Key Account Management

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Key Account Management:

Key Account Management

Definition of Key Account:

Definition of Key Account What is a Key Account? Key Accounts are the 20% of customers who provide 80% of your profits Key Accounts are defined as the prospects or existing customers who have the potential or now fall in the 80/20 category. Any customer that is of strategic importance to your company – loss of it of inability to secure potential future revenue would cause a significant impact.

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ACCOUNTS 20% 80% PROFITS 80% 20%

80/20 principle:

80/20 principle For all corporations, some form of 80/20 rule operates. e.g. 80% of the firm ’ s revenues is supplied by 20% of its customers. If this rule, or a close variant (90/10; 75/25), operates in the firm ’ s customer environment, the critical business implication is that these 20% (or 10% or 25%) of customers have an importance to the firm ’ s long-run future that exceeds that of the “ average ” customer

What are the long-term benefits of running Key Account:

What are the long-term benefits of running Key Account Economies of scale in selling Improved understanding of key account ’ s goals, and requirements Enhanced ability to manage complex relationships Sustainability of sales Increased key account switching costs Credible reference for greater market penetration Constant feedback to research and development for product and service improvements

Selecting Key Accounts - Criteria:

Selecting Key Accounts - Criteria Direct Sales Revenue and Profit Current Sales Revenue Current Profits Future Sales Volume and Profit Financial Security Acquisition Potential Key account effort on firms likely to be acquired may be wasted if the acquiring organization is given the dominant procurement responsibility Selecting potential acquirers as key accounts may bring long-run benefits

…CONTD:

…CONTD Indirect Potential Volume & Profits … Strategic Key Account Opinion Leadership Example: Leading financial services group ICICI was the 1 st Indian company listed on NYSE. One of ICICI ’ s key accounts is Infosys, India ’ s fastest growing software company, well-known for its commercial success, product quality, and high ethical standards, and the first Indian company listed on NASDAQ. Although ICICI transacts little business with Infosys, it regards as a key account because of its exemplary reputation.

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