It’s tough out there for sales people.
One of the, largely-invisible, casualties of the global financial meltdown are sales and marketing budgets that have been cut and business development projects cancelled or moved to the right. If you are a Sales leader for your business, you’re probably thinking that now is the worst time to talk about launching or re-launching a key account management (KAM) programme. We know that KAM programmes are proven to deliver more profits for exponents in the long term but, so the argument goes, they are a costly drain on profits in the short term, right?
Well, not necessarily. As we show in this case study, one client’s experience of the re-launch of a partially healthy KAM programme did not have to be an expensive exercise to be effective. For those leaders considering revitalizing a KAM programme, not only is it likely to benefit the company when your business comes out of recession, but it will provide benefits during the recession as well.
However, as years of research into KAM has demonstrated, it is no good going about it in a haphazard way. The key to success is taking a pragmatic but rigorous change management approach and balancing sensible science with determined execution.
Our case: Global FM PLC
Our client is a global facilities management services company operating in more than 60 countries with annual revenues north of £10 billion and hundreds of thousands of employees. It serves customers in the workplace, schools/colleges, hospitals, leisure events and offshore and remote environments. Workplace clients include major blue-chip multinationals in industries such as oil and extraction, technology, financial services, manufacturing and pharmaceuticals.
Global FM PLC uses a specific portfolio of business-to-business brands recognizing the value of specific go-to-market brands further underpinning the company’s sector expertise. The company continues to extend its portfolio of services to encompass its desire to cross-sell its proven service capabilities.
Creation of the KAM programme
Since 1998, when Global FM PLC pioneered the outsourced food service market with its first global food contract, the company has become a success story, managing a growing number of global contracts with multinational clients. This growth has been fed by the increasing trend for multinationals to demand globally consistent solutions and (with Procurement playing a greater role in contract negotiations) transparency on total costs and service quality. In response to this and to manage the increasing impact it has placed on the organization, Global FM PLC had laid strong foundations for an internationally-focused account management programme. This included basic processes and tools that, combined with geographical coverage, had provided the company with an opportunity to create a unique selling proposition for its multinational clients.
However, as with many companies that begin this journey, the initial challenges were tough, and support for the original account management programme was fragmented around the world. Fast forward to 2006 when new leaders arrived at Global FM PLC. One of their first activities was to interview all the business leaders in the major countries and learn more about their regional businesses. From this, Global FM PLC gained six clear insights into the status of its account management:
- Account management, despite variable execution, was perceived to be an important vehicle for capturing value from key client relationship.
- There was an opportunity to more effectively align the account teams and countries to deliver greater value both to clients and Global FM PLC. More consistency in the processes and tools used would drive this.
- The responsibilities of the account managers needed to extend from a focus on relationship management to looking at their accounts from a P&L perspective.
- The account manager remuneration model had to reflect the changing account management responsibilities.
- A more proactive approach toward business development was needed to unlock the true relationship potential.
- Global FM PLC’s product and service development would greatly benefit from stronger client input.
Clearly the foundations needed renewed attention to develop the capability to serve and leverage Global FM PLC’s multinational client relationships in the future. A proactive approach was required that would maximize the opportunities and also provide strong input to future service development.
Breaking through to a more successful future
Step 1: Set-up a dedicated KAM team reporting directly to the chief executive officer.
After agreeing to use the term ‘KAM’ to describe its programme and the role of its account managers, two years ago Global FM PLC established a dedicated KAM team, sponsored by a senior director reporting directly to the CEO. In addition to typical responsibilities for business development, account management and finance, the KAM team was integrated into the company’s marketing/business systems function. The KAM team quickly developed its vision: “improving the top and bottom line of international clients, developing an industry-leading KAM process to be implemented in a consistent way and installing a clearer, proactive business development strategy.” The team’s goal was to establish Global FM PLC’s competence in managing international clients as a unique selling point for prospective clients. Twelve major international clients were tagged for ‘Wave 1’ KAM implementation.
Step 2: Get input from the country management and score some quick wins.
