KAM Dobar PDF

University of Applied Sciences of Bremen Faculty of International Economics and Nautics School of International Business International Studies of Tourism
Management
Bachelor Thesis
Introduction of Key Account Management concept to the CRDS organisation
EUROCONTROL
Jekaterina Vassiljeva Matrikel Nummer 151439 Althoffstrasse Str.14 Berlin 12169
1. Prfer: Prof. Dr.Felix Bernhard Herle 2. Prfer: Dipl.Ing. / Master of Science Philippe Debels
9th of May 2008
Table of contents
II
Table of contents
Table of contents ............................................................................................... II List of Figures ................................................................................................... IV List of Abbreviations ......................................................................................... IV Abstract ............................................................................................................. 1 1 Introduction ................................................................................................. 2 1.1 1.2 1.3 1.4 2 Background .................................................................................................2 Purpose .......................................................................................................3 Structure......................................................................................................4 Delimitations ................................................................................................4
CRDS in the context of the European Air Traffic .......................................... 5 2.1 2.2 2.3 2.4 2.5 European air traffic management.................................................................5 Single European Sky ...................................................................................6 CRDS CEATS Research and Development Simulation Centre.................6 Changing environment of the CRDS ............................................................7 Summary .....................................................................................................7
Theoretical Framework ................................................................................ 9 3.1 3.2 3.3 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.4 3.4.1 Relationship Marketing ................................................................................9 Key Account Management as a part of Relationship Marketing .................10 Key Account Management.........................................................................10 Terminology...........................................................................................10 Justification of the term Key Account ...................................................11 Objectives of Key Account Management................................................11 Reasons for a company to introduce KAM .............................................12 Decisive factors for KAM implementation...............................................14 Concept of KAM ........................................................................................15 Structuring KAM.....................................................................................16
3.4.1.1 Strategic Dimension ..............................................................................17 3.4.1.2 Functional Dimension ............................................................................18 3.4.1.3 Organisational Dimension ......................................................................18 3.4.2 3.4.3 3.4.4 3.5 3.5.1 3.5.2 3.5.2.1 Controlling as a part of the KAM concept ...............................................19 Marketing Controlling .............................................................................20 Key Account Controlling: its objectives and role.....................................20 The process of KAM implementation .........................................................22 Selection of Key Accounts as a cornerstone of KAM initiation................22 Implementation of KAM - step 1: Selection of Key Accounts ..................23 Criteria for Selection...........................................................................23
Table of contents
III
3.5.2.2 3.5.2.3 3.5.2.4 3.5.2.5 3.5.3 3.5.3.1 3.5.3.2 3.5.3.3 3.5.3.4 4
Qualitative and Quantitative Criteria ...................................................23 Unidimensional Criteria ......................................................................24 Multidimensional criteria .....................................................................24 Assessment of Customer s Attractiveness for Selection of Key Implementation of KAM-step 2: Categorising Key Accounts ...................... via portfolio ............................................................................................27 Origin of portfolio method ...................................................................27 Customer portfolio ..............................................................................29 Key Account Portfolio ........................................................................ 30 Categories of key accounts ................................................................32
Accounts ............................................................................................................25
Analysis of KAM suitability for CRDS ........................................................ 34 4.1 4.2 4.2.1 4.2.2 4.2.3 Hypothesis: KAM is an optimal concept for the CRDS ...............................34 Verification of KAM suitability for CRDS.....................................................34 Compliance of CRDS intentions with KAM-objectives ...........................35 Conformity of CRDS with the companies using KAM .............................35 Availability of factors for KAM implementation........................................36
Introduction of KAM to CRDS .................................................................... 38 5.1 5.1.1 5.1.2 5.1.3 5.2 5.2.1 5.2.1.1 5.2.1.2 5.2.1.3 5.2.2 5.2.3 5.2.4 Implementation of KAM - Step 1: Selection of Key Accounts .....................38 Assessment of Attractiveness of CRDS Customers ..............................39 Criteria for measuring attractiveness of CRDS customers......................40 Selection of CRDS Key Accounts..........................................................41 Implementation of KAM Step 2: Categorising CRDS Key Accounts via portfolio......................................................................................................42 Data collection for the CRDS Key Account Portfolio..............................42 Key Account Attractiveness as a dimension for the Y- axis.................42 Customer Spend as parameter for the bubbles size ...........................42 Calculating Suppliers Relative Business Strength..............................43 Portfolio of the CRDS Key Accounts .....................................................46 Balancing the CRDS Key Account Portfolio...........................................47 Portfolio Characteristics of the CRDS key accounts ..............................49
Conclusion ................................................................................................ 53 Appendix 1: Questionnaire for Assessment of CRDS Customers ......................55 Appendix 2: CRDS' Relative Business Strength .................................................57 Appendix 3: Data Worksheet for KAS - Matrix of CRDS .....................................59
Appendices ...................................................................................................... 55
References ....................................................................................................... 60
Table of contents
IV
List of Figures
Figure 1:Dimensions of key account management ....................................................17 Figure 2:The Business Portfolio (Boston Consulting Group)......................................27 Figure 3:A nine-box directional policy matrix .............................................................28 Figure 4:A four-box directional policy matrix .............................................................29 Figure 5:Key Account Selection Matrix (KAS-Matrix).................................................30 Figure 6:Identification of CRDS key accounts...........................................................41 Figure 7:Key Account Portfolio of CRDS ...................................................................46 Figure 8:Balanced Key Account Portfolio of CRDS ...................................................48
List of Abbreviations
ATM Air Traffic Management CEATS Central European Air Traffic Services CRDS CEATS Research and Development Simulation Centre EUROCONTROL European Organisation for the Safety of Air Navigation ICAO International Civil Aviation Organisation IATA International Air Transport Association KAM Key Account Management KAC Key Account Controlling SES Single European Sky
Abstract
Abstract
Key Account Management is regarded as an important approach to create value through implementation of the processes targeted on the most important customers. Modern companies aim to permanently increase their value by the means of customer orientation and retention. Moreover, the relationship marketing literature suggests overhauling the economic decline through focusing on the business with the main contributors to a companys budget. Although the public organisations act on a non-profit basis, they usually do not plan commercial strategies towards their stakeholders. But as far as their business activities equally depend on their most important customers and stakeholders, who generate the value of organisations, they are equally concerned to direct their resources on their main contributors. This study suggests introducing of the Key Account Management concept to a public organisation CRDS, occupied in the European air traffic sector. Because, this entity is forced to enhance and amplify the business with its customers, the Key Account Management is proposed as solution for increasing the value through a focused orientation and planning for its most important customers. The thesis provides an insight on the concept of Key Account Management and develops an option of its implementation to the CRDS organisation. Hereby, the focus lies on formulating the guidelines of how the crucial customers should be selected, categorised and planned.
Introduction
1 Introduction
1.1 Background
The air transportation industry builds up a system of three main components. These are: airlines, airports and air traffic management services (ATM services). These participants interact and influence each other, while caring out their primary functions. Initially, the air transportation system was founded as a fully state-owned organ, aimed on ensuring a secure and efficient transporting to the airspace users. But due to the liberalisation processes, the two components of it, namely the airlines and the airports, have been privatised. Since then the majority of airlines and airports converted into commercial entities. On the contrary, the third component the ATM services, remained a state-owned monopoly, so as each state saved a privilege to organize it independently. Thereby any presence of the market economy mechanisms in this sector was excluded. Conversely, the non-commercial intergovernmental organisations have overtaken the role of management and coordination of the European air traffic, in order to ensure that the existing dispersed system of European ATM services works properly and is harmonized through the common policies and international programmes. Nevertheless, the common tendency to think more market-oriented in the air transportation industry starts to involve the ATM services. It must be clear, that it becomes difficult for the public organisations to act in the market-oriented environment without any adaption to it. Likewise, the ATM services, as the last component of the air transportation industry, which saved its non-commercial character, are becoming more influenced by the market economies and its current state of the natural monopoly will most probably be modified in the near future. This means that the cost-efficiency, competition, quality and enhanced focusing on the customer, would be prioritized in the ATM sector more than ever before. Consequently, the commercialization, the customer awareness and the customer orientation, which are perceived as the key success factors for any business, will therefore become valid for the ATM business. This would cause the necessity to adjust to the new situation and to develop a selling and marketing culture, which did not exist in the ATM sector before. Furthermore, such a change would have an impact on the members of the ATM sector. Hence, they will need to react promptly and integrate into market-driven and customer-oriented business environment, in order to keep their business viable in long-term. In doing so, they need to apply helpful methods for reshaping the former business model. Therefore in this changing situation, a suitable marketing concept would support any entity in the
Introduction ATM sector on the way to becoming more market-oriented.
In my thesis I concentrate on a particular organisation, which is active in the ATM, sector and also affected by the changing environment. The organisation, known as the Central European Air Traffic Services (CEATS) Research and Development Simulation Centre (CRDS), is specializing in provision of the ATM services for the Central European region. It was founded as a non-commercial research and development unit by the EUROCONTROL1 - an intergovernmental organisation for management and coordination of the European ATM system - and therefore the budget of the centre was financed by the users of its services. But this situation changed when the centre was requested to increase its self-financing. The solution was seen in becoming more customersoriented and in starting to commercialize the services, while paying more attention to the customers. To achieve these goals is required to introduce the proper marketing management structures.
1.2
Purpose
The purpose of this thesis is to study the concept of Key Account Management (KAM) and to propose it as an optimal marketing-management solution for the CRDS, creating an opportunity for business improvement through a customer orientation. In order to reach this objective, the following questions are considered throughout the thesis: In which environment does the CRDS operate? Which implications does it have on business? What are the concept, objectives and structure of Key Account Management? Which benefits does the KAM offer? Which companies should consider implementation of KAM? How is KAM implemented in practice? Which methods exist for introducing of KAM in a company? Does the KAM concept suit to CRDS? Would it correspond to the CRDS intentions? What are the main processes of introducing KAM to CRDS?
EUROCONTROL the European Organisation for the Safety of Air Navigation, has as its primary objective to develop a seamless, pan-European air traffic management (ATM) system that fully copes with the growth in air traffic, while maintaining a high level of safety, reducing costs and respecting the environment.
Introduction
1.3
Structure
The objectives of each chapter are given as follows:
Chapter 2
CRDS in the context of the European Air Traffic This chapter introduces the CRDS organisation and explains the current issues in European Air Traffic. It emphasises the growing dominance of market orientation, which has some implications on the CRDS.
Chapter 3
Theoretical Framework The theory of Key Account Management is described, together with the practical usage of the concept. The introductory processes in its implementation method Selection of Key Accounts and Categorising of Key Accounts via Portfolio are discussed in detail.
Chapter 4
Analysis of KAM suitability for CRDS This chapter aims to verify, that KAM suits indeed to CRDS. For that, the CRDS objectives are analysed and the centre is compared with the companies, using KAM.
Chapter 5
Introduction of KAM to CRDS The chapter shows the methodology of introducing KAM to CRDS. The key accounts of CRDS are identified and selected. The portfolio of CRDS key accounts is developed. The key accounts are characterised according to portfolio positions and the strategies are named.
Chapter 6
Conclusion
1.4
Delimitations
In my thesis I surveyed the CRDS management in order to collect the data on attractiveness of CRDS customers. The given answers covered the data demand, needed for calculating the two dimensions of a Key Account Portfolio. For calculating the third dimension CRDS Relative Business Strength, I took the data, which I acquired at the workshop Analysis of CRDS Competitors during my traineeship at CRDS. This qualitative data is given in own interpretation and is sufficient for this thesis. In order to acquire more precise data on CRDS Relative Business Strength, comparing to its competitors, a surveying of CRDS customers is recommended.
CRDS in the context of the European Air Traffic
2 CRDS in the context of the European Air Traffic

