Key Account Management: It’s all about Relationship Marketing (KAM & RM)
For the past few years I have been a member of a programme named ‘Club Vision’ by a mobile operator in Sri Lanka named Dialog Telekom. It did not surprise me much when I received a gold member card from the telco introducing me to the programme. My welcome into this membership programme was on my birthday when two lovely ladies walked into my office with a cake in hand and asked for me. I was unable to speak to them but word soon got around the office and a friend of these two girls who worked with us asked them how does one become a ‘Club Vision’ member and was soon informed that my phone bills were that much more than most customers! My frequent travel to Europe and America had notched up a fairly large monthly roaming bill which whilst on the radar of the mobile operator secured me a position in their key account management programme. As a key account member I appreciated some of the new benefits I secured. My favorites include having access to one phone number for all queries, a specific counter for all key accounts at all mobile operator service stations or outlets, a premium lounge in some of the larger head quarters, annual gifts, cakes and personalized cards on my birthday. It felt good to be appreciated by the operator.
Key account management and relationship marketing have often worked hand in hand together. For customers the benefits they tend to offer include special service, the notion of being unique in comparison to other customers, one contact point with the company, quality products and promotions, enhanced credit facilities and margins.
The idea of contrasting and differentiating between customers can cause criticism. However from a company’s perspective not all customers are profitable. Some customers despite brining in revenue actually cause the company to run at a loss rather than breaking even. These customers often require more work than they are willing to pay or do not allow the company to achieve economies of scale. These cash traps should often be discontinued however the focus on any company should be to identify its shooting stars or cash cows. Companies are able to increase revenues either via sales (sales to existing customers, new products/services to existing customers or products / services to new customers) or via the restructure of pricing / terms and improved negotiating with customers. Companies have the capacity to boost profits by 100% by retaining just 5% more of their customers. In order to achieve this, key account management and relationship marketing are a necessity. Key Account Management is aimed at building a portfolio of loyal key accounts by offering them, on a continuing basis, a product / service package tailored to their individual needs. Key account management is a partnership approach. It is a long-term relationship and focuses on building relationships. This is what drives relationship marketing.
In the development of a key account or relationship marketing programme a company must identify its key customers first. In order to identify key accounts the company needs to determine which customers perform well on scales of transaction volume and transaction value. These two criteria, ideally the combination of them is what makes a key account. The company must examine the expectations for both the customer and the company. My loyalty on most airline routines is often led toward the Emirates airline. Other airlines do offer the same the benefits however as my loyalty points have gathered most with Emirates together with their high standard of service I often opt in to flying with this airline. As a Silver Member I am allowed an extra 12 Kg on luggage which I find most assuring. I am allowed impartial entry into the airline without queues and also access to the Emirates business lounge in Dubai. Flight stewardesses always personally welcome me on board and ensure that I am treated somewhat differently in spite of sitting in Economy. The airline differentiates their treatment towards me and I continue to differentiate in choice of airline.
The company must decide on how they are able to differentiate with the customer and work more closely with them. They must also determine how access between both parties is simplified. The appointment of a key account manager or a relationship manager is important and I would advise the Emirates airline to look into these steps. Appointing a regional or country based key account or relationship manager is not too complex and often forgoes the necessity to pursue travel agents or colder generic websites (some airlines allow key accounts more access than others to facilities such as seating arrangement or food / beverage options). As in the case of the airlines, the company needs to target small win-wins to build and grow their relationships with key accounts. Mutual benefits and their visibility are key.
Key account management is all about relationship marketing. Traditionally, marketing would refer to the 4Ps (or 7 Ps in some instances) i.e. product, price, place, promotion. Traditionally, relationships, networks and interaction would orbit around this central core competence. However in today’s context – relationships, networks and interaction form the central core with product, price, place, promotion orbiting around it. This shift brings key account management and relationship marketing to the core of sales and marketing functions with the company.
Key account management and relationship management are key marketing and sales functions within any
company. A key account manager or relationship manager represents the company to the customer. I used to have to represent my company (an online room reservation company) at all travel trade fairs as a buyer. Most suppliers we worked with, despite having worked with us for over 5 years only know my face within the organization. I was the face and ‘person-representation’ of the company. My face was associated with the company. As a key account manager or relationship manager a lot of corporate power is vested in the individual and that person must represent the person, persona and mission of the company. They key account manager or relationship manager must be a value creator. They are responsible for developing the relationship and should have pleasant, friendly and most certainly people-oriented personalities. These individuals should not drive for hard sales but more so work on building the friendships, trust, dependability, security and faith in customers. They should be able to put people at ease with their genuine concern at heart. They should also be savvy business people identifying opportunities for business. They should be able to identify mutual value and present it as such to consumers. Being the sole representative of the company the individual must be allowed complete transparency into the goings on within the company such that the customer knows that this single point of contact is a knowledge hub and all that is required from the company. Communication, planning, analytical and management skills are a necessity. The key account manager or relationship manager must have the ability to manage the customer, internal customers, relationships, resources and him/her self.
A good key account manager and relationship manager is able to position him or herself as a middle man between the company and the customer. He works in the best interest of both parties to drive mutual benefits to them. The ROI from a key account manager is a key account who constantly pushes sales for the company on a regular basis. The ROI from a key account manager is a customer who speaks proudly of a company to his friends and family and recommends the company to them.
In the next article on Key Account Management and Relationship Marketing we look at using the internet as a powerful tool to leverage Key Account Management and Relationship Marketing.