Do Cooperatives Need Key Accounts?
Phil Kenkel
Bill Fitzwater Cooperative Chair
Many investor owned agribusinesses, particularly sales based organizations, operate on a key
account system. The idea behind a key account system is that there are a limited number of
customers that have similar characteristics and that will create more value to the firm over time.
It related to the age-old "80/20" rule that suggest that that 20 percent of the customers generate
80 percent or more of the profits. The key account system strives to make these customers feel
special. Many companies recognize this strategy as being important and create sales plans and
organizations to reflect this idea.
The objective of a cooperative is to create profits to share with the member owners. They are
also member-controlled firms, generally operating on a one member-one vote system. Because
of this structure, cooperative managers may be less comfortable with the key account structure.
Another aspect of key account management is to assign the stewardship of the relationship
between the firm and one or more significant clients to an individual. This aspect of key account
management may be a fit for cooperatives. It could even be a partial solution to the challenges
of diverse memberships. Having one individual responsible for cultivating the relationship with
a member group (for example, large producer, irrigated producers or livestock producers) lets
them work to understand the needs of those strategic customers and develop the expertise and
special mix of products and services to meet those needs. The key account concept crosses
functional boundaries and encourages someone to work with specific customers on all of their
needs including crop fertility, grain delivery and risk management.
In a democratically owned firm every member is in some sense a key account. On the other
hand, all members benefit when the cooperative retains high volume members. Could a key
account system be the key to dealing with diverse membership or is it not the cooperative way?
Let me know what you think!
10-25-2012