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Channel Management

Editorial Policy

• Attracting the right talent to an increasingly important job
  
  
• Motivating the desired results among your largest and most important customers
  
  
• Ensuring the desired level of teamwork between KAMs and the field to ensure excellence in customer coverage
  
  

• Many companies are doing increasing amounts of business with their largest accounts. Markets and accounts are in many cases consolidating. More business is being done with fewer customers. Three quarters of survey respondents indicate that national account sales are growing significantly faster than sales overall.
  
  
• Key account business is coming under increasing price and margin pressure. As accounts grow larger and become fewer in number, they are flexing their muscle and demanding more pricing concessions.
  
  
• KAMs recognize that the best way to combat price discounts is to sell value. This includes problem solving/solution selling, product/service customization, enhanced customer education, and post-sales service enhancements.
  
  
• KAMs also recognize that the best way to sell value is to sell high. Value is not easily recognized at the Purchasing Administration level. Functional executives and general managers who manage the top line and the bottom line are more willing to pay a premium for products and services that help them meet their objectives.
  
  
• Companies realize that attracting the right caliber of individual to the KAM job and creating a team-oriented account coverage model are critical to selling value to high-level executives. To sell solutions, the KAM must have access to resources that are motivated to work together. And the KAM must have the skills to organize and direct these resources in ways that add value to the customer.
  
  
• If the compensation plans are wrong, finding the right people and motivating the right behaviors are almost impossible. Money talks. When pay systems are at odds with your goals, those goals are most assuredly in jeopardy.
  
  

• Top-notch Key account managers are expensive. The level at which such positions are paid varies depending upon job scope factors such as revenue, geography, number of direct reports, etc. In general however, the KAM who is responsible for one or several national accounts is paid at a level equal to or greater than a second level sales manager. In many organizations, the second level sales manager is a Regional Director.
  
  
• KAMs are not transactional sellers. The implication here is that these positions should not be compensated on risky, highly leveraged incentive programs. Long lead, complex relationship-oriented selling implies moderate risk. The survey found that the average level of incentive paid to KAMs is about 17 percent of total compensation. Field sales jobs, which typically generate smaller, more frequent transactions than their key account counterparts, generally have much larger percentages of their income at risk in performance based incentives.
  
  
• The most effective plans have only a limited number of measures. We have seen plans with five or more measures of performance in a misguided attempt to accurately reflect all aspects of a complex job. The most successful plans focus on the key results desired -- sales growth, sales retention, increased account share, etc. -- and are limited to two, perhaps three key metrics.
  
  
• The most successful plans share sales credit among the positions responsible for closing the sale. KAMs rarely work alone. They count on field sales, technical sales support and other positions to assist and even lead in various aspects of the sales process. The amount of credit available to these positions must be in proportion to their role in getting the business. Programs that make the mistake of under-crediting encourage non-team behaviors and put sales results at risk. Programs that share credit not only encourage appropriate teamwork, they also encourage joint planning and goal setting between sales managers. Joint planning plus shared crediting generally yields improved results.

• Determine the growth vector of your key accounts. Are they becoming more or less important?
  
  
• Is key account sales profitability under pressure? If so, are you counting on “value add” programs to put more profit into the business?
  
  
• Are your Key account manager compensation plans consistent with “best practices?” Do they attract the right type of individual and encourage the desired behaviors?
  
  
• Are your programs set up to encourage and reward team selling behavior between key accounts and other sales organizations?