an overlapping geographic area.

Channel member. In the channel member-based organization, one salesperson is responsible for developing and maintaining relationships at a specific level in the channel system, for example, distributors; another salesperson is responsible for developing and maintaining relationships at another level, for example, wholesalers or retailers.

Maintenance/new business. In the maintenance-new business sales organization, a distinction is made between existing versus new accounts. Salespeople responsible for generating sales to new accounts and initiating firm/customer relationships later hand these customers over to a maintenance sales force.

Although these various methods of managing sales force effort have served supplier firms well, increased competition is giving rise to a series of pressures that is transforming this traditional system into a new system for managing firm/customer relationships.

Pressures on the Traditional Sales Force System

We conceptualize pressures on the traditional sales force system as comprising three types: increased competition, internal pressures from the firm's sales organization, and pressures from customers.

Increased Competition

Today, virtually all business organizations around the world face vastly increased levels of competition, making the task of securing and retaining customers ever more difficult. Competition has grown in

Edition details

• Publisher: Free Press
• Publication date: 2001
• Language: English
• ISBN 10: 074321188X
• ISBN 13: 9780743211888
• Binding: Hardcover
• Number of pages: 480