The first chapter gave a brief understanding of the air transportation industry. This chapter continues to provide an outlook on the current issues in the air traffic, and in this way shows the specific business context, in which the CRDS acts.
2.1
European air traffic management
The international air transportation industry is coordinated through legislations and international agreements, backed by the international and European air transportation organisations 2. The first established legislations have resulted in the fact that the countries became monopolists for the governance of the domestic air transportation system. Since then, the European air transportation industry has developed significantly, changing through adoption of several European regulative policies3: from the establishment of Bilateral Agreements between the States4 Europe went through deregulation5 and liberalisation of airlines and airports and moved further towards Opening European Skies6. As a result of these regulations, the two components of the air transportation system airlines and airports were liberalised and got access to the free market, and this is where the privatisation of air transportation started. Nonetheless, the third component - ATM services mainly remained to date in a stateowned monopoly of each Member State and it is centrally regulated by the European institutions, which create the legislative framework for provision of safety in air navigation and aviation. But still, due to existence of differences between the numerous European ATM systems, the European continent faces the problem of air-traffic congestion. More collaboration in air-traffic systems between Member States is needed. For that reason, the EU officials try to launch a new air traffic legislation, which would integrate the European skies and support more collaboration on the ATM issues between the Member States, as well as incorporate the interests of all stakeholders involved, e.g. national air traffic agencies, airlines, air traffic service providers, civil and military officials7.
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Such as ICAO International Civil Aviation Organisation, IATA International Air Transport Association, EUROCONTROL - European Organisation for the Safety of Air Navigation.
European Regulation (EEC) No 2408/92 for free market access. European Directive 96/97 on access to the ground-handling market.
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Bilateral Agreements were the first agreements to regulate the landing rights between the countries
The European deregulation took place in 3 phases, named the three Aviation packages that gradually softened restrictions of capacity, prices and market access within the European Communities. The launch of the Open-Skies politics followed after United States began pursuing (1979) Open Skies policies and signing in 1982 bilateral air service agreements worldwide. That was followed in 1990 by agreements with some individual European states.
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Michaels, D. Airlines seek one EU sky The Wall Street Journal, February 2, 2008
2.2
Single European Sky
Because of the high fragmentation of the European sky into numerous sectors, where the Member States apply their own ATM policies, the European legislative organs are currently aiming to introduce a uniform approach and so to harmonize the European ATM system. The European Commission started an initiative; known as SES Single European Sky framework - aiming to reform the European air traffic control in order to meet future capacity and safety needs via legislation. The frameworks objective is to improve safety, to restructure European airspace, to accommodate air traffic flow, unconstrained by national borders, and as a consequence of it to create additional capacity and to increase the overall efficiency of the ATM systems8. This legislation will therefore enhance collaborative decision making in order to optimise the ATM processes all over Europe and in order to ensure more integrated and cost-efficient management of the airspace. Deployment of the SES initiative will involve EUROCONTROL - the main contributor and partner of the European Commission, which is an intergovernmental, civil and military organisation and currently numbers 38 Member States9. This organisations primary objective is to develop a flexible and efficient pan-European Air Traffic Management system, while enabling coordination and planning for the collective implementation of European air traffic management strategies and their associated plans. EUROCONTROL confronts these challenges through close cooperation with national authorities, air navigation service providers, civil and military airspace users, airports, industry, professional organisations and European institutions. As it can be seen, EUROCONTROL incorporates interests of different stakeholders both from the public administrative and commercial sector, when pursuing the SES initiative.
2.3
CRDS CEATS Research and Development Simulation Centre
EUROCONTROL has already created a building stone of the SES initiative, when it founded the CEATS10 (currently being restructured as a function airspace block programme), which has overtaken the processes of harmonisation of the sky above the Central European countries. It was established in order to improve the current level of
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Brochure of the European Air Traffic Management / Master Plan
EUROCONTROL has 38 Member States: Albania, Armenia, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg, Malta, Moldova, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, The former Yugoslav Republic of Macedonia, Turkey, Ukraine, United Kingdom of Great Britain and Northern Ireland.
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CEATS Central European Air traffic Services. CEATS is a programme to create a single, unified air traffic control system for the upper airspace over eight nations Austria, Bosnia and Herzegovina, Croatia, the Czech Republic, Hungary, the northern part of Italy (Padua), the Slovak Republic and Slovenia.
safety and airspace capacity in the CEATS area, so as to integrate the region into the common European ATM system. Meanwhile, it focuses on the improvement of economy of the flight operations through provision of a unified system for all eight States of the Central European region and brings together the interests of different stakeholders of the region. To support the CEATS programme, and in particular to develop and validate the most suitable operational and technical solution, the CEATS Research, Development and Simulation centre (CRDS) was inaugurated in Budapest, Hungary, in July 2001.
2.4
Changing environment of the CRDS
Within the five-year history the CRDS has undergone an evolution. Being founded as a fully public entity, financed by the budget contributions that flow from the eight CEATS countries, the centre was later requested to initiate self-financing and to search for alternative funding sources11. The solution was seen in the intensification of customer focus12. The CRDS suggested finding external revenue through focusing on its former and potential customers and through commercializing its ATM services13. Although commercialization and customer orientation are broadly applied in private businesses, they also can be adapted at the CRDS, which is actually a member of a public noncommercial organisation EUROCONTROL and whose objectives are different as those of the commercial entities. For that reason, the CRDS will still continue fulfilling its specific objective14 and acting according its mission and vision. But as far as it already experiences the changes in the ATM sector and as a result of that, it has assigned revenue increase as a new objective, the CRDS needs to reshape its business model accordingly and for that should introduce some common marketing measures.
2.5
Summary
The increasing market-awareness and cost-dominance are affecting the public administrative organisations and Non Governmental Organisations15(NGOs). The example of the
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CRDS Business Plan 2007-2011.Strategic Goals
CRDS launched the project Business development Strategy in order to revise current business and to identify new opportunities. The project highlighted focusing on the customer. It must be considered that for CRDS exist some legal restrains on entire commercialisation of services, constrained by the specific business environment of ATM sector and membership at EUROCONTROL. CRDS was created as an R&D centre for a CEATS programme. CRDS defines its mission in development of Air Traffic Management through validation and applied research, supporting the ATM community in the realisation of projects. CRDS vision is to be the Central European centre of excellence in Air Traffic Management validations and studies, recognised as such through SES contribution. NGO non-governmental organisation is a legally constituted organisation created by private persons or organisations with no participation or representation of any government. The NGO maintains its nongovernmental status insofar as it excludes government representatives from membership in the
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liberalisation processes of the European air traffic system, which were aimed at raising cost efficiency and creation of competition, has proved that the participants of one system integrate to the common frameworks. Likewise, the ATM sector, as being a component of the air transportation industry, is also influenced by the common tendencies of adoption of the market economy structures. Hence, the ATM segment likely undergoes a change process. In this context, the CRDS, as being occupied in the European ATM sector, is also affected by the changing environment and is encouraged to re-orientate its business towards market economy in order to overhaul the financial difficulties. For this reason the centre sees its opportunity in selling more of its services to former, current and potential customers. Obviously, the customer orientation should be intensified for that. Consequently, the CRDS necessitates an optimal marketing management method, which would extend its business and improve the coordination of customer management at the same time. Because the CRDS is featured by the tight interactions and dependencies from its customers, stakeholders and competitors16, it needs a concept, which considers these implications in planning a successful customer approach. In other words, the CRDS ought to adapt a model, which would strengthen organisations business, while staying focused on the customer and on the other hand continuously increasing the revenue. The Key Account Management is suggested to be an optimal method for the CRDS, which would meet these requirements. The next chapter provides some theoretical background to the Key Account Management and introduces how this concept can be implemented in practice.
organisation. The so-called customers-competitors are CRDS customers, but they can be competitors, if they stop to buy CRDS services and instead produce same services for own use.
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Theoretical Framework
3 Theoretical Framework
3.1 Relationship Marketing
Relationship Marketing is a companys behaviour purposing to establish, to maintain and to develop competitive and profitable customer relationship to the benefit of both parties17. Relationship Marketing has gained widespread recognition in marketing-management literature18. Most researchers characterize Relationship Marketing as a form of marketing aimed on building long-term relationships with customers and on raising their retention and satisfaction. The ultimate goal of Relationship Marketing is to acquire loyal customers, who have selected a particular supplier over time and intend to buy from that same supplier in the future.19 The buyer-seller relationships became a focal point of marketing research and were extensively investigated, proposing several models of how the customers should be treated, so as improving the business with them20. Meanwhile, the business relationships are defined as intangible assets of a company, which directly influence the firms revenue stream.21 The detailed research has proved that the profitability of the firms practicing customer relationship management increases significantly.22 Moreover, a base of loyal customers is more profitable than one-time transactions from a long-term perspective. That is why Relationship Marketing was especially acknowledged in practice and broadly applied in industrial and business-to-business markets where long-term contracts are preferred. Todays business world seeks for long-lasting business relationships and companies orient their strategies on customer satisfaction and loyalty. Researchers of the Marketing in the 21st Century23 assert, that Relationship Marketing is critical for a successful business strategy of any firm operating in modern day business environment.
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Bjerre, M. and Hougaard, S. (2003), p.40 Grnroos, C. (2000), pp.12-19 Orr, M.L., Hawes, M.J. and Keillor, B.D., (2007) Abratt, R., Kelly, P.M. (2002), p.467 Bjerre, M. and Hougaard, S. (2003), pp.27-29 Bjerre, M. and Hougaard, S. (2003), pp.105-108 Keillor, B.D., Orr, M.L. and Hawes, M.J. (2007), p.9
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3.2
Key Account Management as a part of Relationship Marketing
The concept of Key Account Management (KAM) emerged in the early 1980s parallel to the Relationship Marketing, when the companies started to increase market orientation in order to secure long-term profitability. The relational approach is directed towards strategic customers, defined as key accounts, and it requires an appropriate marketing-management organisation with the establishment of some KAM structures and processes. Thereby, KAM was primarily defined as a focused RelationshipMarketing program, centred on a single, but very important customer with a purpose to build up a stable long-term business relationship24.
3.3
Key Account Management
This paragraph explicates the main ideas of the concept of Key Account Management and discusses the reasons, benefits, as well as decisive factors, for introducing the KAM in any company.
3.3.1 Terminology
As from the notion above it becomes clear that for a company not all clients are equal. Some customers represent higher profits than the other and therefore they need to be treated differently, so as a company mainly dedicates resources to the key customers. The quotation below clarifies the understanding of Key Account Management: Key Accounts are customers in a business-to-business markets identified by selling companies as of strategic importance. Key Account Management is an approach adopted by selling companies aimed at building a portfolio of loyal key accounts by offering them, on a continuing basis, a product/service package tailored to their individual needs. To co-ordinate day-to-day interaction under the umbrella of a long-term relationship, selling companies typically form dedicated teams headed up by a Key Account Manager. This special treatment has significant implication for organisation structure, communications and managing expectations 25. The essence of KAM can be concluded in the highlighted keywords of the quotation: customers of strategic importance, portfolio, tailored to their individual needs. Indeed, KAM deals with finding out who are those customers, crucial for the companys
24 25
Wengler, S. (2006), p.12 Millman, T. (1995); cited by McDonald, M. and Rogers, B., (1998). p.XI
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business the customers of strategic importance. Furthermore, KAM assigns a specific approach for managing these key accounts summarized in a portfolio method, in order to finally offer the best possible service solution maximally tailored to customers needs.
3.3.2 Justification of the term Key Account

The term key account as a name for the strategic customers is associative with accounting and banking. The essence lies in the characterisation of a customer as an investment made by a supplier for its own future. Logically, the key accounts appear as those, who bring the business to a desirable position. Hence identifying these important customers is as critical as choosing a portfolio of investments some must give a quick return; some are longer term, while others are speculative, balanced by those that offer more certainty26. In this context, the Key Account Management emerges as a method to manage a special customer as a valuable investment.
3.3.3 Objectives of Key Account Management

As far as the literature on Key Account Management is very fragmented, depending on its origin, some definitions are very dispersed and it becomes difficult to distinguish between the tasks and the objectives, which KAM pursues as a management concept. In the earlier KAM research, some authors perceive KAM tasks for objectives, making it impossible to exactly define what the KAM focus lies on. Despite this, over the last decade the KAM-research succeeded to establish the two main objectives of KAM. These are Customer Retention and Maximising Customer Value. Objective 1: Customer Retention KAM is objected to raise Customer Retention and concentrates on holding those customers, who continue to regularly purchase services by the same company. As from a companys perspective, to hold such customers who buy on a continuous basis is profitable for business: Customer Retention is much cheaper and more effective than the permanent acquisition of new customers
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. Moreover, the supplier gathers
valuable information on the customer and his needs when serving him and therefore next time he can efficiently design the offering using the previous customer knowledge experience.
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Cheverton, P. (1999), p.8 Reichheld (1990) and Sasser (1993); cited by Wengler, S. (2006), p.29
Theoretical Framework Objective 2: Maximising Customer Value
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The second intention of KAM is proclaimed to be in maximising the customer value in the total value, which a customer delivers to a firm. This value can be both of monetary and non-monetary character. Monetary value is summarised in all earnings and profit, while non-monetary value is seen in all customers contributions, such as reputation, recommendations, and additional know-how transfer28. Maximising the both values means that the company creates more profit by doing so. Initially, the objective Maximising Customer Value was seen in only bringing the monetary profit and revenue increase to the firm. But the later investigations identified, that also a non-monetary customer value, for instance such as provision of valuable information, of references or contributing to the reputation, influence indirectly the companys revenue29. This is explained by the fact that information transfer helps to reduce costs; that the customers references and recommendations contribute to building up the firms image and hence, lead to an expansion of the customer network. Both Customer Retention and Maximising Customer Value appear important and profitable for the companies as they promise to develop a network of dedicated customers and to raise economical benefits. Once the company achieves these goals, it can secure the long-term profitable business relationships.
3.3.4 Reasons for a company to introduce KAM