After installing the KAM team, a more detailed review was organized with each of the main countries to gain a deeper understanding of the key concerns of the senior management team, understand its needs and promote good internal relationships. As a result of this work two key actions were implemented. First a communications plan was put in place aimed at building executive and country-level management buy-in. This plan had two aspects: resolving immediate internal issues related to how multinational contracts were handled and underlining the importance of executive management support for international client management. Secondly, meetings were set up with best-in-class Global FM PLC suppliers to learn how they managed their own client bases. Both of these actions gave the KAM function some much-needed internal credibility.
Step 3: Work with an external party to review the approach and come up with a refreshed version that is fit for the future.
There was a desire to consider not only the lessons learned and best practices of the KAM programme’s early life but also other companies’ experiences. From connecting with the Chicago-based Strategic Account Management Association (SAMA), Global FM PLC studied a case about Jones Lang LaSalle’s client management programme. The company wanted an external specialist to challenge its current programme to see how far its current practices were from best in class. Global FM PLC selected Four Pillars’ Ed Bradford and David Atkinson as partners to develop its KAM programme. They provided a comprehensive framework for this (the KAM Healthcheck) and brought their multi-client and multi-sector experience to the KAM team to rate Global FM PLC capability across all areas of the framework. From this work a new and revitalized KAM programme plan was created.
The KAM programme plan defined 10 key objectives for the programme that keep everyone focused on the major deliverables. To illustrate, the first two objectives are:
“Create a vision of what world-class KAM looks like at Global FM PLC. Use this to gain agreement on the vision to achieve buy-in for necessary changes.”
“Take a programme approach: Create reference terms and plan the journey to achieve the vision. Ensure that smaller countries are included in the plan. Treat the programme as a challenge to embed change.”
The programme was then split into key areas as defined by the KAM Healthcheck framework. Under each of these, there were developed specific action plans, with clear definitions of success. This became Global FM PLC’s day-to-day guide for developing its KAM capability, as well as delivering the quick wins necessary to create momentum.
Step 4: Revitalize the global selling and KAM approach.
4.1: Selecting the right accounts
The KAM Healthcheck also highlighted the importance of good key account selection. Global FM PLC needed to focus more proactively on developing relationships with the right clients rather than reacting equally to problems or requests for proposals across all clients. Key account selection is not just about arriving at a list of top clients but also about managing a strategic sales pipeline. Global FM PLC required help to populate its sales growth funnel with the right clients, even if it currently had a single-country relationship with them. The key account selection model helped filter hundreds of international accounts into a short list of potential clients and then finally into the company’s key account portfolio.
Important to the process is first to have a clear definition of the minimum requirements to be considered a key account. At Global FM PLC these are:
• The current plus potential volume of FM-related services.
• A multi-country/multisite presence.
• A willingness to sign a global agreement on a preferred/exclusive basis.
• A significant part of revenue should be generated outside the client’s home country.
Secondly, those accounts that clear the minimum hurdle need to be prioritized. The account’s importance is driven by potential (not current) business levels and the potential relationship, which are evaluated by scoring such factors as:
• Risk evaluation
• Partnering potential
• Cross-selling opportunity
• Ease of implementation
In today’s environment of fewer resources and more demanding customers it is even more important to adopt a process that distinguishes between investing in the clients of the future and the clients of the past.
4.2: Building an effective key account plan
Developing an effective account plan is critical to ensuring relationship development and profitable growth, uncovering new business development opportunities and driving rigorous implementation. These are crucial tasks, especially when clients’ procurement functions sharpen their knives and demanding percentage points off suppliers’ prices. Global FM PLC’s account plan needed to be a true strategic, relationship-focused, comprehensive process to drive long-term account value delivery. This was to become the primary vehicle to push executive support internally, refocusing the job from relationship builder to commercial business manager and driving better client support and alignment. The account plan is also a valuable tool for developing the strategic and business skills of the KAMs themselves. For example, if the account plan asks the right questions of the KAM, then it helps him ask the client the right questions of the client, and question the value the relationship brings in a more objective way.
4.3: Building executive support, metrics and a sense of community
The KAM Healthcheck also helped the company focus on further development of the KAM infrastructure, including:
- Senior executive support. One simple task was to ask the CEO to provide a statement about the importance of KAM to the company as well as to achieving the objectives of the individual country teams. In parallel, the visibility of KAM performance was raised by adding the sales and profits line of KAM to the company’s strategic and performance management processes. KAM is now a regular item on the board agenda and integrated into the country reports.
