Increasing Key Account (KA) growth and strike rate through relationship development
As recently published in the LinkedIn group: Key Account Manager: Best Practice Knowledge Share (with 100,000+ members globally)
Most of us accept that KA business growth is dependent upon the strength of the KA relationship but this study is a more objective attempt to access by how much.
A recent presentation by Prof Kaj Storbacka at the University of Auckland and Reg Price at MirrorWave examines the link between sales growth and the strength of the KA relationship.
Shallow single relationships don’t work
Most suppliers now recognise that a key account relationship is a complex thing and that a simple shallow Account Manager to Buyer relationship is never going to be sufficient.
Success requires the supplier to dig deep into the key account
The key account’s decisions, particularly the purchasing decisions, are influenced by many people with changing roles; so we will see people in the key account acting as influencers, users, decision makers and finally purchasers. The purchaser or buyer role is to drive down the price for specified needs that are already known and acknowledged by the company. Research shows that success rates for suppliers on RFP’s are low, less than 20% in most sectors.
Most of the growth potential lies beyond what the key account realises
The research also shows that most of your growth potential in a key account is hidden. In fact, the study suggests that around 75% of your possible growth lies beyond what the key account realises. That’s 3 times more opportunity than merely responding to known requirements. This has big implications for where KAMs put their attention and how they crystallise opportunities by looking at competitive and out-of-market lookalikes.
Proactivity increases the success rate
When you provide the customer with a proactive solution – instead of waiting for the customer to make the request– your success rate will likely increase by a factor of three. Overall, research shows the strike rate is likely to be in the order of 60%- 3 times more than an RFP.
Traditional customer perception studies don’t work
So developing a deep understanding of sentiment at all levels in the key account is as core to your long term success as is understanding the perceptions of their key managers. Many companies use ad hoc customer perception studies but they rarely deliver the right frequency, continuity and depth of understanding to meet the sales and relationship strengthening objectives of a KAM.
Best practice is defined in the study including the concepts of ‘following’ individuals, creating voice streams, key account change mapping and the internal coordination required to execute on it.
A full paper describing the research and best practice key account understanding is available from Reg Price or Richard Ilsley.
View the Group conversation here.