Crafting key account value propositions

Alistair Taylor: Managing Partner Brightbridge Consulting:

Article for The Association of Key Account Management (AKAM)

One of my favourite quotes, from Mark Twain, the famous American author, is “I didn’t have time to write a short letter, so I wrote a long one instead”.

The point he was making is it is often easier to write a lot of words quickly than to say something briefly but to the point with more meaning.

By having clear, short motivating value propositions targeted and tailored individually to the needs of chosen key customers, a supplier can advantageously distance itself from competitors.

Value propositions are often created for individual products and services, but for an enduring key account relationship, it is also beneficial for a supplier to craft a higher-level proposition, one which illuminates what exceptional value it, the supplier, continuously delivers for the particular key account.

In this short paper we’ll explore the key account value proposition in more detail, noting some practical guidelines for successfully creating such propositions.  We’ll finish by considering some practical implications for the supplier developing its key account management.

What’s are key account value propositions?

In my mind a value proposition is a clear offer to a customer that outlines how your business will help them achieve a better commercial outcome. This is in comparison to what they would achieve alone, or through working with any of your competitors. It’s thus a promise of additional value to be communicated, acknowledged and delivered.

Whilst a proposition will need to be supported by detail, the essence of the proposition should be capable of being expressed in just 50 words i.e.  a short letter. Conciseness enables it to be communicated consistently and easily understood.

Such propositions need to be meet three key criteria.

  • Motivational: Your value proposition needs to address your customer’s specific needs, including consideration of its financial returns, risk profile, and future opportunities.
  • Differentiated: Your value proposition needs to show that your solution is better than other options available.
  • Credible: There needs to be evidence, or history, that shows that what you are proposing can be delivered.

Value propositions developed for a supplier’s individual products, services or solutions (bundles of product and services that address a particular need) are important but tactical. The supplier uses them to win one off pieces of business.

At a higher level, a supplying organisation may have an overall strapline that states what it delivers for its entire customer base. e.g. ‘Global supply chain solutions’, ‘sustainable packaging’ or ‘leading edge sales talent development’.  These are by nature generic.

To develop key account relationships, those where the customer is sufficiently important to the supplier to warrant its special attention, it is also important to craft value propositions what highlight what your organisation consistently delivers to best meet the targeted key customers particular needs.

These hit the target customer’s enduring needs head-on.  If the supplier gets this right with its target key accounts it’s future is likely to be rosy.

Positioning to be the ‘preferred supplier’

A supplier executing key, or strategic, account management selectively invests to develop deep, high value relationships with a relatively small number of customers; those deemed to be strategically important to its current and future performance.

Such investment should lead the targeted customer to perceive that the supplier continuously offers value others can’t match. From this platform they more willingly source higher percentages of their requirements through the supplier and are more willing to pay justified price premiums.  The supplier is elevated to hold the default position as the customers ‘preferred supplier’.

When this position is reached the supplier is not pulled into fighting off competitors for each and every piece of business. The customer sees clear advantages of consistently working with the supplier – and the disadvantages of switching to others.  We are not saying business flows easily, but certainly that there are less barriers.

Such status can also open up opportunities to deeply collaborate, enabling the supplier to discover and address high value opportunities with the customer that previously weren’t on the radar.

However, having reached this position, far from becoming complacent the chosen supplier must regularly communicate and demonstrate its key benefits. Customers can quickly forget, or overlook the value a supplier has created and can deliver. Hence being able to clearly articulate these is essential.

So, from our experience of working with successful suppliers we see that for each key account a supplier crafts a clear, concise statement of what benefits it offers to that key account. The supplier then needs to ensure its entire team is ready to communicate these and to deliver against the promises made.  We have seen the power of short key account value propositions.

What benefits are valued by the key account?

To have impact, the benefit/s the supplier offers to its key account must to be meaningful and motivating to decision makers.  Senior leaders, department heads, procurement specialists, logistics managers, operators and end users may all be influential. The supplier needs to know what makes the customer organisation and the key people making up the organisation tick.

This requires gaining a deep understanding of the key accounts business model, market, internal pressures, strategies and values.

This can illuminate that factors other than immediate technical specifications and pricing, are consistently mission critical to the customer.  Some examples include:

  • Responsiveness to challenging wind turbine project timetables
  • Capacity to deliver rapid innovation and product upgrades in food ingredients
  • Access to specialist know-how- e.g. regulations, market insights, management processes
  • Superior technical capability and the highest quality product range within braking systems
  • Dependable global, or regional, programme delivery of tax management
  • Ability to outsource particular activities such as customer services with full dependability
  • Continuous supply chain productivity improvements for surgical services
  • Partnerships with suppliers who work effectively with their complex organisation: Relationships, processes, IT, etc

The supplier needs to understand which are most important factors to its particular key account and how such priorities might change in the future.

What can the supplier deliver?

Knowing the factors that are vital provides the ingredients for one half of the key account value proposition.  The other half is constructed from what the supplier can truly deliver, and in particular what the supplier is better at than its competitors.

This requires an objective appreciation by the supplier of its own competencies together with competitive intelligence and a realistic assessment of relative strengths.

Are you the supplier providing for your customer the highest quality products in the market sector they operate in? the most effective supply chain solutions for their growing Asia business? the most responsive programme management capabilities in hotel construction? an efficient one stop global shop for all their sales training needs? Perhaps you’re the supplier with the values and operating style that fits their strategic mission on sustainability?

Some practical implications for suppliers

The tailored key account proposition that a supplier puts forward has implications for the structure and actions of its team and the actions it undertakes.

If a supplier for example proposes to a customer that it represents the best partner for continuous innovation then will need to go to extra lengths to ensure top quality technical experts are part of the account team dedicated to the customer.  The supplier may consider directly involving these experts in customer meetings – so they are visible – and they may be encouraged to attend relevant events, gain qualifications, learn creative techniques. They can then bring this leading-edge expertise ‘front stage’ to the customer.

If the proposition is built around superior supply chain expertise then the supplier will need to consider how it can demonstrate its competence and expertise, sharing with the customer its best practice processes, its links with the best ‘tier 2’ suppliers and its track record. It will seek to engage with key individuals within the customers supply team; the suppliers Executive sponsor for the key account might well be the suppliers own supply chain director.

The metrics recorded, the incentive schemes and internal talent development will all be influenced by the key account focus and commitment to bring key account value propositions to life.

And finally…

It’s a simple question, but are the account managers and leaders you deal with able to clearly answer ‘what is our value proposition to customer X?’  All too frequently the answer takes the form of a long letter that is confusing.

Spending time generating and executing tailored key account value propositions is a worthwhile investment that provides the platform for unbeatable key account relationships

Author:  Alistair Taylor is a member of AKAM and a Partner at Brightbridge Consulting.  He combines the experience of implementing highly successful key account management programmes as a business leader, with experience gained from delivering customer development consulting and training for top global organisations.