Sales & Pricing - 4. Sales Optimization Levers

Vocabulary flashcards related to sales optimization levers, including key account management, proactive sales, value-based selling, and online tools based on lecture notes.

Key Account Management (KAM)

The consolidation of activities associated with strategically important customers.

Sales optimization levers

Measures to enhance the effectiveness of the sales force.

Key Account Management Objective

To gain an economic advantage through better support of key customers.

Proactive sales

Working with customers before they express a need.

Value-based selling

Quantifying the benefits of products and services to the customer.

Web-based tools in sales

Modern tools that support efforts throughout the pre-sales, sales, and after-sales phases.

A radically different organizational process to manage relationships with strategically-important customers.

What is KAM’s essence?

Identifying key accounts, allocating resources, and individualizing support.

What is KAM’s approach?

Primarily used in a B2B context due to its resource-intensive nature.

Why and in which context is KAM normally used in?

To better serve key customers.

What is KAM’s external objective?

To strengthen partnerships with key customers through individualized support and close communication.

What is KAM’s aim?

The development and strengthening of a strategic alliance between the company and customer.

What is KAM’s ultimate goal?

To increase customer orientation, facilitate focused cooperation, and dismantle silo thinking.

What is KAM’s internal objective?

KAM effectiveness requirement

The whole organization must accommodate for this new method of operating and dealing with important clients.

Strategic accounts

Accounts that are not just those resulting in large revenues.

Key accounts number

What is limited to ensure intensive and effective management of them?

Strengthening the partnership between supplier and customer and protecting these accounts from competitors.

What is KAM focus?

Significant investments are made to build long-term value. It is not feasible to implement this level of engagement with all customers.

What is KAM investments?

Strategic partnership via KAM

Customer chooses the single source strategy for the supplier’s products.

Customer requirements increase or new requirements

What could happen which would necessitate additional customer sales and support structures?

Centralized purchasing processes

Require a coordinated sales approach from the supplier.

Customer Interface

The interaction between an organization and its customers during its business operations.

Key account manager role

Central point of communication, primary contact, supported by experts.

1. Customers are selected,

2. an account team is formed,

3. an account plan is developed,

4. and the key account is managed.

What are the Key account management implementation steps?

Customer grouping

Categorizing customers based on present relationship and growth potential.

Size and growth, integration interest, geographical distribution, and organizational structure.

What are the Key customer selection factors?

Large customers

Customers that are typically serviced by key account managers or management teams, and are well positioned to become long-term partners.

Mid-range customers

Customers that are typically served by the general sales force.

Small customers service

Served by channel partners or over the Internet.

Key account team

Members of the sales team grouped under a key account manager.

Account teams know-how

Greatest possible concentration related to the spectrum of products and industry knowledge.

Key account manager direct contact

Customers continue to be looked after at all levels by employees best equipped to solve problems.

Key account manager team

Account managers and channel managers.

Executive sponsor role

Provides support and interacts with the top management team of the customer.

KAM importance

Particularly important in companies with many different product offerings.

Central aim of KAM

Ensure coordination of all internal activities related to key customers.

Key account manager competencies

Managing the relationship with the customer and possessing specific knowledge and expertise.

Key account manager skills

Well-developed social competencies and comprehensive subject knowledge.

Key account manager responsibilities

Analyzing business processes, understanding marketing, structuring legal agreements, analyzing financial data.

Key account manager management competencies

Leading a cross-departmental team.

Key account manager position

Almost always members of middle and senior management.

Key account manager tasks

Leading business interaction, championing customer needs, influencing business decisions, coordinating sales efforts.

Account plan purpose

All relevant information about the customer as well as the company’s strategy.

Account plan development

Developed and maintained by the key account management team.

Account team details

Members of the core account team and their responsibilities.

Customer overview details

Customer contact information and industry information.

Sales revenue and sales potential

Past, current, and projected sales and share of wallet.

