Advice for KAMs during Covid
10th November 2020 | Richard Vincent
Reports from Cranfield Key Account Management Forum’s online series.
Following the Covid-19 pandemic, the Cranfield Key Account Management Forum has created a series of online seminars to complement the regular face-to face meetings which will resume when it is safe to do so.
The Forum aims to create and disseminate research and thought-leadership that can be used by its members in their respective organisations in the pursuit of sustainable growth and positive impact with their most strategic customers. These webinars offer valuable inputs and practical, actionable suggestions to inform key customer strategies.
The webinars are planned to address strategic themes for key account managers (such as the buyer’s perspective, economic trends, managing large bids), operational issues (executive engagement, defining KAM programmes, and so on) and personal development themes (such as mindfulness, positivity and productivity). Thought-leaders from academia, consulting firms and industry offered valuable insights for KAMs and their businesses in these uncertain times. Here, we offer a summary of these seminars and some high-level recommendations that emerge:
- Staying positive and focused in uncertain times
- Aligning to strategic procurement during challenging times
- Re-engaging with senior executives
- Connecting your value proposition to enhanced customer experience
- Monitoring the economic impact of Covid 19 and the emerging transformations
- Developing new ways of creating and quantifying customer value
Staying positive and focused in uncertain times
Andy Bounds, a leading sales communications expert, advocates putting emphasis on creating “positivity and productivity”. Using the “Yes, if…” technique allows individuals and teams to focus on the key few outcomes that are needed to make an objective achievable and then ensure that those happen.
The “Think about the afters” approach ensures that you focus on the benefits that the customer will see and consequently are able to articulate those benefits to the customer in an understandable form from the very outset of the conversation.
Another really useful approach is to keep a list close to hand, of things that give you energy. So that before key encounters you can always ensure you are in the right frame of mind.
Aligning to strategic procurement during challenging times
Rob Maguire of MaguireIzatt, who has over 30 years’ purchasing and supplier management experience in both operational and management consulting roles, argues that because there is a new customer landscape, a new competitor landscape and a new commercial landscape, we must as a matter of urgency, change: the people we sell to, the markets we position ourselves in, and the way we get paid for the what we do.
Many sales strategies are predicated on the assumption that while there will be some buyers who will focus on price alone and there are some that are only interested in getting the very best performance, there will be a lot in between these two extremes who will be prepared to pay a bit more for a better product. However, the trend over the past few years has been for fewer and fewer buyers to adopt this approach with some organisations deliberately adopting “strategic stupidity” and encouraging their buyers to adopt the “crocodile” approach of behaving like an animal with poor eyesight, closed ears, very little brain power and a very strong bite, focusing entirely on price and not entertaining any discussions of value.
In order to be able to compete effectively in the narrowing mid-section it is imperative that you have an excellent understanding of the customer’s own business and so are able to effectively articulate and quantify the benefits that you will be able to bring to their business.
Re-engaging with senior executives
Bev Burgess, Senior Vice President and Account-Based Marketing Practice Lead at ITSMA, shared findings of research into engaging senior executives. ITSMA has established that buyers buying complex B2B offerings only have an average of three providers that they see as being truly trusted. Understanding what it takes to become one of those few is key.
She argues that trust is built by:
- Regular meetings, without frequent sales pitches
- Demonstrating a deep understanding of the buyer’s role and business objectives
- Providing high-quality thought-leadership, on relevant business and industry issues
The most valued activities by senior leaders are private, executive-level briefings and customer events. The reasons that executives choose to engage are extremely diverse, so it is always vital to get an in-depth knowledge of the individuals involved and understand their own particular motivations – but the top three reasons given are:
- Establishing relationships with provider’s senior management executives
- Learning more about issues and markets
- Influencing provider’s offerings and direction
ITSMA has developed a programme-management model for engagements (Figure 1).
Putting time and effort into gathering appropriate insights into a company can be used to create compelling, tailored material around:
- The value you are adding to their business today
- Thought-leadership and new ideas on their issues
- Custom value propositions
- Best-practice examples and case studies
Meanwhile, five steps that can be used to guide your executive engagements and there are five questions that everyone should be asking about their current approaches: Five steps to effective engagement
- Success starts with insight. Invest up front to identify, segment, and truly understand the executives who matter most.
- Develop content for conversation. Thought-leadership needs to be business-focused, relevant, and personalized; co-creation is the best approach.
- Enable peer connections. Your own executives, subject-matter experts, and delivery leaders win the most trust.
- Ensure effective orchestration. Programmes win with alignment across individual meetings, high-level events, and peer networking.
- Measure what matters most. As with all marketing, the three Rs – reputation development, relationship strength, and revenue acceleration – are always key.
Connecting your value proposition to enhanced customer experience
Professor Moira Clark, Director of The Henley Centre for Customer Management, addressed the core themes of customer experience and value propositions. The key question to ask is: “Are you in the driving seat and building customer experience into your value proposition?”
A checklist for this includes questions like:
- Are you shaping the market and doing things better for your customers?
- Do you know your customers’ goals, what they value, what keeps them awake at night, and what makes a “perfect” customer experience?