The theoretical objectives of KAM as a marketing-management concept were discussed above. Now, I refer to its practical perspective and investigate for the reasons and intentions of the companies who implement KAM. As from the discussion on the KAMs benefits for the firms, the concept seems to be of a great interest for a supplier, seeking for a customer-oriented marketing-management program. In order to continue the discussion of the practical value of KAM, I refer to the exploratory study Implementation of KAM: Who, Why and How implement KAM30? which investigated the common tendencies and conditions of implementation of KAM. This study examined the companies, who use the KAM and those companies who do not, and identified the reasons, tasks and factors, which determine the decision itself to
28 29 30
Wengler, S. (2006), p.31 Eberling (2003); cited by Wengler, S., p. 32 Wengler,S., Ehret, M and Saab, S. (2005) , pp.104-110
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implement KAM concept in a company. According to studys results, the tendency on applying the concept looks positive: similarly to the US, more than 50% of the business-to-business companies in Germany already apply Key Account Management, while 16% of the companies without such established KAM structures seriously consider its implementation in the future. The study has also detected the reasons, of why any firm is motivated to adopt KAM and emphasised the next four motivators: Increase of customer orientation Intensification of business relationships Differentiation of the company from its competitors Minimisation of market risks Closely related to these reasons, the study investigated as well the tasks, which the KAM fulfils in the organisations. They were concluded in: Raising customer satisfaction Managing relationships Establishing trust with the customer Developing customer orientated strategies The outcome of the study indicates that the companies implement KAM in order to be customer-oriented and in order to keep their customers satisfied. Additionally, they use KAM as a differentiation strategy. Moreover it is used as a tool for minimising market risk, because KAM enables to gain more customer knowledge. The companies also apply KAM for the management of business relationships. It is interesting to note, that the perception of the value of KAM concept in practice, corresponds with the conceptual objectives of KAM, which were represented in the theory in paragraph 3.3.3. Indeed, the developers of KAM and those who apply KAM in practice, both see KAM as a useful marketing-management concept. For instance, the companies highlighted Customer Retention and Maximising Customer Value, which are the two objectives of KAM according to the theory, as the main motivators for introducing KAM. As far as Customer Retention can be achieved through customer satisfaction and orientation, this conceptual KAM objective corresponds to the first reason for KAM implementation, noted in the exploratory study as Increase of customer orientation.
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Similarly, corresponds the second KAM objective - Maximising Customer Value with the studys notion, that the companies use KAM for the reason to minimise market risks. The companies can minimise market risks and customer behaviour through a better knowledge of the customers, which KAM facilitates entirely. Thus, the firms can profit from the close relationships with the customers and get all information they need without spending money on additional market research for forecasting the customers future needs. In this manner, the firms maximise the total Customer Value as they already get the required market knowledge due to KAM. Hence, the information and know-how transfer, stated in theory as under the objective Maximising Customer Value, corresponds to the fourth motivating reason for KAM introducing, defined as minimisation of market risks. Hence, the theoretical basis of KAM and the way how the companies perceive the concept are balanced. This raises the reliability of implementation of KAM as an efficient marketing-management tool.
3.3.5 Decisive factors for KAM implementation

To understand in which environment KAM is applicable I refer to the same study, which as well explored the factors, influencing the decision for using KAM in a company. The study detected the next three factors, forcing the companies to introduce KAM: Factor 1: Intensity of competition The study concluded that those companies, who act in an intense competitive environment, implement KAM with a purpose to improve their positioning at the market and in order to raise their competitive advantage. The KAM supports them in doing that, because it provides a uniform and central coordination of marketing-management in the customer processes. As a result of that, the company that uses KAM transmits a homogeneous corporate image to its most important customers. In this manner, these companies succeed to win crucial customers through a better customer approach and to mark out from the competitors. Hence, the companies acting on competitive markets can differentiate themselves through a harmonised corporate customer marketing, which KAM facilitates. Factor 2: Intensity of coordination of business relationships The outcome of the study indicated that the firms with a complex coordination of supplier-buyer relationships would rather implement KAM, than those companies with low complexity of coordination. The role of KAM is thereby seen in simplifying the coordination of processes with customer involvement. For instance, KAM proposes to
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assign a direct contact person, who will guide the client through the whole buying process. Such a personalised customer approach allows avoiding hesitations and misunderstandings, improving significantly the customers buying experience and building a good relationship with the company. The companies, with the complex customer processes can improve coordination of business relationships through adoption of KAM. Factor 3: Integration of customers in the product development process The study concluded, that those companies, who frequently integrate customers into product development processes, see the KAM as a method to make the involvement of customers more effective and to raise cooperation with them. Thereby, the companies gain benefits from constructive interactions per direct contact with the customers so as they rapidly adapt to the customers needs during the production process. Hence, the companies, which integrate their customers into production processes, can increase the cooperation effect with the customer due to applying KAM. Ultimately, the study concluded the common characteristics of the companies, which necessitate KAM, as follows: Companies operating in a very intense competitive environment, in intense coordination of business relationships and interested in close product and service development with their most important customers, should seriously consider the implementation of Key Account Management 31. These characteristics will be further applied in the practical chapter 5, examining the suitability of KAM concept for the CRDS.
3.4
Concept of KAM
Although, the concept of Key Account Management is young, its scientific research was broadly developed in different streams and experienced a great evolution32. Being developed in the US, it was further elaborated by the European researchers. The research on KAM became fragmented due to different regional focuses and specialisations33. This hindered a clear formulation of a consistent KAM concept and yet, there is no coherent definition of the uniform keystones of the KAM concept.34 As a
31 32 33 34
Wengler,S., Ehret, M. and Saab, S. (2005), p.108 Wengler, S. (2006), pp.19-23 Wengler, S., Ehret,M. and Saab,S. (2005), p.104 Wengler, S. (2006), p.12
16
result of this conceptual insufficiency, the practical application of KAM has suffered. According to the above-mentioned research study, the managers still face some difficulties when deciding how and at what time to implement KAM35. Despite a number of theoretical facets, the practical application of KAM is seen narrower and in business life it is reduced to the sales function in most of the cases. The exploratory study deduced, that the 65 % of the researched companies still understand KAM as a classical sales task, which needs to be a part of or integrated in the sales and marketing function.36 The next paragraphs 3.4.1 to 3.4.5 outline the structure and functions of KAM in a firm, discussing its most significant implications, which should be considered during the practical introduction of KAM to any company.
3.4.1 Structuring KAM

It was discussed, that KAM promises to bring benefits both to seller and buyer, through improving their business relationships and securing the Customer Retention. But in order to achieve the overall goals, it is required to implement KAM systematically, as a marketing-management concept, establishing specific structures and processes. The previous section emphasised a certain insufficiency of formulation how to launch KAM exactly, because no common definition on its tactical implementation was yet defined. Therefore, an insight on the main processes, involved in KAM would help to realise the complexity of all implications that KAM has on a firm. The Figure 1 provides a comprehensive overview of the main functions and activities of KAM. According to the pyramid, the KAM activities are distinguished in three dimensions, depending on the type of tasks they complete, which are given in the right column.
35 36
Wengler, S., Ehret, M. and Saab, S. (2005), p.103 Wengler, S., Ehret, M. and Saab. S. (2005), p.106
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Scale and scope of key account management Selection of key accounts
Strategic dimension
Tasks and geographical reach of key account management program Selection of key account executives Informing
Functional dimension
Planning Coordinating Controlling
Organizational dimension
Staff organization Line organization Matrix organization
Figure 1:Dimensions of Key Account Management
As the figure shows, the KAM has strategic, functional and organisational implications on the suppliers company. Within the strategic dimension, the company assigns the expected value, tasks and responsibilities of the key account management program. The functional dimension entails the operational tasks, enabling to put KAM in force. The organisational dimension concerns the alignment of KAM in the firm and assignment of its responsibilities. The next sections clarify each dimension and specify its tasks, actions and functions.
3.4.1.1 Strategic Dimension

This dimension sets the scope of how far KAM will be introduced in the company and which contents will it have. Within the strategic dimension, the KAM is being planned, focusing on the next topics: Planning KAM on the corporate marketing-management level Corporate awareness of the need to implement KAM Reference to corporate mission and strategy while planning KAM Transformation of KAM into a customer-relationship program per each key account Setting the statement of the role, mission, responsibilities and accountability of the KAM programs Selection of Key Accounts and categorising them, in terms of: o o o Identifying of key accounts from all customers Formulation of a Key Account Portfolio Assessment of companys strengths and customers needs and formulation of competitive advantage, which supplier delivers to customer
Theoretical Framework Assignment of tasks and geographical reach of customers Selection of efficient marketing channels Selection of appropriate key account manager
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Finally, planning of KAM on the strategic level seizes development of an individualised strategic management approach towards each key account.
3.4.1.2 Functional Dimension

In this dimension the set of strategic objectives enters into operational tasks and actions. The following four functions facilitate the realisation of KAM: Informing This function provides information on all the levels of interactions between the customer and supplier. Planning This function concerns planning of the services development process with the involvement of the key account into it. This functions overall goal is to secure a transparent and problem-free product planning process. Coordinating Coordinating focuses both on the informing and the planning processes. Coordination entails marketing after sales, maintenance of strong customer orientation, development of customised solutions, enrolment of one key account representative, who embodies the company competencies and secures a completed information flow. Controlling This function provides information for planning, management and controlling the singlecustomer-focused business relationship. It conducts controlling tasks for all KAM processes, monitors the cost-benefit relation of KAM in order to calculate the costs of KAM input and the benefits brought by KAM. The controlling tasks comprise Selection of Key Accounts, controlling of the realisation of KAM strategy, as well as assessment of economical success of KAM application.
3.4.1.3 Organisational Dimension

When the KAM programme is set and the tasks are formulated, the company plans the institualisation and alignment of the KAM processes. There are several propositions
19
how to allocate KAM in a company37. In his research Jensen identified the next eight options of KAM placement in a company38: top-management level, senior-management level, operative management level, cross-functional KAM, unstructured KAM, isolated KAM, Golf-club KAM, No-KAM, Hidden KAM. Interestingly, the results of the study Implementation of KAM: Who, Why and How implement KAM39? have also detected that some companies have KAM in a not formalised form, called the Hidden KAM and featured by the absence of established KAM processes. But companies with Hidden KAM asserted, that they already use a differentiated approach to their most important customers, even though these approaches miss methodical development. The arguments against a structured implementation of KAM may lie in costs, time, knowledge, organisational implications, and in lacking understanding of the economical benefits, which a structured KAM may bring to a company. The represented three-dimensional model of KAM gives a good understanding of how KAM is structured in a firm: at the top-management level it is analysed and identified which crucial customers deserve the KAM approach; the functional level takes care of the integration of KAM processes into the supplier-customer interfaces, whereas the organisational KAM deals with the assignment of the KAM duties and responsibilities.
3.4.2 Controlling as a part of the KAM concept

