Cranfield School of Management
Interview: Diana Woodburn
Key Account Management: The Definitive Guide
SM
Hello, this is Steve Macaulay from Cranfield School of Management,
Learning Services Team. I am here today to interview Diana
Woodburn, who is the co-author with Malcolm McDonald of Key
Account Management: The Definitive Guide. Diana, between you,
you and Malcolm have got a lot of experience of key account
management. I hope that this is a practical experience, and not just
an academic one.
DW
Oh, no, certainly not. I mean right from the beginning all the research
and the work that we have done has been done with real companies
and as we have learned more over the years, we have actually been
able to deliver more to companies so that they have been able to build
that into their key account management programmes. So, no, its not
theory – or if it is, its very grounded theory.
SM
What has been the reaction to the book from what you have
gathered?
DW
Well, I think people have found that there is a lot in it that they can use
– that is what we hope. We have put into it a lot of tools, things that
people can pick up and take out the generic titles that we have to put
into them to put them into the book and put in the things that really
relate to their company and their customers and really put those
things to use. So I think it is very practical, but it is practical from the
point of view of both the key account manager who is doing the job
and also for the key account director, the person who is trying to put
KAM initiative into a company which is a very extensive activity. So I
think there is something in there for both those constituencies.
SM
So it has clearly been popular, because it is now in the second edition.
What prompted you and Malcolm to write it?
DW
In the first place, or the second place?
SM
I think – let's take both of those, the first and then the second, because
obviously things have changed during that time.
DW
Yes, we wrote the first book, which was called Key Customers back in
99 and it was published in 2000 and at that stage there wasn’t really
very much out there about key account management at all. We had
started working together in 97 to develop our knowledge on key
account management, not very much was available to people, so we
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took that and we put that book together and then over the six, seven
years in between we have learned a lot more, and therefore it seemed
time – and I have to have say it was probably a little after time, it
should have been done before – to put that new knowledge into the
book and extend some of the areas which weren’t as strong as we
would have liked them to have been in the first place because we
didn’t know as much, and that was particularly perhaps around the
processes area that comes to mind.
SM
You talk about key account management as an organisation wide
process. What has led you to this conclusion?
DW
Well, this is interesting because it is pretty well a universal rule that
the issue of key account management, the difficulties that arise from
doing them, don’t really come from the customers, they come from our
own organisations. It is not the external big – yes, we have
demanding customers, but they are often quite reasonable demands,
things that you would expect customer to want and then the difficulty
that we have, or the problems that we have, are trying to deliver
against those promises. Now, for some people, they think that key
account management is about going out being friendly to customers
and nice to them. Of course, it isn’t. Your contacts or your
relationships have got to deliver something and therefore you have
got to get back into your organisation to say, well these special
customers require something special. That shouldn’t be a surprise,
but it is to some internal departments who want to standardise and do
things exactly as they did before and that is the issue. You have got
to get the whole organisation orientated in order to make sure that you
deliver and don’t just make promises.
SM
If you were to pick out three things that you would like people to
remember from the book, what would they be?
DW
I am going to be a little bit traditional here and go for the three Ps, but
not the same as the marketing four Ps. Planning, if you haven’t got a
plan for a key account that is a major part of your company’s
business, then I don’t suppose you really know where you are going
with it and that is far too risky. If you haven’t got a plan for a key
account then there is nobody in the company who can help you to
deliver to it because you haven’t told them what is going to happen.
So the first thing is that you need a plan and that plan has got to be
soundly based on an understanding of the customer and their
environment, not just what you want. I think the second thing is
process, as I said just now, we strengthened that area of the book and
what we have realised is that things tend to fall down if key accounts
had been promised something and it is delivered on an ad hoc basis.
Generally speaking these accounts are too big, too important to the
company and too demanding to have things in a fragile state. So you
need to consider what processes your company has for delivering to
key customers. It may be for example, that you have pricing process,
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a pricing approval process, but it is far too slow to give answers to key
customers as quickly as they want and as often as they want. So you
need a better process. That kind of thing needs to be looked at.
