How to work with customer relationship – The role of the Key Account Manager

Who is the person behind the role of Key Account Manager? Who is facing your customer? What characteristics are important to take into account?

A Key Account Manager is the key person in contact with the customer. The person that faces all the good moments, the bad moments, the negotiations…The person behind this role needs to have a set of characteristic. A few of the top (in importance are)

  1. business mind
  2. business attitude
  3. negotiation skills
  4. Feeling

To make sure that this «role» adds value to your customer, to the business to the closure of the contract, you need to make sure that this person is:

  1. knowledge about the service (or well supported)
  2. knowledge about the client
  3. knowledge about the customer needs (how do we help the customer and in what way are we different)

When negotiating price the Key Account manager need to work with «the value» of the product. Arguments such as «I can’t give you a lower price because my costs are too high» are not going to be effective. If the customers know that a competitor of yours gives him lower price, he would know that you have not been able to negotiate with your providers to lower the price (and prices are easy to find out).

It is therefore important to work with «value». The value is what the customers decide is the value for them (not always what we decide is the value). The price is therefore the «agreement» in-between
a) what you are able to take according to your cost levels
b) your margins
c) but most important, how much the customer wants to pay (what is the value for the customer).

  • When you work with loyalty/retention it is all about satisfaction plus retention
  • When you work with satisfaction it is all about perception minus expectation

A Key Account Manager needs to manage these aspects in order to know how the product or service is valued. Added to this, he/she needs to keep in mind the emotional association related to the product that the customer may have (so you must know your customer!). To the extent that the customer may value more a product when associating to something with high value.

There are many parameters that impact the value:

  1. the brand
  2. the commodity/or incommodity
  3. the professionalism/expertise
  4. Insecurity (can it be replaced, is it possible to return it, doubts…). The Key Account Manager needs to minimize the insecurity

Different types of behavior

  1. Reactive behavior = a person that is not proactive. Not a good profile for a Key Account Manager (for sales, for retention)
  2. Normative behavior = the norms are important for this person. A good characteristic if you work with accounting, if you work with planning, but not as good if you require quick changes as it generates stiffness
  3. Relation driven behavior = persons that are good in creating contacts (very good if the sales person is one-time-shopping) but there is a version of this that relates to retaining the relationship (good characteristic if you are Key Account Manager where the relationship is important)
  4. Result driven behavior = important for any sales person

Three concepts in a negotiation to have in mind

  • Space: Where does the negotiation take place (starting point and breaking point in a negotiation)
  • Frame: What is the framework where the negotiation takes place? (the break through point that the customers doesn’t know and the customers breaking point that I don’t know)
  • Strategy/Tactic: What would be your strategy (there are competitive strategies and collaborative strategies. Competitive is: I win and you lose or we both lose but you lose more. Collaborative is about I lose to make you win or win-win)

Different negotiation styles

  • Direct: good to specify the deal and to close a deal
  • Evasive: good if  you need to put pressure but not too much (make somebody wait).
  • Consensus: trying to find a deal using «conditioning argument». «I can reduce price if you can… «. This is good in very opened projects.
  • Transactional: good characteristic if you need to bargain
  • Integrator: this is the one than transmits the win-win feeling. This is a good characteristic if you need to create long-term customer relationship
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