When discussing the KAM concept it must be clear that this concept is not merely centred on bringing value and satisfaction to the customer, through meeting of individualised customers needs and maintaining of a trustful relationship, but it must primarily bring profit for the supplying company. Surely, the companys efforts on launching a customised KAM program produce additional costs, but the value, which KAM as a customer-oriented program result, should be higher. It is therefore essential to track the success of KAM, through comparing KAM input and output, backed by some provable factual data. In this context, Controlling with its prior tasks to cover the information demand, to allocate and to assess information, emerges as a helpful concept to facilitate and measure the KAM performance. Concluding this, the crucial contribution of controlling is to support efficient KAM
37
For detailed discussion see authors McDonald, M. and Woodburn, D. (2007); McDonald, M. and Rogers, B. (1998)
38
These institualisation types of KAM were identified through analysis of 385 enterprises and are explored in the dissertation of Jensen, O. (2001), pp. 162-167 Wengler, S., Ehret, M. and Saab, S. (2005), p.109
39
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implementation by the means of provision of relevant data. A reference to Marketing Controlling is required for a better understanding of why Key Account Controlling must be involved in the introduction of KAM.
3.4.3
Marketing Controlling
Controlling is known as a subsystem of corporate management, aimed at supervising the realisation of the corporate strategic objectives. Controlling supportive functions accomplish the pursuit of long-term objectives, such as maintenance of liquidity, fulfilment of corporate demand, realisation of profits and avoidance of deficits. Controlling guides a company to sustainable development and helps to move to a target-performance, while informing a company about its current performance. Consequently, controlling of marketing enables to reach the strategic marketing goals according to a strategic marketing plan. The Marketing Controlling is defined as a concept, aimed to provide information about corporate management and coordination for the purpose of analysis and corporate planning.40 Marketing Controlling results from the need to design marketing and sales processes as efficient and effective as possible and to decrease expenditures generated from the marketing and sales activities. The objectives of Marketing Controlling lie in: realisation of Marketing Controlling and marketing audits; coordination of information in marketing planning; provision of specific marketing information for different marketing organisations and in management of human resources within marketing and sales.41 Summarising, Marketing Controlling assists in the implementation of any marketingmanagement program through provision of valuable specific information. In this context, it becomes evident that certain controlling structures need to be launched for the use of KAM, as a relationship-marketing-management program.
3.4.4
Key Account Controlling: its objectives and role
Since KAM is a complex marketing-management approach, it needs to control the KAM planning processes and therefore the KAM developers have included controlling as an integral part of KAM. Defined as Key Account Controlling (KAC), it has own objectives, tasks, processes and methods, applied in the process of introduction of KAM. The primary goal of KAC is to deliver information for strategic decision-making on
40 41
Khler, R. (2001b); cited by Baguhl, O. (2004), p.87 Khler,R. (2001b) in Baguhl, O. (2004), pp.87-88
21
planning and coordination of KAM42. As well as marketing controlling, the KAC provides data, designated for a particular task - for management of a single-customer-focused business relationship. The KAM triangle has illustrated the position of controlling in the functional dimension, followed after the strategic dimension (see Figure1). Indeed, through provision of information, KAC supports the implementation of KAM in the strategic dimension, because it provides crucial data for the process of Selection of Key Accounts. With the help of numerous KAC tools, a firm can analyse and measure the customers performance in terms of qualitative and quantitative aspects.43 As it was mentioned, the Key Account Controlling guides KAM at the very beginning of its implementation, providing customer data and offering a set of data evaluation tools. KAC is firstly applied in the phase Selection of Key Accounts after the scope and scale of KAM introduction are set. Here, KAC assists in identification of customers providing some numerical data from the current corporate analyses, such as SWOT44 and PEST45 as well as using key data from the customer records on sales volume and other data sources, as described in paragraph 3.5.2. Customer data, provided by KAC, gives information on the past, current and future business volume with the company. In this manner, KAC facilitates to correctly select the key accounts, using the reliable and provable data from accounting. KACs second task is to provide relevant data, needed for definition of the strategies for key accounts, which are later derived from the Key Account Portfolio, described in paragraph 3.5.3.3. Finally, KAC offers a set of methods and tools46 for assessment of economic success of KAM implementation programs. It is also needed to point out, that from the given three tasks, the first task provision of data for Selection of Key Accounts is considered to be the prime and the most important task, completed by key account controlling47. Summarising the role of KAC, it becomes clear, that it facilitates to successfully introduce KAM. Besides the above-named tasks, it continues assisting KAM through offering numerous KAC methods.
42 43 44 45 46 47
Baguhl, O. (2004), p.89 For further detailed discussion on KAC methods and tools see Baguhl, O. (2004), pp. 134-190 SWOT Strengths, Weaknesses, Opportunities and Threats Analysis PEST Political, Economical, Social and Technological Analysis Baguhl ,O (2004), p.113 Napolitano (1997) in Wengler, S. (2006), pp.69-71
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In the context of the thesis, some methods of KAC are practically employed in chapter 5 in the processes of Selection of Key Accounts and Categorising of Key Accounts via the Key Account Portfolio, which are the topic of the next paragraph.
3.5
The process of KAM implementation
Both the KAM three-dimensional model, given in section 3.4.1 and the KAC tasks, provided an overview of KAM activities and its implications on the corporate management of a company. Till now, the discussion on KAM was aimed at provision of general understanding of the KAM concept. This paragraph introduces the theoretical framework of KAM in terms of its practical implementation. The discussion aims to examine which concrete actions should a company undertake for launching KAM in the corporate management. The implementation of KAM starts in the strategic corporate level, where a company recognizes the need for it and defines the role of KAM as a marketing-management approach. Moreover, the company should then perceive the expected value of KAM and consider all expenditures involved in planning and setting up the program. These decisions require the internal coordination and executives approvals and are the subject of the corporate management and marketing planning. Therefore, the next paragraph proceeds the discussion with a subsequent step in implementation of KAM.
3.5.1 Selection of Key Accounts as a cornerstone of KAM initiation

The task Selection of Key Accounts deserves particular interest, as this is where the true initiation of KAM takes place. This task is important and constitutes both strategic and functional dimensions as it can be interpreted from the KAM-triangle (see Figure 1). There, the Selection of Key Accounts is placed in the strategic dimension, because this is where the company chooses who are those crucial customers, to be treated as investments. Meanwhile, this task is placed in the functional dimension of the KAMtriangle, and is defined as the prime KAC task, due to offering a certain method on how to select the key accounts. In this manner, the Selection of Key Accounts has a dual role: firstly it appears as a controlling function; secondly it enables to strategically prioritise and differentiate the key accounts in terms of KAM planning within the strategic dimension. After the key accounts have been selected, the next step is to formulate the KAM approach towards selected accounts and to set customised strategies. Because the process of Selection of Key Accounts is a start-up in implementation of KAM, it is essential to accurately select accounts, as only then a correct KAM program can be developed.
23
From a KAM point of view, the supplier should differentiate between the customers and concentrate on those prospective ones, who secure current and future long-term business. A real KAM is expensive and requires delivering customised, innovative strategies for each individual customer. It must be understood, that for a company this capacity is limited. Therefore the company needs to pick out those attractive key accounts, to which it makes sense to pay more attention. Particularly for these accounts the company would plan an individualised KAM approach, pursuing the goal to retain them.
3.5.2 Implementation of KAM - step 1: Selection of Key Accounts

The Selection of Key Accounts is a method of choosing the key accounts from the existing customers. This can be done by the means of analysing and scoring the customers in terms of their attractiveness for the company. The attractiveness is hereby measured according to the different criteria, specified in the next paragraph.
3.5.2.1 Criteria for Selection

It is indispensable that the selection process is conducted rightly as based upon its outcome the whole future KAM program will be founded on. Making choice between important and less important customers is a challenging process, and there is a need to find definitive criteria. Based on these criteria will be decided which customers are the companys key accounts. It is required, that the criteria provide a good reasoning for that. Companies should define consistent parameters according to which they can measure the significance of an individual customer for the business. For doing that, KAM research has developed numerous tools, serving for the Selection of Key Accounts. Basically, these tools can be differentiated according to the type of selection criteria, used for evaluation of customers48. The researchers distinguish between the next types of criteria quantitative, qualitative, unidimensional and multidimensional according to the type of data, used as a basis for selection.
3.5.2.2 Qualitative and Quantitative Criteria

Quantitative criteria are applied in those key account selection modes, which assess the customers numerically, analysing their sales volume, customers gross earnings, customers profit and customers investment cost. These analytical data can be obtained through calculations of customers contribution margins, customers return on
48
For detailed discussion on the tools applied in Key Account Controlling for the Selection of Key Accounts refer to Wengler, S. (2006), pp.71-81
Theoretical Framework investment and the other complex accounting calculations49.
24
On the other side, the qualitative criteria measure the customers significance in terms of customers needs and attributes. Such measuring of customers needs gives assumptions on the amount of services the customers may require in the future. Therefore, these criteria help to recognise those key accounts, which currently do not contribute a lot to business, but may alter their buying volume in future. The second qualitative criterion, attribute-based criterion, evaluates customers in terms of their relationship to a company. Although, a company may succeed in planning how to bind the customer in long-term business, the customer may not always correspond to the plans, unless he has equal interest. Therefore, the attribute-based criterion is substantial in Selection of Key Accounts, who appear as prospective and reliable customers, who are willing to be partners, to cooperate and who are seeking for longterm business relationships.
3.5.2.3 Unidimensional Criteria

For Selection of Key Accounts the KAC offers a number of tools, based on the quantitative criteria. The well-known tools such as ABC-Analysis, Customer Profitability Analysis and Customer Lifetime Value are being widely applied by the companies to select prospective customers on the basis of available accounting data from the past purchase and from transactions data between supplier and the buyer. However, the unidimensional criteria deliver precise factual data per customer from a cost-benefit perspective, it do not concern other strategic outlooks on the customers business potential, such as his needs and business relationships, which are both highlighted by qualitative criteria. In this context, application of a selection method, based solely on a quantitative customer analysis appears as one-sided and excludes other indicators, also crucial for choosing profitable customers50.
3.5.2.4 Multidimensional criteria

Conversely to the narrow look on customer data, given by application of unidimensional criteria, multidimensional criteria unite both the qualitative and quantitative aspects simultaneously. This multidimensional approach entails the complexity of the managerial decision towards customer selection much better, because it integrates decisive internal and external factors, such as market forces, customers needs and
49 50
Wengler, S. (2006), p.78 Wengler, S. (2006), p.73
25
quality of business relationships in the customer assessment. Moreover, in order to select accounts correctly, the criteria for selection should involve different aspects that detect the customers future buying potential51. Therefore, based on different interrelated criteria, the multidimensional approach transmits to the company a more enriched insight, unachievable by using the unidimensional criterion. For this reason, in the practical part of the thesis is applied a key account selection method, based on the multidimensional criteria. This method appears as a versatile tool, comprising an enriched customer data and therefore enabling to adequately identify the key accounts. This process is described in the next section.
3.5.2.5 Assessment of Customer s Attractiveness for Selection of Key Accounts

Whichever method is deployed for Selection of Key Accounts, the focus always lies on the contribution of a single customer to a firm. Consequently, exactly those clients appear for a company as attractive, who bring higher contributions. Whereby the amount of their total contributions determines whether they can be matched to the key accounts or not. This idea to measure customer contributions as the way to assess their attractiveness for a firm was put as a keystone for the Selection of Key Accounts. The method was suggested 52 as a universal tool for identification of key accounts from existing customers and it obtained recognition throughout the managers. This method applies multidimensional criteria and thus combines both qualitative and quantitative customer information, discussed in the previous section. Using this method for selection of accounts, the company should firstly score them in terms of three criteria: profit, customers needs and relationship scope. In this manner, the company reflects on how important it perceives each criterion, weighting the relative importance of each criterion. Further on, it scores how far each of the customer fulfils these criteria. Finally, the scores, distributed per customer are multiplied with the scores of relative importance of each criterion. The outcome of multiplication summarizes a total score of customers attractiveness for a firm. The questionnaire attached in Appendix 1A, specifies these parameters for scoring. This method is practically applied and explained in detail in chapter 5.
51 52
McDonald, M. and Woodburn, D. (2007), p.31
The method of Selection of Key Accounts based on the assessment of their attractiveness was developed by the Key Account Management research Club, conducted at the Cranfield School of Management in collaboration with 15 leading companies and leaded by Prof. McDonald, M. For detailed overview of the method see McDonald, M. and Woodburn, D. (2007), pp.23-51.
26
Accordingly, through the combination of quantitative and qualitative customer data, the method facilitates a comprehensive and deep customer analysis, required for accurate selection. The customers contributions are hereby measured by to the next criteria: Profit, which a customer results to the company. This criterion clearly determines the scope of business with the customer. Customer needs-based criteria, which represents the dependence or a need to be served by this supplier. Goal of this selection criterion is to assess the probability of customers repeated purchase and prospects of his retention. Besides, this criterion can also measure alignment and conformity of customers business with the suppliers business (e.g. its needs in services; similarity or coincidence in business strategy and vision with the supplier; alignment to the suppliers business strategy). Customer attributes need to be weighted in order to identify what type of relationship between the customer and supplier is likely to persist (e.g. customers behaviour in relationships, level of decision-making, customers interest in relationship). Applying this method, the supplier can objectively score the buyers attractiveness, because there are several determinants of customer importance for the business. Moreover, the company estimates the importance of all three criteria, distributing the total score of 100 per each one and weighting how far the buyer fulfils the criteria, as shown in Appendix 1A. As a result of multiplication of the relative importance rates with the customers scores, which are given in green column of the table, the supplier obtains the relative numerical rates of attractiveness per customer, shown in the second white column. These outputs give an overview of customers attractiveness per criterion and help a supplier to analyse total contributions of each customer in quantity, as shown in the yellow row. Besides, this method allows the supplier to compare very different customers. McDonald points out53, that one customer may score well on actual sale volume size, but its attractiveness can be reduced by its low attitude to long-term business relationships, which will have an impact on business. Finally, this scoring helps the supplier to identify the key accounts, prioritising those customers who obtained the highest scores.
53
McDonald, M. and Woodburn, D. (2007), p.35
27
3.5.3 Implementation of KAM-step 2: Categorising Key Accounts via portfolio