And I think the last one is persistence because this isn’t a short term
strategy and there are some rocks and boulders along the way and
therefore you really do need persistence and customers have long
memories, so if you start something, you have to go on with it.
SM
So that leads me really onto the next one, which is about relationship
stages. Everybody things of the traditional bow tie relationship, but I
think you go through some steps, so could you explain what those
steps are in terms of the quality of the relationship?
DW
Well we describe four main stages of the relationship – as you say
rightly the minimal one perhaps, is known as the basic stage or the
bow tie. It had one or two other names, but we think basic describes
it pretty well and that is the nearest thing perhaps to a more traditional
selling relationship, where you have got the key account manager, so
called but still probably doing a lot of selling, interfacing directly with
the key contact and keeping other people on both sides behind them
in the relationship. And that is all very well for a lot of accounts. For
a lot of your accounts that is as much resource as you can and you
want to give them, because you are not expecting that there is going
to be a great return from that. So that is fine up to a point, but then
you need to work your way towards what is known as the diamond,
which is called the interdependent relationship and that is probably the
relationship that you aspire to if you are really going to do real key
account management, where the key account manager retreats –
doesn’t exactly retreat, but they actually start to engage the rest of
their company and the key customer contact does the same, so that
people can be in direct working relationships together because they
have been properly briefed and properly managed and empowered to
do that. Now, that is not an easy thing to do and in between there
you are likely to go through a stage which we call the cooperative
relationship which is when the customer feels a bit better towards you
and you get a bit more business, but you tend to have contacts firing
off in all directions and the key account manager often doesn’t have
enough control or authority over that and a canny customer can get an
awful lot of resource out of a supplier, without the supplier even
noticing at that stage. So it may be a necessary transition stage, but
it is not a place to settle down. And also, we rather think that that
stage is perhaps related to the relationships in which suppliers find
they are losing money. So we are not saying that all relationships at
that stage lose money, but they ought to be looked into and
challenged, we suggest. And right at the top there, there is one
called the integrated, but it is really very rare and it is almost just one
stage down from a legal merger. So there are a few about, but we
don’t dwell on it because there aren’t too many, but they do exist.
SM
There are lots of organisations that I come across that profess how
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important good client relationships are, that in fact have a very different
emphasis internally and particularly financial – how do you actually get
this genuine kind of outward client facing stance through key account
management?
DW
I think what a company has to do is open itself up to hearing the voice
of the customer and that may often be through hearing it through the
key account manager, but then they have got to adhear to it and of
course we do have a traditional approach sometimes in this which is
we shoot the messenger of bad news and in lots of cases a customer
of this kind is going to say well, you are good, but you are not good
enough for our future and you are going to need to do things
differently. And that is not always welcome news, as we say, but
companies that can open themselves up to the voice of the customer,
have had some startling revelations, good and bad, and have actually
– where they have responded to that – they have had some startlingly
good results. So, it all falls into line so long as you can hear what the
market-place is saying, but some companies are really excellent at
blanking off their board of directors, who tend to isolate themselves
from that and that is not a good approach.
SM
So give me some preconditions then for what you would see, from your
experience, of successfully introducing and sustaining a good key
account management system.
DW
Well, it is sad but true that lots of companies don’t do anything
different from what they have done before until they are hitting some
kind of issue, going on crisis. And what we would say is that key
account management can do certain things for you – it can’t do
everything. So if you don’t have a strategy or your basic core offer is
failing in the marketplace, key account management isn’t going to fill
in all the holes. On the other hand, if you have got a good offer, but
you are in a tough market place with tough competitors, what it can do
is give you greater security through building that closeness to the
customer which enables you to flex and bend and reduce the risk.
But what you do want to do, is right at the beginning, start thinking
about what is it that you realistically think that key account
management should do for you before you start appointing key
account managers and telling them to go off and do the job, because
a reasonable question would be what job do you want us to do? Why
are we doing key account management? So starting out, some
thinking around why is it that you think circumstances in your market
place are right and for lots of people it is because customers are
consolidating and it is very much more the prizes are bigger, it's much
more you win a lot, or you lose a lot and in the end your company
survival can depend on that.
