Module 5

B2B CRM
 B2B Market
 The business market comprises of all the organisations that buy goods
and services for use in the production of other products and services that
are sold, rented or supplied to others. It also includes retailing and other
wholesale firms that acquire end goods for the purpose of reselling or
renting them to others at a profit.
( Kotler et. Al. 1999)

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 Market Structure and Demand
 Nature of the Buying Unit
 Types of Decisions and the Decision Process
 Major Types of Buying Situations in B2B Contexts
 Participants in the Business-buying Process
 The Business-buying Process

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 A business market contains a few but large buyers who buy in bulk. This
increases the influence of these buyers on the market.

 Most demands in a business market are ‘derived demands’, being

derived from quantity the firm hopes to sell to its customers.

 Many business markets have inelastic demands.

 Business markets have more fluctuating demands because a small change

in consumer’s demand can cause a large change in business demand.

 The demand for many business goods and services tends to change much
more quickly than the demand for consumer goods or services.

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 A business purchase usually involves more buyers involved in the
decision-making process and a more professional purchasing
effort.

 As the quantity of purchase and its value increases, the number of

people involved in the purchase also tends to increase
dramatically.

 The key players involved include technical experts, management

and business markets experts and finally well-trained sales
persons.

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 The business buying process is more formalised than the consumer
buying process because of the complexity involved.

 Decisions may be made after due considerations of all the factors and this
may involve considerable time for deliberation.

 In the business buying process, the buyer and the seller are much more
dependent on each other.

 Major factors that influence the buying process include the four
marketing Ps, i.e. product, price, place and promotion.

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 Users
 Influencers
 Buyers
 Deciders
 Gatekeepers

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 Firms are able to get instant information on demand and supply
situations from the website.
 The proliferation of web-based industrial service providers has bought
services like vendor comparison on various parameters readily
accessible to buyers.
 Companies can resort to day-to-day trading to reduce their inventory
and get competitive prices for their purchases.
 For high value items that are very critical, industrial customers may go in
for a long-term close collaboration with their vendors.
 Fierce competition for the top customers, rising customer acquisition
costs, maturing markets, commoditisation of many products and services
through e-commerce and lower vendor switching costs have forced
vendors to focus on building loyalty with the customers.

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→ Focusing on key customers and building strong relationships
with them.
→ Proactively generate high levels of customer satisfaction
with every interaction with the customer.
→ Anticipate customer’s need by careful study of the
environment, customer processes and their behaviour.
→ Building closer ties with the customer, sometimes by
integrating their systems.
→ Finally, creating a value perception for the customer.

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Customers
Identification of key customers is based on:
 Lifetime value
 Strategic importance of the customer

Technology
 Technology is playing an important role in building relationships by
facilitating the flow of information across the value chain.
 It enables the demand of the customers to become much more visible
across the extended supply chain.
 Technology is changing the way relationships are made and managed.

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 KAM
• Key account management is a natural
development of customer focus and
relationship marketing in business-to-business
markets.
• It offers critical benefits and opportunities for
profit enhancement to both sides of the
seller/buyer dyad.
• builds a portfolio of loyal key accounts by
offering them, a product/service package
tailored to their individual needs.
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 Key Account Management (KAM)
• KAM is a structure that facilitates the
implementation of CRM at the level of the business
unit
• A key account is an account that is strategically
significant
• Are two ways to implement KAM.
– A single dedicated person is responsible for
managing the relationship, or
– A key account team is assigned
The team membership might be fully dedicated to a
single key account, or may work on several accounts

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• Relationships between buying and selling companies
evolve over time.
• Firstly a shift from "transactional“ to "collaborative"
modes of exchange;
• secondly, the building of trust and commitment
towards a shared future.
• Using the six-stage Key Account Relational
Development model proposed by Millman and
Wilson (1994), it’s possible to assess the position of
selling companies at various stages of key account
development, analyze managerial behavior, and gain
insights into the changing profile of skills necessary
as relationships mature
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 A model of KAM development

Complex
involvement with

Synergistic - KAM
customers

Partnership - KAM
Levels of

Mid - KAM
Simple

Early - KAM

Pre - KAM
Transactional Collaborative
Nature of customer relationship 16
• selling companies practicing key account management do
consciously plan to move key accounts from prospects
towards higher relationship levels.
• This model demonstrates the typical progression of a
relationship between buyer and seller through five stages .
• A sixth stage, Uncoupling-KAM, can occur at any time in the
relational development process.
• The operationalization of the model can be achieved:
1. by an analysis of the volume of business between the supplier
and customer
2. by the observed working relationships between the two
companies.

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 Pre-KAM
• Describes preparation for KAM. A buying company is
identified as having key account potential, and the
selling company starts to focus resources on winning
some business with that prospect.
• The Pre-KAM stage could be described as a "scanning
and attraction" stage.
• Both seller and buyer are sending out signals (factual
information) and exchanging messages (interactions)
prior to the decision to engage in transactions.

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 Early-KAM.
• At this stage, the selling company is concerned with
identifying the opportunities for account penetration once
the account has been won.
• Bespoke solutions are needed, and the key account manager
will be focused on understanding more about his/her
customer and the market in which that customer is
competing.
• The buying company will still be market testing other selling
companies, and expecting a demonstration of value for
money.
• The selling company must concentrate hard on product,
service and intangibles — the buying company wants
recognition that the product offering is the prime reason for
the relationship — and expects it to work.
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 Mid-KAM stage
• the selling company has established credibility with the buying company.
Contacts between the two organisations increase at all levels
• buying companies still feel the need for alternative sources of supply. The
selling company's offering is still periodically market tested, but is reliably
perceived to be good value.
• The selling company is now a "preferred“ supplier. There will be assumed
longevity, even if individual contracts are renewed annually. There may
still be exit plans as well!
• The emphasis switches from product excellence to social integration at
the Mid-KAM stage.
• Everyone in the selling company will be expected to know the names of
key accounts and understand their importance to the company and the
service that must be given.
• The buying company will now know the people in the wider key account
team as well, and some senior managers.

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 Partnership-KAM
• the selling company is seen by the buying company organisation as a strategic
external resource.
• The two companies will be sharing sensitive information and engaging in joint
problem resolution. Pricing will be long term and stable, perhaps fixed, but it will
have been established that each side will allow the other to make a profit!
• Key accounts will "beta test" all the selling company's innovations so that they
have first access to, and first benefit from, the latest technology. The buying
company will expect to be guaranteed continuity of supply and access to the best
material.
• Expertise will be shared. The buying company will also expect to gain from
continuous improvement There may be joint promotions, where appropriate.
• The partnership agreement will be long term; at last 3 or 5 years. (one buying
company claimed that, in practice, they put no time limit on their partnership
agreements.
• Several categories of performance are itemized in partnership agreements (up to
40 within our sample), and the selling company will be trying for 100 percent on
every measure.

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 Synergistic-KAM
• It is the ultimate stage in the relational development model.
• Synergistic-KAM refers to selling company and buying company together, creating
value in the marketplace, i.e. quasi-integration
• exit barriers have been built up. Costing systems become transparent Joint
research and development will take place.
• There will be interfaces at every level and function between the organisations.
• Top management commitment will be fulfilled through joint board meetings and
reviews. There will be a joint business plan, joint strategies, joint market research.
• Information flow should be streamlined and information systems integration will
be planned or in place.
• Transaction costs will be reduced and time will be taken out of work cycles. Billing
will be bespoke to that buying company.

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 Uncouplling-KAM
• There is a sixth stage in the relational development model
that demands key account strategists' attention.
• Uncoupling-KAM, describes relational breakdown and
emphasizes the need for contingency plans.
• Breakdowns can occur at any stage for a number of reasons,
but the reason occurred most frequently is a breach of trust.
• Buying companies, in particular, feel vulnerable, and place a
very high importance on the integrity of suppliers

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 Benefits from KAM
1. Doing large amounts of business with a few
customers offers considerable opportunities to
improve efficiency and effectiveness
2. Selling at a relationship level produces
disproportionately high volume, turnover and
profit.
3. Repeat business can be considerably cheaper to
win than new business
4. Long-term relationships enable the use of
facilitating technologies such as extranet-enabled
portals, shared databases
5. Familiarity and trust reduce the need for checking
and make it easier to do business
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 Diamond structure for
Partnership-KAM
R&D R&D

Admin Admin

Operations Operations
Key Main
Act. Mgr contact
Outbound Inbound
logistics logistics

Selling company Board Board Buying company

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 Steps to key account management
1. Identify key accounts:
• Big existing account Vs Big potential accounts
• Prioritize on the basis of attractiveness (R.O.I.)
• Decide on how many key account you can handle
2. Identify what matters to key customers:
• Map the customers needs, motivations & goals.
• Pin point what really creates value for key account
decision maker.
• Adjust your offer to create maximum value for the
key account.

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 Steps to key account management
3. Plan to do things differently
• Identify where value creation can exist.
• Plan for account growth.
• Focused / account specific strategy for each of the key
accounts.

4. Upgrade the skills of your key account executives.

• Check if the skills of the key account executive matches the
needs of the key accounts.
• Specific, need based development plan for each of the key
account executives. Both training and experience
(mentoring ).

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 Steps to key account management

5. Improve account management processes.

• Up to date job definition (keeps on
changing ).
• Rewards consistent with performance.
• Organizational working processes aligned to
the job requirements of KAM.

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 Team selling
• Form of selling associated with KAM
• Key account team might include specialists that can
sense and respond to customer concerns over a
variety of issues
– engineers, logistics, research and development, sales.
• Team selling may cross organisational boundaries
– Representatives from two or more partnering
organisations can come together to pitch for new business
or service an established customer.
• Partner Relationship Management systems facilitate
such arrangements by making customer, project and
product information available to all partners

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