When the key accounts have been selected on the basis of their attractiveness, the next step is to plan how to manage these accounts. The key accounts offer major opportunities to potentially grow business and at the same time save costs for both sides. Key accounts require major investment and individualised managerial approach. The developers of KAM suggest a specific method to analysing, categorising and prioritising the key accounts using the portfolio method54. The next paragraph outlines the origin of portfolio method and leads the discussion to the explanation of its procedure and application in KAM.
3.5.3.1 Origin of portfolio method

A Nobel Prize recipient Harry Markowitz primarily developed a portfolio method, as a method to diversify and optimally manage financial assets and investments, organised and grouped into portfeilles, so that for each group was assigned a proper approach55. Further on this method was developed by the Boston Consulting Group in a portfolio management approach, determined by application of the BCG-Matrix or a Growth-Share Matrix (see Figure 2). This approach is aimed to analyse the products, businesses or market segments, by the means of a four-box matrix. The matrix plots the market growth rate against the relative market share and sets the four categories, as shown:
B.C.G. Matrix
High
Market Growth Rate
Stars
Question Marks
Cash cows
Dogs
Low High Low Relative Market Share

Figure 2:The Business Portfolio
56
(Boston Consulting Group)
The Key Account Management research Club, leaded by Prof. McDonald, M., has adapted the portfolio method into key account management practice.
55
54
Markowitz, H.M. (1959) Hedley, B. (1977) Boston Consulting Group approach to business portfolio in Baker, M. (1995), p.458
56
28
Hereby, significant are the positions of the analysed objects, as they represent the relative position of a product or business at the analysed market. This approach was however criticised as it relied only on two factors, ignoring the factors of external environment, for instance technological environment or legal requirements, which have a bearing on the product and business performance57. Later on the General Electric and McKinsey jointly developed the next multi-factor portfolio approach using the same structure as the Boston Consulting Group, but replacing the variables from BCG-Matrix with the new ones market attractiveness (Y) and business strength (X). Market attractiveness represents how attractive is the market or industry where the firm operates, and the dimension business / company strength shows how strong is the position of a firm in this market. For calculating the variables of dimensions, several multiple criteria are used. The criteria may be chosen according to the purposes of the business analysis. The possible criteria options are listed on the left and right sides of the two dimensions, as illustrated below58:
Business / Company Strength
High Medium Low Size Growth Share Position Profitability Strengths/weaknesses Image
Size Market Growth Pricing Profitability Competitive Structure Market Diversity
Industry/Market Attractiveness
Invest
Selectivity
Harvest
Figure 3:A nine-box directional policy matrix
Ultimate goal of this matrix is to generate strategies, which derive from the positions of the analysed business in the cells. The directional strategies suggest to supplier three strategic options: to invest in business, to make selective choices or just to harvest and divest the business, as depicted in the lower box of the matrix. However the nine-box matrix is a uniform technique to select businesses and to assign strategy per target businesses, customers or markets, it was neglected by practitioners, owed to its complexity.
57 58
Baker, M. (1995), p.459 McDonald, M. and Rogers, B. (1998), p.66
29
The nine-box directional policy matrix was later on modified into a four-box directional policy matrix (see Figure 4). The simplified matrix is easy to handle and is widespread practiced in management. Here the horizontal and vertical dimensions remained the same as in the nine-box directional matrix, and the way to represent the customers business volume in form of bubbles is borrowed from the BCG-matrix.
High Industry / Market Attractiveness Stars Question Marks
Cash cows High
Dogs Low
Low Business / Company Strengths Figure 4:A four-box directional policy matrix
59
Likewise the other portfolio matrixes, this matrix categorises the analysed subject in four groups: cash cows, stars, dogs, question marks. Accordingly are suggested the following strategies to apply for each group: to maintain, to invest/grow, to selectively invest or to manage for cash/withdraw. Withal, the portfolio strategies serve as directives for planning individual managerial approach per category. The latter approach got recognition not only as a technique for analysing of assets, businesses, markets and products, but it was also further developed into a customer portfolio method to be used in the customer management.
3.5.3.2 Customer portfolio

The customer portfolio is being used for strategic and operational management and for planning of customers in industrial markets60. The customer portfolio method suggests managing customers and the relationships with them according to their cluster position in the portfolio. Hereby, it incorporates the matrix of the four-box directional policy matrix, but applies other dimensions on the X and Y-axis. These dimensions change according to the type of criteria, applied for measuring the customer performance61.
59 60 61
McDonald, M and Rogers, B. (1998), p.67 Mller, K. and Wilson, T.D. in Baker, J.M. (1995), pp.811-812
As a result of the variance of applied criteria, several customer-controlling methods were developed, e.g. Customer Growth-Supplier share portfolio, Customer Attractiveness-Relative Supplier Position, Customer attractiveness- relative Customer Satisfaction, portfolio of business relationships. For detailed discussion see Baguhl, O. (2004), pp.140-148
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3.5.3.3 Key Account Portfolio

The customer portfolio served the basis for development of the Key Account Portfolio (Figure 5). The Key Account Portfolio is also named as KAS-Matrix62. The KAS-Matrix provides a solid methodology for analysing, identifying and prioritising key account using portfolio management. It also enables the supplier to compare key accounts, to categorise them and to plan the future business strategies for managing them. The idea of Key Account Portfolio lies upon proposition, that the key accounts must be managed as an investment share. Therefore, the supplier detects the value of each key account and identifies those who have high growth potential (Strategic Customers or Star Customers) and those customers, who bring the current income (Status and partially the Streamline Customers). This method suggests, that supplier acts upon current or future customers income potential, focusing on the most prospective ones, because this is where the future big business lies. Therefore, it is proposed to maintain the customers who realise current business, while investing in business relationships with prospective customers of the future. At the same time, the supplier should switch off the investment from the less-promising customers. The matrix categorises all key accounts, matching those having similar characteristics to the four groups63: Star Customers, Strategic Customers, Status Customers and Streamline Customers, as shown:
Key Account Selection Matrix High Key account Attractiveness Strategic customers Star customers - Key customers spend
Status customers High
Streamline customers Low
Low
Suppliers relative business strength as seen by the customer
Figure 5:Key Account Selection Matrix (KAS-Matrix)
The three dimensions constitute the Key Account Selection Matrix. These are: the Key Account Attractiveness, placed on the vertical axe; the Suppliers Relative Business Strength as seen from customers perspective located on the horizontal axe and the
62
In literature the Key Account Portfolio is also defined as the Key Account Selection-Matrix-KAS-Matrix (compare McDonald, M. and Woodburn, D. 2007). The thesis applies the both definitions.
63
McDonald, M. & Woodburn, D. (2007), p.24
31
Customer Spend, expressed in bubbles. Information for the vertical and horizontal dimensions is provided through the self-assessment questionnaires, which quantify the position of customer for the supplier and the suppliers competitive position, as seen by the customer. The data for the horizontal dimension comes out from the calculation of the Suppliers Relative Business Strength comparing to the competitors. For doing that, the supplier gathers the data by the means of a self-assessment questionnaire, where the following three questions are asked to detect the suppliers actual strengths compared to the suppliers: What are the Critical Success Factors for any supplier to succeed in the industry? How important is each of these Critical Success Factors (as measured of summary of 100)? How do the company and each competitor score on each of the Critical Success Factors? These questions yield the information necessary for making an overall assessment of suppliers strengths. The data serving for the Y-axe is same to the outcomes of the calculations, conducted within the assessment of Key Account Attractiveness and is detailed in section 3.5.2.5. The third dimension Customer Spend is represented in the shaded customer-circles shown in the matrix boxes. This data represents the volume of customer spending, which can be sales volume or budget contribution, either current or past, according to the time frame which company defines. After all three types of data are collected; they are converted into a Key Account Selection Matrix. Some companies apply special KAM software to create the matrix for their key accounts64. The portfolio method for key accounts measures the potential of every key account to yield growth in profit shown in the vertical axe. The business strengths of the company, as perceived by its key accounts are given on the horizontal axe. Meanwhile, the business with each customer is represented by the volume and by the positions of bubbles in the clusters: the bigger the bubble the more business the customer creates for the company, the higher the bubble is allocated, the more attractive the company evaluates the account. The practical application of the method is given precisely in the chapter 5.
64
The software for creating the KAS-Matrix was developed in conjunction with Prof. McDonald, M.
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3.5.3.4 Categories of key accounts

Equally, as the other portfolio methods, the KAS-matrix categorises the key accounts, defining the characteristics of each key account group and suggesting an appropriate strategy depending on where the key account is located in the matrix. In the following the directional strategies and characteristics for each portfolio group are summarised65. Strategic Customers strategic investment The business case with these customers is very strong and both the customer and the supplier are interested and satisfied with the business relationship. The supplier derives much of its growth in sales and profits from accounts in this cluster. Their position must be hold and if possible improved. The recommended strategy for supplier is to continue investing in this group, to be attentive to accounts needs, trying to stay the leading supplier for them, improving the competitive position. As the more tactical strategies it is recommended to put in action more marketing, to adapt pricing, to raise the service levels and to offer a differentiated product or even offering a new product. Further guidelines consider upgrading of staff working with key accounts and tight cost control. Star Customers investment for growth / invest selectively These customers are seen as attractive key accounts for the supplier, but the suppliers position with them is currently weak. Therefore, the supplier should enhance his position and improve the business case with this customer, as this is his prospect for growth. The recommended strategy is to try to move this customer to the left cluster, converting him into a Strategic Customer. The supplier should hereby recognize the customer having high growth potential and should selectively invest there. For doing that a focused allocation of business resources and investment in them is required. The supplier must see this group as a business opportunity for the future, which is achievable through investing and concentration on the customer today. Status Customers proactive maintenance These are the loyal customers and the supplier should concentrate on withholding their position. Suppliers primer strategy towards managing this customer group is to foster the sustainability of earnings. This can be achieved through continuing to deliver a successful product and service. Besides, the supplier should act cost-efficiently when managing this customer, for instance he is recommended to stabilize prices, to offer a differentiated product, to reduce the time-spent and limit marketing and other variable costs, without letting customer feel that.
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The portfolio strategies and characteristics are adapted from McDonald, M. and Rogers, B. (1998), p.79
Theoretical Framework Streamline Customers management for cash
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This customer group is the one who brings income. Nonetheless this is not the critical group for the future business. Therefore, the supplier is recommended to manage this customer just for profit, exploiting all business potential and maximising cash flow. This can be done through maintaining or increasing the prices and through minimising marketing and other business supportive expenditures. As it can be seen, the portfolio method offers strategies, which allow formulating a balanced approach towards very different key accounts. Namely it prioritises the most attractive customers for doing business, but nonetheless it does not neglect the less favourable customers, offering a suitable strategy for improving and holding business with weaker customers. Furthermore, the portfolio matrix assists the supplier in analysing the current position of a key account and enables to plan the development of business with him. Hereby, shifting of key account to the desired cluster positions, e.g. moving a Star Customer to the cluster of Strategic Customers helps to visualise the options of business development with the key account. Moreover, the portfolio method suggests the marketing and management measures, for maintaining or changing the customers business positions. Here, the supplier derives directional strategies from a portfolio and according to them plans the product- and price management, together with the design of promotion- and human resources activities. Such planning can be extended till formulation of a Key Account Management programme and Key Account Marketing Programme, which would cover all operational and tactical aspects, for planning of an individualised KAM approach. The benefits of KAM and in particular of a Key Account Portfolio method were understood. The next chapter continues the discussion on KAM, emphasising the use of its application for the CRDS.
Analysis of KAM suitability for CRDS
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4 Analysis of KAM suitability for CRDS

In chapter 1 and 2 the CRDS organisation was introduced, emphasising the context of the changing environment in the ATM sector and of the CRDS. CRDS is challenged to enhance its business and it recognised the opportunity in selling more services and becoming more market-orientated, as it was described in paragraph 2.4. A proper customer-management concept would facilitate achievement of these objectives. In this context, KAM is proposed as a solution for CRDS, enabling to effectively manage its customers and helping to strengthen the business. The hypothesis can be proved through finding out whether the KAM concept indeed suits to the CRDS organisation. For doing that, it is required to refer once again to the conceptual objectives of KAM and to identify whether they correspond to the CRDS goals. Besides, the hypothesis will be then proved, if the further verification of KAMs suitability for CRDS will result that the centre possesses the same features, like the companies that use KAM, discussed in paragraph 3.3. In this manner will be answered the questions, whether the KAM would correspond to the CRDS expectations and if it could be an optimal concept for CRDS.
4.1
Hypothesis: KAM is an optimal concept for the CRDS
The KAM concept offers an optimal solution for CRDS. The concept suggests that the business can be improved through a consequent focusing and planning of management resources for the most important customers, because they are the main contributors to the business. Making a reference to the CRDS as a company, which depends a lot on its diverse customers, it becomes obvious that the centre requires such a method in order to formulate a methodological approach on how to win and to hold the most valuable customers.
4.2
Verification of KAM suitability for CRDS
This paragraph verifies the suitability of the concept for CRDS, referring to the needs of the centre; analysing the reasons to implement KAM and investigating for the availability of the three factors that determine the decision to implement KAM in any company, as described in paragraph 3.3.5. Besides, the verification bases on assuring that CRDS intentions are conform to the objectives of KAMs and to the characteristics of companies using KAM with.
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4.2.1 Compliance of CRDS intentions with KAM-objectives