- Are you continuously disrupting the market and differentiating yourselves in the market?
In the past, functional value was often seen as enough to compete and, although some companies still use this approach, they are at a great competitive disadvantage compared to those that really understand their customers, differentiate on downstream activities, and shape their customers buying criteria.
Professor Clark worked with Professor Hugh Wilson of Cranfield School of Management to develop the customer experience model in Figure 2.
The inner part of the model is the product itself surrounded by the service and then the associated experience. The customer’s feelings about the inner sections are primarily governed by the factual elements and the outer parts are governed by the less tangible, more emotional elements. Real long-term sustainable competitive advantage comes from these elements as they are much harder for competitors to replicate.
The most important customer experience factors in B2B are:
- Extent of personal contact
- Implicit understanding of customer needs
The final element, continuously disrupting the market, is best illustrated using the familiar “commodity slide” model (Figure 3). Copying product functionality is ever easier so, in order to be able to maintain price differentiation, it is imperative to keep innovating and creating differentiation.
Too many companies allow themselves to be caught by this and end up in commodity markets because they failed to add value or differentiate effectively. This may be caused by complacency or due to poor management and over-reliance on inappropriate and simplistic measures (eg, product cost). Where multiple suppliers do the same thing, this will lead to a “race to the bottom” effect where all suppliers suffer.
To ensure that you are market-driving:
- You need to shape the market and do things better for the customer.
- Really understand your customers.
- Proactively shape their behaviour.
- Continuously disrupt the market.
Monitoring the economic impact of Covid-19 and the emerging transformations
Dr John Glen, former senior lecturer in Economics and Director of the Centre for Customised Executive Education at Cranfield School of Management, offered an insightful outlook on the current economic environment. First, with regard to current levels of growth, the Bank of England Monetary Policy report for May 2020 provides the following figures. However, these are very dependent on the assumptions that are made.
Headline figures for the UK (Bank of England)
|2020 H1 GDP||–30%|
|2020 H2 GDP||–15%|
|2019 GDP parity||2023|
They do assume that there will be an effective track-and-isolate process in place and (at the time the predictions were issued) that there would be no second wave of the virus. These figures are from scenarios and are not forecasts as the models are all operating well outside of all previous ranges.
The reactions of different companies are varying wildly. Some are urgently cutting costs and workforce numbers while others are doing everything possible to protect their employees and retain capability in order to be able to respond as effectively as possible. The microeconomic responses seen in industry include:
- Businesses will hold onto cash (paradox of thrift).
- Many small businesses will struggle to survive 3-5 months will little or no revenues.
- Businesses that have cash should pay their suppliers to keep them alive!
- Protect employment where possible.
- Invest early in the cycle (cash versus opportunity) to have the ability to respond quickly when signs of recovery emerge.
- Understand market and customer needs in depth
- Target identified and unidentified customer needs
- Make specific offers to each selected customer
- Have clear differentiation, positioning and branding.
- Anticipate the future
- Always talk about products
- Target product categories
- Make similar offers to all customers
- Have no differentiation, and poor positioning and branding.
- Plan using historical data
The best hope of rapid recovery is global coordinated action that includes, fiscal policy coordination, global liquidity and everyone playing a cooperative game rather than a competitive game. For the UK in particular, a frictionless Brexit and no protectionism either in Europe or US-China relationships is seen as imperative for economic recovery.
Developing new ways of creating and quantifying customer value
Cranfield’s professor emeritus Malcolm McDonald believes that a major issue in how the current crisis is being handled will be the typical knee-jerk reaction from many companies too focused on the finance, which he refers to as Anorexia Industrialosa: “An excessive desire to always be leaner and fitter that inevitably leads to emaciation and death because, unlike KAM, it does not create value.”
In his view, a better approach that suppliers should take towards their customers includes:
- Taking a through-crisis view of the customer relationships
- Helping solve their short-term problems, rather than seeking short-term advantage
- Working out how we can create advantage for them in the future
- Accepting the fact that it may be necessary to serve a few bargain-hunting customers at a loss in the short term but beware of them in the long-term Too often, companies do not understand the profitability by customer, and hence are often losing large amounts of money on some of their main accounts.
Professor McDonald argues: “If you identify the core market of primary customers and delight them with selected differential offers, you will create a resilient customer base; but trying to delight all customers will guarantee everyone getting an average service which will delight no one.”
The key thing for all companies to think about is about how will dealing with you make your customers more profitable? This boils down to be able to prove that dealing with you will create advantage for your customers.
For example, using the Cranfield KAM planning process, bearings specialist SKF showed the lifetime cost of ownership of their products to be significantly lower than that of their competitors, enabling them to sell bearings at 50% above the market norm.
Six actionable propositions for KAM in the current Covid-19-driven recession include:
- Work out the key accounts you want in the longer term.
- Understand the value required by them and quantify it financially.
- Prioritize the value propositions you put forward.
- Communicate them to the right people.
- Reduce costs in the unproductive areas of the business.
- Ensure that you have brilliant managers in charge.