Customer satisfaction data

History of complaints, relationship strength, and satisfaction index.

Customer organization information

Product/market portfolio, capital spending, buying behavior.

Positioning strategy analysis

Customer’s perception, company goals, competitor activities, company history.

Customer relationship details

Organization map and current relationship with customer contacts.

General customer buying behavior

Buying channel preference and decision-making network.

Account coverage by competitors

Measures of how well customer is served by competitors.

Indirect account coverage

Channel partners used by the customer.

Action plans

Planned activities for managing the relationship with the customer.

Key account plan objectives

Achieved via the key account team according to outlined processes.

Key performance indicators (KPIs)

Measure success related to the customer, account plan, account team, and business processes.

Customer KPIs

Growth of customer wallet and % increase in cross-selling value.

Account plan KPIs

Orders and return rate versus budget, number of offerings versus accepted offerings.

Account team KPIs

Contribution to customer knowledge and number of contact points.

Processes KPIs

Reduction in selling costs and increase in account awareness.

KAM success factors

Changes in the sales department and across the entire company.

Company organization in KAM

Organized in customer-centric units, e.g., separate business area for the automotive sector.

KAM introduction approach

Structured approach with distinct project phases.

Change management approach

Responds to the needs of all affected employees.

Change management communication

Workshops, training events, and internal communication channels.

Change process support

Must be supported and championed by management.

Key account management questions

Integrated into company strategy? Criteria for selection defined? Needs systematically recorded?

Account plan definition check

Has an account plan been defined for each key account?

Key Account managers ability

Are able to meet performance expectations?

Relationship network check

Are the networks of relationships for key customers clearly defined?

Proactive selling

Selling products or services to potential customers in an unsolicited manner.

Reactive selling

Selling products or services to customers who are actively seeking a supplier.

Request for proposal (RFP)

Invitation to suppliers to submit a bid.

Proactive sales definition

Contacting the customer before they indicate a need.

Proactive selling requirements

Analyzing new and existing customers to determine sales potential.

Proactive selling preparation

Matching products and services to potential customers and preparing convincing arguments.

Sales representatives knowledge

Know the company’s products and services inside out and understand customer needs.

Proactive selling communication

Address others apart from the usual customer contact.

Share of wallet

How much of a customer’s spending within a category is with a specific company.

Cross-selling

Selling an additional product or service to an existing customer.

Upselling

Selling more expensive items, upgrades, or other add-ons to existing customers.

White spot analysis

Analysis of sales potential for new customers who are not yet served.

Proactive sales change management

Challenging for many companies and require effective change management processes.

Proactive selling training

Sales representatives need proactive sales training and product/service know-how.

Proactive selling KPIs

Recognize success in proactive sales.

Successful sales KPIs

Percentage of sales generated with customers who have bought from the competition so far.

First-time sales KPIs

Percentage of successful first-time sales of products not previously bought by existing customers.

What to sell in Proactive Sales

Products or services that you attempt must be easily understood by the customer.

Where to sell in Proactive Sales

Answered by doing a share of wallet analysis and a white spot analysis.

How to sell in Proactive Sales

Involves asking questions, listening to the customer, and defining concrete next steps.

Customer objections in Proactive Sales

Most effective response is careful listening.

Expect short-term success in Proactive Sales

Requires the development of a long-term, trusting relationship.

Value-based selling

Selling a product or service based on measures of quantitative value.

Value-based selling dialogue

Addressing customer doubts with logical and statistical facts about the products quality to ensure further engagement.

Value-based selling approach

Quantifying the benefits for the customer.

Value selling

The sales person identifies and implements improvements for the customers.

Value-based selling context

Occurs in the context of strong customer relationships rather than individual transactions.

Differentiation of customer values

Is the key to successfully utilizing a value-based selling approach.

Value-based selling questions

Which values are most important for the customer? How does our performance compare to the competition?