The primer objectives of KAM were concluded in Maximising Customer Value and in making the customer to continue purchasing ones products. Considering the business expectations of CRDS, these objectives ideally match to the centres needs. Maximising Customer Value Transferring the first objective on the practice, Maximising Customer Value means for the CRDS that the customer brings monetary and non-monetary contributions to the company and this is a growing tendency. As far as the centre wants to increase its revenue and as far as the customers enable to do it, the first KAM objective coincides with the intention of the centre. Customer Retention Realising the second KAM objective - Customer Retention on the CRDS perspective, means that its customers repeat to purchase the services of CRDS on a continuous basis. Thus, this objective coincides with the centres intention to secure long-term business viability, noted in the CRDS business plan. Consequently, the both KAM objectives correspond to the intentions of the centre. The more customers buy the CRDS services and the more value they deliver to CRDS, the more satisfied the organization will be and the more it will achieve its target to increase revenue and keep business sustainable. Putting this on a large scale, through achieving these goals, CRDS can extend its self-financing and become more marketoriented, succeeding to adapt to the common tendency in air transportation industry, discussed in chapter 2.
4.2.2 Conformity of CRDS with the companies using KAM

In paragraph 3.3.4 the reasons were summarized, which motivate the companies to introduce KAM. The firms, who use KAM expect from the concept to obtain the following four benefits: increasing customer orientation, improvement of business relationships, differentiation from competitors and minimisation of market risks . As mentioned in paragraph 2.4, CRDS wants to become more customer-orientated. Hence, this intention of CRDS coincides with the motivation of the firms that want to raise customer-orientation through KAM. Besides, the centre is surely interested in an improvement of its business relationships with its most important customers. Hence, the second objective corresponds to CRDS as well.
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Considering the objective differentiation from competitors, which yet was not explicitly defined as the new targets of CRDS, it can be deduced that it is also valid for the CRDS. In particular, the centre assumes, that competition is growing and therefore it sees the differentiation of products and services as own competitive strategy. Considering the last benefit expected from KAM and concluded in minimising market risks, it can be concluded that this goal also complies with the CRDS intention, to find out the way to minimise in future the risks of loosing the customers. Summarising, the overall motivations of CRDS are conform with the reasons of the companies that adapt KAM.
4.2.3 Availability of factors for KAM implementation

Referring to the paragraph 3.3.5, which named the determining factors for applying KAM in a company, this paragraph examines the availability of these factors at CRDS. Factor 1: Intensity of competition As it was defined in the section 3.3.6, the companies featured by high competition, should consider implementation of KAM as a method for harmonising customermarketing activities and a method helping to differentiate from competitors through an individualised customer approach. It can be assumed that the centre acts in a relatively low competitive environment because the ATM sector still has not yet converted into a deregulated marketplace like the airlines and airports sectors. However, the rival is increasing and some of the former CRDS customers convert into competitors, because they start to produce for them the same services, as they used to buy at CRDS. Moreover, some new competitors may appear, aiming to offer the same ATM services to the CRDS customers and thus may endanger the CRDS business. Even though CRDS has obtained a unique competitive positioning, owed to its research and development expertise and a deep knowledge on the Central European air traffic issues, it should consider that the ATM business becomes more competitive. If no countermeasures for holding and enhancing business with the customers will be undertaken, these customers can be lost. Thus, the CRDS needs KAM as a differentiated customer-management approach, helping to survive in the business featured by growing competition.
Analysis of KAM suitability for CRDS Factor 2: Intensity of coordination of business relationships
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The business relationships of CRDS with its customers can be defined as highly complex and a lot of coordination is required, because the CRDS can both sell and provide for free the services to those customers, belonging to the contracting parties and financing the CRDS budget. So, the CRDS mainly provides services to its central customer and even a stakeholder the CEATS ANSPs. But the centre is interested in serving more customers in order to balance its budget. Finding direct contacts to the right customers seems to be difficult due to lacking information and some constraints on doing business. The centre even conducts lobby work for finding more customers. This proves the availability of the second factor at CRDS. The centre is indeed featured by complex interactions with its customers, who can originate both from public and private organizations. The KAM would facilitate making a differentiated management approach and plan personalised strategies for such different customers. In doing so, KAM would improve the coordination of customer relationships and processes. Factor 3: Integration of customers in the development process of services The CRDS services are tailormade and very individualized, as they are being developed in a close cooperation with the customer. The CRDS pursues to continuously integrate the customers needs into the product development process. For that reason, the centre broadly applies Project Management in production and simplifies the incorporation of the customers in the most important phases. In other words, CRDS cooperates tightly with the customers while creating a service for them, aiming to deliver the best quality. Nevertheless, launching of KAM would increase the cooperation effect even more, as the centre would additionally be able to plan strategically the business relationship with a single customer and hence, would be able to differentiate, which customer needs more attention and a better treatment. Thus, the availability of three factors at CRDS was proved. The CRDS is indeed a firm, operating in an intense competitive environment, with a high coordination of business relationships and is being interested in close cooperation with its customers, while developing the services. It became evident, that CRDS matches to the characteristics of those companies who implement KAM. Considering this proposition, it is suggested to adapt the concept for CRDS. The next chapter shows the practical implementation of KAM for CRDS.
Introduction of KAM to CRDS
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5 Introduction of KAM to CRDS

The Key Account Management was proved to be a suitable management solution for the CRDS because it offers a comprehensive customer-oriented marketingmanagement approach. KAM suggests withholding the most important customers and maintaining and investing into a long-term trustful business relationship with them. But before planning the business with such customers it is necessary, to carefully analyse them, to understand the value of each customer and to know its future behaviour. Only then the company can adequately plan a structured management approach. This chapter suggests an option of how the KAM can be introduced to CRDS. It must be considered, that setting of KAM is a multi-level process and it implies a consistent planning and analysing the customers, before an operational KAM program can be launched in practice. This thesis explores the introductory phases of KAM implementation and therefore suggests launching KAM at the CRDS, undertaking the first steps, concluded in Selection of Key Accounts and in Categorising of Key Accounts via portfolio method. This chapter shows how these two processes were developed for the CRDS according to the guidelines and the theory of the KAM implementation process, given in paragraph 3.5. The Key Account Controlling hereby accompanied the two phases of KAM implementation to CRDS. In particular, the KAC assisted in the process of Selection of Key Accounts providing qualitative and numerical customer data, derived from CRDS SWOT analysis, Business Plan and corporate accounting. Besides, the KAC provided customer sales data required for composing of KAS-Matrix and hence facilitated to accurately evaluate and interpret the CRDS customer data. The next paragraph outlines the introduction of KAM to CRDS in two main steps.
5.1
Implementation of KAM - Step 1: Selection of Key Accounts
The implementation of KAM requires an accurate identification of prospective accounts. For identifying the CRDS key accounts was applied the method of Assessment of Customers Attractiveness, given in section 3.5.2.5. This method has measured the grade of attractiveness of each customer as seen by the CRDS. Based on its outcomes, the most attractive customers were identified as the CRDS key accounts. The Assessment of CRDS Customers Attractiveness was realised through a scoring table, shown in Appendix 1B.The latter was directed to the Head of the CRDS with the request to score all customers according to the amount of their contributions. These contributions served as criteria for detecting the customers attractiveness for CRDS.
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The next sections discuss in detail the procedures of Assessment of Customers Attractiveness and of the Selection of CRDS Key Accounts.
5.1.1 Assessment of Attractiveness of CRDS Customers

The method of Assessment of Customers Attractiveness was applied as a technique to identify and select the CRDS key accounts. It suggests analysing and selecting key accounts on the basis of their contributions to a firm. Hereby, the customers contributions are categorised in three criteria: the profit-based, the customer-needs based and the attribute-based. These three criteria have measured the contributions of the CRDS customers. For doing that, the criteria were adapted to the CRDS business case and measured the customer attractiveness from the centres point of view. Each criterion was divided into six sub criteria, aimed to particularly specify the amount of customers contribution (see Appendix 1A). The sub criteria were put on the scale of ranking from 0 till 10. Each analysed customer was matched to one sub criteria and was scored according to this. The higher was the customers input, the higher he was ranked and scored by the CRDS. For example, in order to assess a customer on the basis of the needs-based criteria, the CRDS was requested to score a single client in terms of prospects for doing longterm business with the centre. For assessment was offered a list of sub criteria (see Appendix 1A) specifying the volume of business prospects of a customer. Each customer was scored according to the sub criteria, which characterised his demand for CRDS. For instance, if the customer indicated no interest for doing business with the organisation, he got a score of 0. The score of 2 would get a customer, who currently does not purchase CRDS services but may do it in the future. The score of 4, was given to the customer, whose business strategy or mission was similar to the CRDS and this simplified the access to the customer. The score of 6 was given to the customer, who was estimated to have interest in buying CRDS services now and till some period in the future. The higher scores - 8 and 10 respectively, were given to those prospective customers, who are willing to cooperate on a long-term basis with CRDS, are contributing to the expansion of its business network, as well as are bringing new businesses. Likewise, was measured the customers attractiveness, determined by the profit-based and the attribute-based criteria.
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5.1.2 Criteria for measuring attractiveness of CRDS customers

As it was discussed above, the three criteria were used to measure the attractiveness of CRDS customers. This was done by the means of a questionnaire table, which included the groups of CRDS current and future customers66, together with the attractiveness criteria. The Head of the CRDS was asked to assess each customer, in terms of profit-based, needs-based and attribute-based criteria, which were explained in Appendix 1A. The customers obtained the scores, according to the amount of their contributions (see the outcomes of the assessment in Appendix 1B). So, when assessing a customer in terms of the profit-based criteria, the CRDS answered how much profit the customer brought to the firm over the last three years. The higher scores obtained those customers who indicated high purchase volume. Assessing customers in terms of needs-based criteria, the centre has analysed the prospects of doing business with each customer. Those customers, who constantly necessitate CRDS services and hence support the sustainability of CRDS business, have obtained the higher scores. Assessment of customers in terms of attribute-based criterion has analysed and ranked the customers according to the strength of their involvement in business with CRDS. Therefore those customers who were more allied to the CRDS were ranked higher. This is how, the CRDS rated its customers in terms of three criteria: profit, durability of customer demand and business relationship. According to the framework of technique of Assessment of Customers Attractiveness, the supplier does not equally perceive these three types of criteria and may value the presence of one contribution more, than of the other. For instance, the volume of sales per customer might count more than the intensity of business relationship with him. Therefore, it is necessary to know, which customers contribution is more appreciated and expected by the supplier. Applying this for Assessment of Customers Attractiveness, the supplier must prioritise in quantity each criterion. Thus, the CRDS was requested to indicate the importance of each criterion of attractiveness in percentage. The Head of the CRDS has estimated the relative importance of each criteria, ranking them on a scale between 0 and 100, shown in column Relative Importance of Criteria in Appendix 1B. As a result, the profit-based criterion was prioritised as the most important determinant of customers attractiveness and was
The assessment included the CRDS customers served in the last three years, as well as those customers, which will be served in year 2008 and later.
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issued for 50 points. The customers-needs based criteria was scored with 35 points. As the less important determinant was ranked the customers attribute-based criteria it obtained 15 points. In this manner, it became clear how much value each customer contribution means for the CRDS. Finally, the rates of Relative Importance of Criteria were multiplied with the attractiveness scores of each of customer, placed in green columns of the questionnaire. The results of multiplication are given in white columns. The summary of customers attractiveness scores per criteria have resulted the total attractiveness scores of the CRDS customers, as shown in the yellow row of Appendix 1B.
5.1.3 Selection of CRDS Key Accounts

