Why Key Account Management (KAM) implementations fail
Geplaatst op 20 juni 2018 door Ronald Swensson

Key account management (KAM) is one of the most important changes in the history of selling. KAM is a radically different organizational process used by business-to-business suppliers to manage their relationships with strategically-important customers (key customers), and it (can) produce measurable business benefits. Not surprisingly, smart suppliers are keen to implement KAM. But, many KAM implementations fail. For example, many companies mistake their objective as their strategy in KAM. They describe their aspiration in terms of growth in sales and/or profits from key customers, apparently failing to notice that simply stating a number does not achieve it. Until how they will achieve the desired outcome is specified, there is no defined route to success that people can follow. 

KAM strategies can be very varied: they may focus on the introduction of new products; greater supply chain flexibility; extra capacity; new technology or services that will add value to key customers; and they may include initiatives that offer more efficiency or effectiveness (e.g. cost reductions) for the key customer and for the supplier, such as production savings, etc. Suppliers need to be clear about their specific value focus in the relationship in order to optimize activities, processes, and resource allocation. You can identify several kinds of value: exchange value, created through the supplier’s KAM activities, e.g. tailored product offering; supplier value, created by the supplier, e.g. supply chain efficiencies; relational value, co-created value, joint new product development. A strong focus on supplier value with limited attention to exchange and relational value will mostly lead to unsuccessful KAM. 

Key customers should have an understanding of the value strategy that is pursued by the supplier in order to optimize their own position. Through the account plan, both parties can see how their strategies can be aligned to optimize the benefits they gain from the relationship. Therefore an account plan is: 
- for the customer, to make the added value they could expect visible and explicit; 
- for the supplier, to show how the plan contributed to the corporate vision (and results); 
- for the KAM team, to specify goals and objectives; 
- for other account managers, to share plans and learn from it; 
- for the account manager, to provide a clear roadmap (to success) for managing the key customer and gain the organization’s approval and support for it. 

Successful KAM should balance the value appropriated by the supplier and the key customer, but sadly that's not always the case. Some suppliers making healthy profit from a big business with the key customer and give nothing special in exchange; and some key customers leave the supplier with a poor return on their investment (lock-up situation). Neither of these situations is sustainable in the long term. At the end it's all about value creation by the supplier resulting in lower costs for the key customer and healthy business growth for the supplier. And if not so, the relationship is doomed to fail! 

See our Sellingnet Knowledge Center for more information on KAM: 

This article is also published on LinkedIn.