Using Key Account Management to Capture Market Opportunities,March 2002,CONFIDENTIAL,This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey it is not a complete record of the discussion.,Client discussion/LOP on multi-level sales improvement program (SSP/sales performance, cross-selling and coordination, solutions and vertical packaging) SALES however, KAM or other sales improvement efforts can and often are shorter or more narrowly focused. In addition, in this particular example, we had deep knowledge of the client situation through previous strategy and pricing studies, as represented on the example pages attached. This might not be the case in your client situation. For more information on these and other sales and channel topics, contact the North American Sales “Band-Aid” organizational changes Big accounts get most attention Sales/margin for transaction Judgment-based decisions Short-term account planning; reacting to opportunities Relationship-driven model Leveraging sales Relying on negotiation skills to extract value Minimal market feedback; one-way sales cycle,Winners,Tailored delivery systems “Highest priority” to accounts with growth potential Lifetime profitability/market value Fact-based decisions Longer-term account strategies; identifying and developing opportunities Value creation and partnership model Leveraging organization Relying on understanding of joint economics to optimize value Customer and field feedback loops feed an ongoing process,17,TODAYS DISCUSSION,Overview of key account management Perspectives on the opportunity Basic beliefs and approach Selected examples Discuss a suggested approach for your company Diagnosing the opportunity Building the capabilities and capturing near-term value Designing the organization Resource requirements Highlight McKinsey qualifications Firm experience and resources Understanding of your company Field questions and discuss next steps,18,Phase 2,3 months (varies by program),Phase 3,Launch the organization of the future,Execution with target customer sets,8 weeks,OVERVIEW OF SUGGESTED APPROACH FOR KAM ENGAGEMENT,Phase 1,Timing,6 weeks,Activities,Scope,Build the customer knowledge base,Opportunity assessment and program design,Begin to build the market / customer knowledge base Understand segment and customer opportunities Evaluate capability and change readiness Choose customer sets and design execution phase,Develop the account-level fact base Execute key account management pilots Assign role and responsibilities Engage in pilot account planning Develop tactical action plans Execute initial account actions, evaluate and refine plans Initiate longer term account action items Complete and “go live” with customer knowledge base,Outline scope and nature of remaining opportunity Determine go-to-market / KAM structure Clarify processes and supporting mechanisms Begin full-scale implementation,Opportunities selected in Phase 1 Solutions/verticals-based (e.g., oil and gas, utilities) Cross-selling focused (e.g., multi-bu accounts in IAS, Controls and Power overlaps) Sales penetration at major accounts(e.g., Compaq, Whirlpool),Subset of customer base from across the organization, including: Multi-divisional accounts Multi-bu accounts Single-bu global accounts?,Company-wide, high-level go-to-market organization design,Purpose,Increase success from market-back, opportunity-driven design,Create momentum through early wins Begin building capabilities,Establish longer-term, experience-based solution,19,PHASE 1 DETAIL: OPPORTUNITY ASSESSMENT PHASE,Timing,Activities,Opportunity assessment and program design,1 week,3 weeks,1 week,1 week,Assemble basic, internal customer information Outline customer information requirements Assess availability of additional information and begin collection process Compile list of your company offerings and capabilities,Synthesize all available information (e.g., sales perspectives, financials, previous customer interviews, external data, etc.) into segment and customer attractiveness Develop preliminary view of opportunity and likely approach for capture Estimate magnitude of opportunity,Assess management and organization readiness Skill for new tasks Will to change and try new approach Estimate timing of impact Map opportunity attractiveness versus feasibility for pilot,Select initial customers sets to begin Outline resource requirements, process, and timing Refine work plans, tools, and approach Gain agreement to proceed,20,CUSTOMER SEGMENTATION BASED ON ATTRACTIVENESS,Current sales volume,Growth potential - share of wallet and organic,Competitive landscape (the company/ customer fit),Customer segmentation based on attractiveness,“Key”,“Major”,“Core”,Customer willingness to partner with the company,Current and future estimated profitability,21,PRIORITIZING CUST