The CRDS management team rated attractiveness of the customers according to the above-mentioned three criteria. The outcomes of this scoring are summarised in the next diagram:
1000 900 Scores of attractiveness 800 700 600 500 400 300 200 100 0
AN P SP s C EA s N TS on CE CE AT AT No S S n M M CE ili ilit ta AT ar ry y S Ai M rS ilit ar pa y Ai ce rp Us or ta er s ut ho r it ie s SE SA C SP R DU E /F A B EC C EC EA TL TS AT M Pr EC og (n on ra m CE m A TS es )F AT AB M s Sy Ai st r li em ne s Pr ov id er s R &D IA U NS Re ni se ve ar rs ch itie s Pr ov id er s
AN S
Customers of the CRDS
Figure 6:Identification of CRDS key accounts As the diagram shows, the attractiveness scores per customer differ a lot. Hence, some customers are seen by the CRDS as more attractive than the other. According to KAM framework, only the most attractive customers should be selected as key accounts. As the diagram shows, the six customers of CRDS, marked in green colour, have obtained higher attractiveness scores than the other customers. Hence, these are the CRDS most attractive customers and are consequently its key accounts.
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The purpose of Selection of Key Accounts is to choose those key accounts, on which the supplier will concentrate its business resources and towards whom he will further plan and deploy Key Account Management strategies. These strategies can be derived from a portfolio matrix of key accounts. The next paragraph explains in detail how the Key Account Portfolio was formulated for the CRDS.
5.2
Implementation of KAM Step 2: Categorising CRDS Key Accounts via portfolio
Categorisation of Key Accounts by the means of portfolio method was concluded in paragraph 3.5.3 to be the second step in implementation of KAM. This measure aims to plan strategies for selected key accounts, prioritising the very important accounts from the less ones. The KAS-Matrix generates suitable key account strategies. In order to create this matrix is needed additional supplier and customer-related data, serving as parameters for the matrix, as it was discussed in paragraph 3.5.3.3. Thus, to facilitate composing of the KAS-Matrix for CRDS was required to collect some missing data. The next paragraphs explain how this data was collected and how the Key Account Portfolio was created for the CRDS.
5.2.1 Data collection for the CRDS Key Account Portfolio

For composing of Key Account Portfolio or the KAS-Matrix for the CRDS was required to get the following data on selected six key accounts: the Attractiveness scores, the Spend volume and the CRDS Relative Business Strength, compared to its competitors. This data serves as variables for composing the KAS-Matrix, analogue of which was already illustrated in chapter 3. The next sections explain the methodology of collecting this data.
5.2.1.1 Key Account Attractiveness as a dimension for the Y- axis

The Scores of Key Account Attractiveness served as parameters for the vertical axis of the Key Account Portfolio of CRDS and were in detail described in previous paragraphs.
5.2.1.2 Customer Spend as parameter for the bubbles size

The third dimension, needed for composing the KAS-matrix of the CRDS, was the Spend Volume of every key account over the last three years. This data was given by the CRDS management and was partially extracted from the CRDS Business Plan. It must be considered, that the CRDS customers are distinguished between those who buy CRDS services and those who obtain them for free of charge, because they already financed the CRDS budget. In this context, the Customer Spend is a
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parameter, which seized both the accounts purchase volume and accounts monetary contributions to the budget, depending on the type of customer. The Customer Spend shows how much business was done with each single key account. In the portfolio matrix this data is conveyed by the size of the bubbles.
5.2.1.3 Calculating Suppliers Relative Business Strength

The Suppliers Relative Business Strength is one of the three dimensions of the KASMatrix, which represents how strong a supplier is positioned at the market. To calculate it, the supplier needs to identify which competitor competes on serving particular key accounts. As next follows the analysis of competitors services and overall business performance. Hereby, the strength of competitors performance is measured by the Critical Success Factors (CSFs), valid for this type of industry. The business, where CRDS is active, is determined by the following CSFs: quality of services, technical competences, price and knowledge transfer to the customers. These CSFs serve to the customers as reasons for buying the services of a particular supplier and measure the attractiveness of the suppliers offering. Knowing how the customer perceives the suppliers offering and the competitors offering, is useful, because it allows to detect how better or how worse is the supplier positioned at the market, comparing to its competitors. In this manner, applying the CSFs a supplier can evaluate his own business strength and those of the competitors. However, it is hard to recognize how the buyer perceives the business performance of the seller and of its competitors. An extensive market research can provide this data, but this costs time and investments. As alternative, the supplier can try himself to estimate how his key accounts would score his business performance and of the competitors by the means of a self-assessment questionnaire, briefly introduced in paragraph 3.5.3.3. This technique measures the suppliers attractiveness for the key account and is analogous to the method of Assessment of Customers Attractiveness for a supplier, discussed above. Here, the supplier likewise prioritises each of the CSFs, ranking the significance of each factor so, as the key account would do it (see column Relative Importance of CSFs of Appendix 2A). The importance of the factors is presented in points, making out 100 in summary. The characteristics of the four CSFs are specified in sub-dimensions and are ranked in the same way as the criteria for Assessment of Customers Attractiveness (see explanation to CSFs in Appendix 2A), enabling to precisely identify how far the business of the supplier and of the analysed competitor possesses the Critical Success Factors. It is suggested, that the supplier scores himself and his rivals, who compete on serving its key accounts according to the given four CSFs. In particular, he selects
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those characteristics of CSFs that suit best to each competitor. Hereby, every CSFcharacteristic is given a score from 0 to 10. The stronger is the business performance of competitor on the analysed CSF, the better scores he obtains and the higher is his business strength. After each competitor is rated according to the CSFs, his scores are multiplied with the Relative Importance points of the CSF, given in the white column of Appendix 2B. As the result, the supplier gets the scores of the Business Strength of his competitors. Afterwards, the outcomes of these multiplications are set in relation with the scores of suppliers business strength, through a simple subtraction of competitors scores from the suppliers scores. The result of this subtraction represents in rates how strong is suppliers business comparing to his competitors. These final outcomes are applied in the KAS-Matrix as variables of the X-axis. This method was applied for calculating the CRDS Relative Business Strength, which is needed for creating the Key Account Portfolio. For doing that, I firstly identified the Critical Success Factors, which determine the level of business performance of an ATM service provider, like CRDS. Due to previous knowledge on the centres business, it was easy to identify the Critical Success Factors, valid for this type of business. It was summarised, that the customer, who purchases ATM service solutions, first of all puts value on the technical competences of the provider, on quality and reliability of the delivered services, on the price and value of the product and on transmission of the product knowledge to the customer. It was suggested, that the customer appreciates some of the named CSFs more, than the other. Therefore, each critical factor was weighted according to its importance for the customer and was summarised in points, as seen in the second column of Appendix 2A. Hereby, the highest rate attained the CSF-Technical Competences. This is to explain by the truth that this factor is the most crucial as it actually identifies the technical capabilities and equipment of the provider, which allow him to deliver a wide range of services. As shows the legend of CSFs parameters (see Appendix 2A), the bigger is the providers assortment, e.g. his offering includes Real-Time Simulations (RTS), Fast-Time Simulation (FTS), Model-Based Simulations (MBS) and additional value, the better technical competences he has and the higher rating scores he obtains. The Quality and Reliability of services was rated as the second important factor, getting 25 points. This factor is significant, because it is a requirement for the ATM service provider, to assure high reliability and certainty of his services. The level of reliability and quality was distinguished between high, medium and low. The CSF Price was ranked as the third important CSF and obtained 20 points. This factor measures the cost-value relation of the service. However, the price is not the
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most important factor in a buying decision of an ATM service solution, the customer still pays attention to which extent the price corresponds to the value of delivered services. Owed to the price-sensitivity of the customers, here those suppliers were better rated, who offered services of high value for the lower price, than the competitors. The last and less important CSF in the ATM business was concluded in Best Practice or, in other words, in how a provider transfers his knowledge and expertise on services and tools to a customer. This CSF measures the level of customisation of services, the provision of consultancy and knowledge to a customer, as well as identifies the extra services and added value of the suppliers products. Those providers having high expertise, providing consultancy and extra services have attained the higher scores in assessment of this CSF. All the competitors of the CRDS were scored according to these CSFs, as illustrated in Appendix 2B. In doing so, I referred to the data, acquired from the previous intern workshops for analysis of the CRDS rivals. While scoring, I opposed the competitors with the selected key accounts of the CRDS and listed them correspondingly in the lower row. This is how were specified the opponents of CRDS, who compete on serving its single key account. The competitors and the CRDS were scored. The obtained results were multiplied with the rate of the Relative Importance per CSF. This is how the scores of Relative Business Strength of each competitor were calculated. The CRDS was likewise scored in terms of the four CSF, obtaining the score of 920 points for its Relative Business Strength. The scores of CRDS and of the competitors represent how well or bad is their business positioned. These results were further elaborated for the need to compose the KAS-Matrix. In particular, the scores of Relative Business Strength of each competitor were subtracted from the score of Relative Business Strength of CRDS, with a purpose to see the relation of how better is CRDS positioned in front of each key account, comparing to the competitor. These differences are given in the lowest row of the table. The results of the calculations show that the CRDS is stronger positioned as its competitors. It must be noticed, that the analysis of the competitors business strength cannot be considered as 100% adequate, unless the customers are the ones who assess all providers. However, the obtained data is perceived as reliable and sufficient for composing the KAS-Matrix, because it was derived from analysis done in CRDS and is backed by corporate knowledge of market situation.
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5.2.2 Portfolio of the CRDS Key Accounts

The previous paragraphs explained how the key accounts of CRDS were identified, how their attractiveness for CRDS was measured and how the CRDS Relative Business Strength, compared to those of the competitors was assessed. This data served as parameters for composing the KAS-matrix, shown in Figure 7. The key accounts have been plotted in the matrix, according to their scores and spend amount, which are summarised in Appendix 3.
Figure 7:Key Account Portfolio of CRDS
The matrix provides an outlook on the positions of the CRDS key accounts and categorises them in four groups. As the graph shows, CRDS has a mix of different key accounts, placed across the four clusters. Hence, the firm has a diversified customer portfolio, which is required for a successful business. But the business success also depends on the amount of budget each customer generates for the firm and the portfolio highlights it, showing in circles the spending of the key accounts for CRDS services. As the graphic results, the CRDS has three major contributors to the budget the key accounts Nr.1 CEATS ANSP, Nr.2 EUROCONTROL and Nr.3 ANSP non-CEATS. The biggest and the main contributor stays however the key account Nr.1. The key accounts Nr.4 and Nr.5 indicate the least capital input to the CRDS and key account Nr. 6 CSPDU, is not seen on the graph at all, as yet it didnt indicate any spend volume, and therefore is seen more as a partner and not as a customer.
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Ideally, the portfolio should be diversified and balanced, in a way that numerous customers generate companys budget. Such a portfolio secures suppliers independence, which can be limited by having just one big customer in portfolio. Once a firm has various revenue sources, it gets stable high earnings from the loyal customers Status Customers. From this money it can invest into strengthening the business with very promising, but less budget-generating customers into the Star Customers. In such a portfolio the Spend Volume of the key accounts is distributed proportionally across all four clusters. Hereby, the size of the circles does not differ largely from each other, as the contributions of the key accounts are comparable. On the whole, an equilibrated Key Account Portfolio improves the suppliers business, giving more independence and options for doing business.
5.2.3 Balancing the CRDS Key Account Portfolio

As it can be seen from the Figure 7, the CRDS portfolio is diversified, nonetheless it is not balanced, as the firms main source of budget is key account Nr. 1 and its contribution can merely be compared to the payments of the other key accounts. Obviously, the portfolio would be more balanced if the Spend Volume of the other key accounts would increase. Moreover, the CRDS portfolio can be improved if the positions of some key accounts would change, resulting more benefits for the CRDS. For example, the key account who was plotted in the cluster of Status Customers, e.g. key account Nr.1, can be moved to a better position, namely to the Strategic Customers or to the Star Customers, and hence, would become a more prospective and attractive one (compare characteristics of portfolio categories). The supplier can plan development of business with every key account through a simple shifting of the positions of the key accounts in the portfolio. Then, referring to the portfolio characteristics, he can forecast the future business strategies with each account. This gives a good possibility to define where a supplier wants to see his key accounts positioned. Likewise, the current portfolio of the CRDS can be improved and redrawn, so as the key accounts can be moved to the desired positions. Surely, as knowing business environment and its influential factors, the firm itself knows best where it wants to position its accounts and whether this is achievable. For the case of the CRDS, it is suggested to place favourably its key accounts as Figure 8 illustrates 67:
The suggested positions of the circles are adapted from the options of development of Key Account Portfolio. For detail refer to Cheverton,P. (1999), Figure: Investment of money and effort, p.175
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?
Current Position Forecast position Move position
Figure 8:Balanced Key Account Portfolio of CRDS
The graph indicates that the CRDS would have a more balanced portfolio if the Spend Volume of key accounts - Nr.2, 3 and 4 would increase as shown by the bigger yellows bubbles. Furthermore, it is suggested to move the accounts Nr.2 and 3 to the left. This change means that these key accounts would better perceive the business performance of the CRDS. As next, it is suggested that the key account Nr.1 moves to the right side and hence becomes either a Star Customer or a Strategic Customer. In both cases changing position means to him improving the business prospects with CRDS. Besides, the matrix indicates an undefined position of key account Nr.6, putting him under question mark. His position should be clearly stated and developed accordingly. The positions of key accounts Nr. 4 and Nr. 5 are placed in the cluster of Streamline Customers. The balanced portfolio suggests withholding their positions or slightly moving them up, raising their attractiveness for the CRDS. In both cases, the centre is supposed to identify clear objectives and strategies towards these key accounts. In this paragraph the current Key Account Portfolio of the CRDS was formulated and shown in Figure 7. This portfolio can be improved and converted into a more balanced one, given in Figure 8, if some key accounts increase their Spend Volume and if CRDS improves its business position in front of the most prospective key accounts. But in order to change the CRDS current portfolio into a balanced one, it is incumbent to adopt appropriate strategies, to plan proper managerial and operational tactics for development of key accounts.
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The next section handles these topics, giving characteristics of key account and suggesting appropriate portfolio strategies for management of each key account group.
5.2.4 Portfolio Characteristics of the CRDS key accounts