SM
I would like you to draw on your experience, we said at the beginning
how much experience you had, can you pick out some successful
examples that you can say I went into this company, or this
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organisation, to address these issues and we were successful through
adopting a genuine key account management approach in achieving
that?
DW
Yes, I suppose I fear I might have a little bit stressed some of the
difficulties of key account management so far, on the other hand, it is
tremendously exciting and you do find that people who have been
doing a job of dealing with customers for, you know, years or decades
can suddenly see a gap in the wall. They might have felt that they
have been banging their heads against the same brick wall for the last
twenty years, and you can begin to see a way forward and it is when
you are working with a company that you enable people to do that.
So for example, one company on the professional services side, they
had a wake up call from some research that they did that said to them
you are a very good company and so are the other big four, so good,
but no better than the good ones, which is always a tough message.
And also we are moving forward and we don’t quite see where you
are going to come into our future, so this was a wake up call. Having
done that, received that message, people were keen to see how they
could change and when they actually got the hang of it, you could see
– what you would like to see is people taking the ideas and the
concepts and changing them to suit their market place and their
customers and making them their own and actually coming up with
some fabulous ideas for moving forward and having a company
behind them which is prepared to say yes. Not yes, every time,
obviously, but to say yes some of the time. This particular company
was put up afterwards as an industry standard, or an industry icon
about what they had done. They had a measurement programme,
along with some of their key clients that was published and both sides
were proud to own up to that and the amount of business that they
developed was astonishing, and that was with clients, some of them in
the public sector, where you would be quite surprised by that. So
there are some – people have done things like tripling their business –
now these things don’t come out of doing more of the same of what
you have been doing, you have to do something different to triple your
business in a year or two.
SM
That sounds great news to me. If we look to the future, do you see
some research that you are doing or some trends that you are
spotting that will give a feel for where key account management is
heading?
DW
I think one of the interesting things is that you can see in the enquiries
and interest that we get, various sectors waking up – in any given
year, you get a sort of general wake up call and so we are beginning
to understand a little bit more about what are the differences – sorry,
what are the similarities between the way that people have to do key
account management with their customers, which are a lot across
widely different sectors, are very much in common – similar
approaches that people need to make. But there are some
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differences and that is interesting to explore in order to make people's
programmes more successful. There is quite a lot, originally we just
sort of said it ought to look like this, and recently we have been
looking into how – that’s all very well but how do you get from where
you are to where you want to be? Because that transition is a tough
one and sometimes, one company I know termed the phrase
corporate wobble – and you can get corporate wobble in the middle
and lose your programme because some of the elements and
expectations of what were involved in the transition weren’t perhaps
realistic. We have also been looking into the way that people reward
performance and it is interesting that out of the things that we
researched that companies would change and adapt in order to
implement key account management, one of the things that they like
changing least is the way that those people are rewarded. Now if you
want people to develop long term relationships then you are giving
them entirely the wrong messages if you are rewarding them on short
term sales revenue and I think there is an interesting piece of work in
the development that we are doing around how to incentivise and
encourage people better, and more in alignment with what you want to
achieve.
SM
Fascinating. We have covered a big area here, is there anything else
that you would to add that we have not covered fully.
DW
I think I would just like to say that if you are embarking on key account
management as a company, or as an individual, it's more of a medium
and long term strategy than a short term hit. You may well get short
term wins, and in any organisation it’s a good idea to try to do that and
to celebrate them when you get them, but you need to be settled in for
the longer haul. If that sounds dull, it entirely isn’t and as I said
before, it is a very exciting thing to do. It expands your whole
horizons, it gives you new challenges and a broader range of
competencies to work with than you would have done if you had been
doing sales or if in fact you had come from a project management
background. The underpinnings of it all is really having a deep
understanding of the customer, not just the power politics, but what
their marketplace is and where it is going, so that you can genuinely
add value.
SM
Ok, well that is very useful. Diana Woodburn, thank you very much.
DW
You are welcome.
Transcript prepared by Learning Services for the Knowledge Interchange
www.cranfield.ac.uk/som
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Produced by the Learning Services Team
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© Cranfield University 2007