- Internal MI reporting. Standard internal management information reports are now produced with the KAMs that show quarterly sales, profitability, satisfaction and account penetration figures for each client account. These are used to review performance with the key account teams and are available online to the country business units.
- External reporting. In addition to the existing financial performance reporting of its clients, Global FM PLC has also launched an online client loyalty/satisfaction measurement tool. This provides a robust assessment of a client’s satisfaction with the delivery of the company’s services and signals how likely it is to renew a contract. The latter measure is a key indicator of loyalty and provides Global FM PLC with useful statistics on the progress being made across the KAM client portfolio.
- Measuring share of wallet. A database, supported by periodic client business reviews, is used to identify current share of wallet with the key accounts and the areas of largest potential growth.
- Establishing a web-based community for clients. Global FM PLC established an online KAM community that includes contact details, relevant articles and e-news for clients. In addition, the company installed client Web portals; that include contract performance reporting, contact information, a contract archive, a best-practice archive, and key dates for the diary.
Together these building blocks ensure that good science is balanced with rigorous execution, all designed to ensure KAM programme maintains momentum and delivers expected results.
Step 5: Future-proof the programme.
Global FM PLC has put many of the key components of its programme in place over the past two years with some considerable success. Nevertheless, it has its eyes set on four areas for future development:
- Implement an executive sponsorship programme (modeled on Siemens AG’s KAM approach). Each executive committee member is assigned a current or prospective client account. This sponsor then plays a significant part helping to develop business with the client. Examples of this include a sponsor becoming quickly involved with any health and safety incidents and assisting with overcoming internal or external cross-functional hurdles. The account plan plays a substantial role in keeping the sponsors updated on the client relationship.
- Expand the web-based client community beyond just the clients and their assigned KAMs to all the stakeholders within Global FM PLC. This is expected to lead to closer integration of the account plans with the country-based business plans and will demand increased involvement of the countries in KAM planning.
- Develop a universal gold standard of performance across the KAM community by developing a KAM competency model. This will be used to assess training needs and address skill, knowledge and behavior gaps.
- Develop joint account plans with selected clients to cement the relationship and further drive strategic alignment and business growth.
The Global FM PLC KAM programme has already delivered much in its first two years post KAM Healthcheck, including:
- Improved performance and service delivery with clients.
- Greater consistency of service to clients across the global business.
- Company-wide and client-supporting activities led by KAMs have become more effective, efficient and aligned.
- A deeper, broader knowledge of clients with much greater insight about their key issues.
- Better appreciation of key account attractiveness, a more objective account qualification process and reduced internal discussion about priorities. This has resulted in much greater focus and energy applied to the most attractive clients.
- Improved communication and information flow internally with greater teamwork across the global business.
Regarding wider applicability of the lessons found in this case, for anyone else starting (or restarting) a KAM programme we would advise you to keep in mind the following essential building blocks:
- Secure and maintain senior commitment to the programme.
- Plan some quick victories to demonstrate early success and build momentum.
- Use outside advisors to provide an external best-practices from a range of sectors and businesses, and to challenge the internal mind-set.
- Make sure there is a balance between planning and execution. The exercise must be quickly converted into action, otherwise momentum will be lost.
- Keep the tools and processes simple. Be pragmatic: don’t try to model everything.
- Take the programme seriously by utilizing a systematic change management approach. This means having a carefully constructed programme plan and team, and ensuring that the key players have real business experience, influence and authority.
- Maintain constancy of purpose. Balance the desire to succeed quickly with some patience.
The Global FM PLC KAM programme remains a significant vehicle for helping the company’s global business strategy become locally implemented. The programme has been a important vehicle for delivering the company’s multiservice offerings into its key markets, and has proved that success is possible, even in a worsening economic climate.
No doubt your business continues to face serious sales-growth challenges but, perhaps, now is the time for revitalizing your key account management using a more robust and systematic KAM methodology. Not only would you be better-prepared for tougher client demands, but you could also take advantage of the cutbacks in your competitors’ budgets to strengthen your client relationships.
Written by Ed Bradford and David Atkinson
For more information on how to revitalize your key account management programme contact Four Pillars and discuss how the KAM Healthcheck can work for your business.