Rodrigo Guesalaga is Senior Lecturer at Cranfield School of Management, Associate Professor at Pontificia Universidad Católica de Chile, and Visiting Professor at Vlerick Business School. Rodrigo obtained a PhD in Marketing at Emory University (Atlanta, USA). His main area of expertise (teaching, research, and consulting) is on marketing strategy, and specifically in sales and key account management, customer metrics, and cross-cultural management.
Rodrigo, you have recently published as co-author the book “Implementing Key Account Management: Designing Customer-Centric Processes for Mutual Growth” can you please tell us how this project came about?
This book was a natural consequence of years of work in the area of Key Account Management (KAM), both for the four coauthors (Javier, Sue, Mark and I) and for the KAM & Strategic Sales Forum at Cranfield University, a research center that brings together companies from different sectors and advances the knowledge on KAM and strategic sales. We had this idea for some time, and we finally decided to pursue this project, which was absolutely interesting and exciting.
We felt that although there were several very good books on KAM in the market, there was a need for a focus on the implementation part, with a very practical approach and the experience of a number of executives, managers, and consultants who supported the contents of the book with insights and examples.
What are the challenges for adopting the key Account Management?
A major challenge in adopting KAM is to be profitable in the long run with key account relationships. And this is driven mostly by the right selection of key accounts, the terms of agreement with these customers, and the supplier’s commitment. A true KAM program requires unique investments in key customers, and an organizational involvement that needs to be supported from the top and throughout the company; therefore, it is not really easy to succeed if the selected customers are not the right ones or if the supplier company is not willing or ready to fully support KAM implementation. We have seen that the customers’ willingness to co-invest in a relationship with the supplier is crucial, so it’s not enough to find that a customer is “big” or “profitable” to select it as a key account. The mutual understanding of how the two companies can grow together and the co-creation of initiatives that brings real value to the relationship are paramount.
What differentiates key account management from simple account management?
Two important aspects distinguish key account management from just account management. First, the selection of key accounts needs to be very well analyzed and really only a few customers should get this status. In the book we propose a methodology to select key accounts, but in a nut shell, key accounts must be those of strategic importance, with which the supplier company has a greater chance of developing and growing business relationships that are profitable to both firms of the dyad. Second, the amount and type of investment in key account relationships differs from that with regular accounts. In KAM, the supplier company strategically decides to invest distinctive resources in each key account, such as dedicated personnel, tailor-made solutions, or a unique technology-based communication system.
What are the main mistakes in the development of customer relationships?
One typical mistake in the process of developing key account relationships is to intend to establish very quickly a series of complex agreements between the two companies, without first building a trusting relationship. As we elaborate in the book, often times a supplier and a buyer start a business relationship in different positions in terms of power and in terms of the kind of relationship they are looking for (from purely transactional to highly relational). Therefore, to achieve a collaborative relationship of mutual dependency requires the two company to engage in interactions and activities that are trust building. Otherwise, a disparity in power can trigger opportunistic behavior from one of the companies, which will threaten the development of mutually successful long-term relationships.
Another mistake is to assume that all key customers follow a very similar buying process and that the factors that determine their experience are also similar. To avoid this mistake, supplier firms need to work on a proper customer journey mapping, to identify the critical touchpoints within the two companies and the specific factors that produce a positive customer experience. Likewise, the customer buying process needs to be analyzed very carefully to make sure the supplier company understand the roles, interests, and other aspects of the decision-making unit.
You have done some research on dynamic capabilities. Can you please explain what are the dynamic capabilities, why are they relevant, which could be an example in the context of key account management?
The idea of dynamic capabilities evolved from resource-based theory, which is an organizational perspective to uncover and develop competitive advantages. A company is conceived as a combination of resources (tangible and intangible) and capabilities; competitive advantages are built on some of these resources and capabilities when they are valuable, rare, difficult to imitate, and supported by the organization. Capabilities can be either operational or dynamic. In the context of KAM, an example of an operational capability is the selection of key customers; a dynamic capability could be the timely gathering and analysis of market information which allows the selection of key accounts to be more effective and efficient. Therefore, dynamic capabilities support the development of resources and operational capabilities to make a competitive advantage sustained.
The book is avaiable here: