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CLE_PE1188_012902_Abele_v4UsingKeyAccountManagementtoCaptureMarketOpportunitiesMarch2002CONFIDENTIALThisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.Clientdiscussion/LOPonmulti-levelsalesimprovementprogram(SSP/salesperformance,cross-sellingandcoordination,solutionsandverticalpackaging)SALES&CHANNELPRACTICEJOHNABELE-CL,MIKELONGMAN-CLCLE_PE1188_012902_Abele_v41INTRODUCTIONFollowingisasampleclientdiscussion/horizontalLOPthatoutlinesamulti-levelsalesimprovementprogramthatincludes:•Frontlinesalesperformanceimprovement/betterintra-unitmanagementoflargecustomers•Cross-sellingandsalescoordination(typicallyacrossunits)•SolutionsandverticalpackagingWithkeyaccountmanagement(KAM)asanenabler.ThisdocumenttakesacomprehensiveviewtosalesimprovementandKAM;however,KAMorothersalesimprovementeffortscanandoftenareshorterormorenarrowlyfocused.Inaddition,inthisparticularexample,wehaddeepknowledgeoftheclientsituationthroughpreviousstrategyandpricingstudies,asrepresentedontheexamplepagesattached.Thismightnotbethecaseinyourclientsituation.Formoreinformationontheseandothersalesandchanneltopics,contacttheNorthAmericanSales&ChannelPractice.CLE_PE1188_012902_Abele_v42TODAY’SDISCUSSIONOverviewofkeyaccountmanagement•Perspectivesontheopportunity•Basicbeliefsandapproach•SelectedexamplesDiscussasuggestedapproach•Diagnosingtheopportunity•Buildingthecapabilitiesandcapturingnear-termvalue•Designingtheorganization•ResourcerequirementsHighlightMcKinseyqualifications•Firmexperienceandresources•UnderstandingofyourcompanyFieldquestionsanddiscussnextstepsCLE_PE1188_012902_Abele_v43TODAY’SDISCUSSIONOverviewofkeyaccountmanagement•Perspectivesontheopportunity•Basicbeliefsandapproach•SelectedexamplesDiscussasuggestedapproach•Diagnosingtheopportunity•Buildingthecapabilitiesandcapturingnear-termvalue•Designingtheorganization•ResourcerequirementsHighlightMcKinseyqualifications•Firmexperienceandresources•UnderstandingofyourcompanyFieldquestionsanddiscussnextstepsCLE_PE1188_012902_Abele_v44SUMMARYPERSPECTIVES(note:KAMinthisexampleisonepartofthelargermulti-levelsalesimprovementprogram)Ourexperiencewithsalesimprovementeffortsindicatesthatimprovingsalesandgo-to-marketrelatedactivitiesisoftenahugevalueleverforcompanies•Initialestimatessuggestthatanincrementalsalesopportunityofover20%mayexist•Approximately50%oftheopportunityinanyareaisachievablewithin12monthsofimplementationKeyAccountManagementisonlyonepartoftheanswer.Achievingtheseresultsrequiresamulti-levelsalesimprovementprogramincluding:•Improvedsalesforceperformance/salesstimulation•Cross-sellingandsalescoordination•SolutionsandverticalpackagingInundertakingakeyaccountmanagementeffort,yourcompanyshouldensurethattheeffortis•Foundedinadeepunderstandingofcustomers’realneedsandwhattheyvalueinsuppliers•Clearlyidentifiesthenatureofthesalesimprovementopportunityforeachcustomerrelativetocompetitivealternatives•Tailorsthego-to-marketandkeyaccountapproachtofittheopportunity•Balancesnear-termvaluecapturewithbest-in-classskillbuilding•TracksperformanceandenforcesaccountabilityCLE_PE1188_012902_Abele_v45IMPACTFROMSALESIMPROVEMENTISSIGNIFICANTSalesforceperformanceandstimulationCross-sellingandimprovedsalescoordinationSolutions/verticalapplicationsOpportunitysizeImprovementleverTypicalcapturerate•60-100%inaddressedareaswithin6-18months,dependingonbuyingcycles•~6-18monthsinareasaddressed•Oftenmoreintra-divisionthaninter-division•~12-36months•WinnersfocusondrivingasmallernumberofhighpotentialopportunitiesMcKINSEYCLIENTEXPERIENCE•Median10%revenueincrease–1/25-10%improvement–1/210%improvement•Reductioninsalesrelatedcostsof5-10%ormore•Opportunitiesexistin20-40%ofcaseswitha10-20%successrate•Typically10-20%ofcustomersarepotential“solutionsbuyers”•Conversionratesoftenin20-30%range•Revenues1.5-5Xcurrent,dependingon“solution”Source:McKinseyMarketingPracticeKeyaccountmanagementcanbeanenableracrossalloftheseCLE_PE1188_012902_Abele_v46ROUGHESTIMATEOFTHETOTALSALESIMPROVEMENTOPPORTUNITYFORYOURCOMPANY(disguisedexample)Incrementalsales$MillionSource:TeamanalysisSalesperformanceCross-sellingSolutionsTotalopportunity500-1000200-800950–2,400250-600•Opportunityfor~10-15%increaseinrevenuesfromsalesimprovementprograms•Grossmarginimprovementof~$300-500million•Actualresultswilldependon:–Scopeofeffort–Paceofprogram–ExecutionqualityCLE_PE1188_012902_Abele_v47Manycompanieshaveadoptedsomeformofkeyaccountmanagementasameanstobreakoutofproductsilosandcaptureincrementalvaluefromsomeoftheirlargercustomers.Quiteanumberhaveachievedrealincreasesthroughcross-sellinganddevelopingcommercialand/ortechnical“solutions”forcustomersHowever,wehaveseenmanyclients“over-invest”inaccountmanagementstructuresandprocesseswithoutgainingmuchbenefitbecausetheyputinplaceonesizefitsall“accountcoordinators”withoutaclearideaofhowtheymightcreatevaluefordif