Why Key Account Management is relevant?
- High Level of Attrition: Due to booming economy and the phenomenal growth of IT, ITES and services sector, the mobility of the executives is very high. You may not be so sure whether you may meet the same executive in the client organization in your next visit.
- The high value of equipment: This forces the decision makers to think of the cost-benefit analysis from different perspectives.
- Organizational Complexities: In the 20th century, organizations were relatively stable and it was possible that you could meet the same purchase officer for a number of years. Thanks to globalization, organizations are not only becoming bigger but are also becoming increasingly complex. Due to mergers and acquisitions, executives are getting retrenched or relocated. For example, it is generally observed that the executives from an acquired company may not get the same preference vis-à-vis executives’ from the acquiring company. You may have an excellent rapport with a purchase officer but if he is a part of the acquired company, he may either get a subordinate role or may be asked to leave.
- A Joint Decision-making Process: There is a possibility that a decision maker may be in Bangalore, the other in Shanghai, the third in New York and the fourth in New Delhi.
- Product Complexity: This may not make it possible for a single person to understand the technical, commercial and the application-wise perspective.
The vendor should understand human psychology, which involves the individual as well as the group dynamics. There will be more than one person involved in a decision making process. The number of people involved may be 5, 10 or 20 but essentially they can be mapped into four categories. These are the roles played by the executives for a specific transaction.
The Four Critical Roles:
- End User: Is the one who may be using the equipment directly or may be indirectly responsible for its use. He may be a person who has a need. For example, in a city like Bangalore which is plagued with power cuts, a company manufacturing ball bearing may decide to have a Diesel Generator (DG) as a back-up option for the Electric Utility Supplier. The end user will initiate the requirement, and the person may be the maintenance manager whose responsibility is to provide uninterrupted power for the plant, so that the production dept. meets its stipulated targets. There may be five persons in the maintenance dept.,who may be operating the DG sets and thus reporting to the manager. In spite of those five operators, the maintenance manager can be considered as the end user from the seller’s perspective.
- Gatekeeper: Once the end-user makes a specific request, the gatekeeper decides the technical parameters on which tender enquiries are prepared. The gatekeeper may either be a technical expert or a Purchase Officer who decides the norms for the qualification of vendors. He may be within an organization or may be an external consultant. For example, if you are looking for an opportunity to sell air conditioners to an up-market apartment complex, the gatekeeper can be the GM-Electrical of the company or the architect who may be either working for the company or an external consultant. Please note that the job of the gatekeeper, as the name suggests, is to control the gate, how much it should be open or how closed it could be. It may also include empanelment of vendors. For executing specific civil construction jobs, it is specified that only class I contractors are qualified or those who have executed projects of not less than Rs 50. Corers can purchase the tender papers. It can also mean that if you are able to get the specifications floated as per your eqpt., you have won half the battle.
- Decider: Now that the technical comparison is made with the pricing in mind, the decider takes the decision whether to place the purchase order in favor of A, B or C. He may rarely be from outside the organization.
Now, what are your chances of getting the order? If all the decision makers are on your side, there are great chances that you will get the order. In these days of intense competition, it is rare to have such a scenario, which means, either you are in a near monopoly or you are overestimating your abilities. It may not augur well for the buying organization that all the decision makers are favouring only one vendor. Such overconfidence may make you complacent and may even lead to losing the order. You can improve your order closing by acquiring some authentic information.
- Well Wisher: The dynamics between people becomes very critical in the final decision making. We feel people take rational decision but it is not so. Each one has his own biases and preferences. The end-user may have liked your product and may have floated an enquiry but the gatekeeper might be a friend of the competitor or a gizmo freak and prefer the latest technology. Alternatively, both of them may be on your side but the decider, the VP-Finance may consider cost as the major factor. This internal dynamics of an organization may not be visible to anyone but is crucial. If you have a well wisher in organization, he will help you guide in this particular sale. When you ask your well wisher Santosh, “I have been meeting John for the last three months, but I am only getting a standard answer to come back the next week.” Your well wisher may tell you, “Why are you wasting so much time on John? Are you aware that he has been asked to put in his papers and this is the last week that he is here.” Now you may wonder why John didn’t tell you all this.” Remember, to John you are a stranger, he may not like to share his frustrations to an acquaintance like you and may give standard bureaucratic response.
Alternatively, you may get valuable information like the file has been sent to the General Manager and that you need to take an immediate action. A well wisher is the person with whom you should have a good rapport. He may be the security officer who can tell you that the competitor has demonstrated his product the previous day. She might be the receptionist who may give some critical information. The important aspects of the well wishers are:
- He should have credibility in the organization.
- He wants you to succeed.
- He should have the critical information, which can help you in your current case.
- He should be able to do the internal selling for you.
Most of the sales executives in our training programs used to feel that Lowest Price (L1) is the ONLY parameter on which a decision is based. It may not be necessarily so. Particularly in high value items, it is not only the one-time cost, it may also include the running cost, the recurring cost or what is termed as the total cost of ownership (TCO) or the Return on Investment. (ROI). For more details refer Contextual Selling: A New Sales Paradigm for the 21st Century by Rajan Parulekar.
If you need to enhance your personal and professional quality of life reading good books is a must. Some of the books I recommend are:
- Creativity : Flow and Psychology of Discovery and Invention by Mihaly Csikszentmihali
- How to Read a Book : A Classic Guide to Intelligent Reading by Mortimer Adler & Charles Van Doren
- How to Live in a World We Don’t Understand by Nassim Nicholas Taleb
- The Road Less Travelled by Dr. Scott M. Peck
Other services: Effective Value-Selling of Capital Equipments , Effective Salesmanship for Premium Property, Managing Outstanding Collections, Skillful Negotiations, Key Account Management, On-Line Training, Coaching and Mentoring
For more details write to firstname.lastname@example.org , 080 2349 3661 / 2359 7930 / +91 9880236793