This paragraph gives the characteristics
68
on the CRDS key accounts according to
their current positions in the portfolio, given in Figure 7. It is suggested, that CRDS develops the business with its key accounts, adapting proper strategies for each account. In doing so, it is recommended to apply the portfolio strategies as directional policies for management of a particular category of key accounts. This paragraph proposes the strategic options for managing of CRDS key accounts. The pursuit of these strategies would improve the CRDS current portfolio, converting it into a more balanced on, as represented by Figure 8. Strategic Customers: ANSP Non-CEATS The most innovative and important projects should be developed with this key account. It is expected, that this account will have growth in sales and will continue to bring profits and a positive cash flow. The CRDS estimated this key account as highly attractive and targets a large amount of business with him. Hence, the further opportunities for finding and developing joint work must be investigated. The appropriate strategy would be to invest and build up a long-term business with this key account. Meanwhile, the CRDS should concentrate on creating on-going value for the ANSP Non-CEATS, in order to strengthen own position in front of the account. Launching a deep and multilevel relationship with this account can support this. The multi-skilled key account managers are required here for handling relationship with account. Even though the position of Strategic Customers is regarded to be the strongest position of the portfolio, there are still some recommendations on how these customers can be developed. In particular, the portfolio strategies suggest, that the customer can be moved to the left side in portfolio. This would imply for CRDS strengthening its Relative Business Position, given in the X-axis of portfolio matrix. Besides, this account can be developed through raising its Spend Volume on purchasing the CRDS services.
68
The portfolio characteristics of the key accounts were adapted for the CRDS from the Programme guidelines, suggested for different positioning on the directional policy matrix, McDonald, M. & Rogers, B. (1998), p.80
Introduction of KAM to CRDS Star Customers: EUROCONTROL ATM programmes; CSPDU - FAB CEATS
50
These two key accounts are the customers of the future, though at the moment they do not represent the biggest business. The assessment has showed that they are aligned with the CRDS corporate strategy and have potential. However, the problematic resides in the fact, that these accounts would not score the CRDS as high as CRDS did. This may be explained by two reasons: the first is that they do not know what the CRDS has to offer; the second is that the CRDS offering does not fit to their needs. To improve this situation it is recommended to change position of the key accounts, moving them to the left side of the portfolio. Logically, this may take place only if the CRDS Relative Business Strength will increase or in other words, if the CRDS gains a better competitive position in front of these Star Customers. For enhancing its image and business position, the CRDS should do a better communication with these key accounts. Additionally, this Spend Volume of the both key accounts should be raised, in order to secure a profitable business. Currently the cash flow brought by EUROCONTROL ATM Programmes may be neutral or even negative, nonetheless this account has a lot of potential and in future he can indicate substantial growth in sales volume. Therefore, the recommended strategy towards is to try to convert him into a more prospective account. For doing so, is required to develop and to invest more into the business with this key account. Considering the second key account CSPDU/FAB CEATS, it was already recognised that his position and relation to CRDS is undefined, because it yet has not indicate any Spend Volume. However, the CRDS valued this customer highly and appreciated him as a key account. Hence, as being a Star Customer, he should be treated likely. Status Customers: ANSP CEATS The portfolio position of this key account ANSP CEATS is unclear, as it can be both categorised as a Status and a Strategic Customer in the same proportion. Consequently, this key account combines both characteristics of the two key account groups. Thus, the recommended strategies for managing this account would be both proactive maintenance and strategic investment. But as knowing the background of the relationship with this account it becomes obvious that this customer is currently changing his business position, namely he moves from the Strategic Customer to the Status Customer position. Definitely, this account was the strategic account in the past and brought many innovative projects and business to CRDS. The CRDS has already built up a trustful relationship with him. Probably the
51
business share of this customer will not grow in future as much as it did in the past. Consequently, this customer may not form anymore the CRDS strategic vision of the future, as it does not show any new great prospects and will generate less business than it did before. Hence, it can be concluded that the ANSP CEATS is rather overtaking the position of a Status Customer. Nevertheless, this account must remain in focus of the CRDS as he brings the highest contribution to the budget of the centre. It is further expected, that this key account will continue to bring stable profits as well as positive cash flow. Therefore, the recommended strategy will be directed on holding this account and maintaining the profits. But according to the portfolio method, the position of Status Customers cannot stay unchanged long and it needs to be altered and improved with time. There two options for doing that. The first option offers to develop a Status Customer into a Strategic Customer and hence to move his position into the upper portfolio cluster. This option does not fit, because the ANSP CEATS is currently moving oppositely. The second option suggests converting the Status Customer into a high-potential Star Customer. This option appears as possible and should be further explored.
Streamline Customers: Research and Development Universities, EEC These customers are price-sensitive and require extended negotiation and do not bring big business. The company may even tend to resign from serving these customers. Nonetheless, they continue to deliver business. The supplier has choice on how to manage these customers and depending on its will, their current positions can be shifted to the other portfolio clusters. If no changes in managing these accounts take place, their position should be just withheld. Furthermore, it can be recommended to move these key accounts to the left side of the cluster, and hence to improve the CRDS business position. Moreover, it is suggested, that these key accounts increase their Spend Volume for the CRDS services. The best strategy for managing the two accounts is to manage them for cash, because these customers still bring positive cash flow, even though it is low. Moreover, these customers are the matter of some uncertainties when speaking about their share and attractiveness for doing business. Therefore, it is indispensable to meet strategic decisions on designing business with them. The CRDS has options on whether to hold, to develop or to eliminate these accounts from portfolio, depending on the centres business intentions. At this point, the position of the key account Nr.4 EEC should be held, whereby the options of raising its Spend Volume should be investigated. Likewise, the position of the key account Nr.5 R&D and Universities, should be
52
maintained or improved, since the CRDS mission complies with the mission of this account, having in common the goal of doing Research and Development. Finally, the ultimate decision whether to withhold or to change the portfolio positions of the Streamline Customers will come out from the CRDS. Supportive would be to clarify the roles of the both accounts in the CRDS business.
Conclusion
53
6 Conclusion
In my thesis I analysed the business context of the CRDS and identified the need of introducing a managerial concept that would raise the customer orientation and profitability. The changes in the Air Traffic segment, which is becoming more costconscious and oriented towards its users, had and has an impact on the CRDS, forcing to increase its self-financing. The organisation identified the opportunity for generating value in selling its services and focusing more on its customers. But as still staying a public organisation, the CRDS has some limitations on doing business. However, in this study I assumed that the business of CRDS could be enhanced through focusing on its customers and stakeholders, on whom CRDS depends on. An introducing of an appropriate marketing-management concept would help the centre to increase its earnings, would offer to effectively concentrate on its customers, emphasising the durability and mutual benefit of the business. Thereby, the concept ought not to contradict to the mission and business specifications of CRDS.
In my thesis, I identified the concept of Key Account Management as an optimal for achieving these goals and proposed to introduce it to CRDS. In doing so, I aimed to ensure, that Key Account Management is indeed a solution for CRDS. I studied the concept and analysed whether it fits to the requirements of CRDS. I founded out that KAM promises to increase firms profitability through customers retention and through maximisation of their value and earnings. This was exactly, what CRDS aims to achieve, because if the customers continuously buy its services, they generate more value to CRDS. Moreover, since CRDS operates in a business-to-business industry, it is easier and cheaper to retain the customers as to start business with the new ones. The differentiated customer approach, provided by KAM would secure customer retention for CRDS. Concluding, the KAM is a concept, which would help CRDS to increase profitability and business sustainability through focusing on the customers.
To prove this hypothesis, I explored the reasons and characteristics of the companies that use KAM and detected, that CRDS is similar to them. Companies, willing to increase customer orientation, to improve business relationships and to differentiate themselves from competitors, apply KAM for achieving these goals. The same intentions were found for CRDS. Hence, CRDS can also apply KAM to meet these objectives. I continued to verify the suitability of KAM for CRDS, searching for three factors that serve as determinants for implementation of KAM in a company. The
Conclusion
54
analysis resulted that CRDS is as well having these three factors: intensity of competition, intensity of coordination of business relationships and integration of customers into the service development process. Equally, as the other companies, CRDS would benefit from KAM, increasing the cooperation through a differentiated customer approach, improving the coordination of business relationships and advancing in the processes of development customised services. Moreover, KAM can even serve to CRDS as a strategy for differentiation of the centre, from competitors.
To my point of view, KAM gives to CRDS an option to develop its business, because the concept provides an understanding of the value of each customer and offers appropriate options of treating them according to their value for the company. The study analysed and concluded that not all the customers are seen as same important to CRDS. My findings resulted the portfolio of CRDS key accounts and enabled to classify and prioritise single customers within the categories of key accounts. I concluded, that the portfolio of CRDS key accounts is not balanced and can be further improved. The strategies were specified and recommended the approaches for planning business with each key account. The introduced characteristics and strategies for development of the CRDS key accounts gave common directives on how the centre can treat its most significant customers.
Choosing a particular strategy for a key account has implications on the quantity of investment in relationship; on organisational processes with the customer involvement and on the pricing of services and products for individual key account. But before implementing portfolio strategies, every single key account should be carefully analysed, to assure the correctness of the new strategic choice. However, setting of key account strategy and a tactical KAM program, which is being elaborated in the next step of KAM implementation, cannot just be just deducted from the portfolio matrix. The KAS-Matrix gives overall common guidelines how to manage accounts according to their portfolio positions. Because each business and account is very individual, many implications and other factors should be considered in planning implementation of these strategies. This thesis challenged to formulate for the CRDS the guidelines for the strategic management of its key accounts. For further research I recommend the extended analysis of the suggested Key Account Portfolios and establishing final strategies, per single key account. Planning of a tactical KAM-program would be the next logical step in introducing of the concept to CRDS.
Appendices
55
Appendices
Appendix 1: Questionnaire for Assessment of CRDS Customers
1 A: Legend of questionnaire parameters
Appendices 56
1 B: Data
Appendices
57
Appendix 2: CRDS' Relative Business Strength
2 A: Legend of parameters for calculation
Appendices
58
2 B: Data
Appendices
59
Appendix 3: Data Worksheet for KAS - Matrix of CRDS
Key Accounts
CRDS' Relative Business Strength 620
Attractiveness Scores 470
Total Spend/Sales Volume (T EUR) from 2005-2008 12307
ANSPs CEATS EUROCONTROL ATM Programmes ANSPs Non CEATS EEC R&D Universities CSPDU / FAB CEATS
90 430 40 280 40
865 770 230 260 500
1900 720 300 50 0
References
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References
McDonald, M. and Woodburn, D. (2007): Key Account Management: the definitive guide, (2nd edn), Amsterdam, Elsevier. McDonald, M. and Rogers, B. (1998): Key Account Management: learning from supplier and customer perspectives, Jordan Hill, Oxford, Butterworth-Heinemann. Wengler, S. (2006): Key Account Management in Business-to-Business markets An Assessment of its Economic Value, Wiesbaden, Deutscher Universitts-Verlag. Cheverton, P. (1999): Key Account Management: the route to profitable key supplier status, London, Kogan Page. Bjerre, M. and Hougaard, S. (2003): Strategic Relationship Marketing, BerlinHeidelberg, Springer. Baguhl, O. (2004): Key-Account-Controlling im Marketing fr Industriegter,
Mnster, LIT-Verlag. Orr, M.L., Haw es, M.J. and Keillor, B.D. , editors, (2007): Marketing in the 21st Century: company and Customer Relations, (volume 3), Westport, Praeger Edition. Grnroos, C. (2000): Service Management and Marketing A customer
Relationship management approach, (2nd edn), Chichester, Wiley. Michaels, D. (2008): Airlines seek one EU sky: push to cut emissions spurs calls to unify air-traffic system, The Wall Street Journal, 5 February, p.3. Baker, J.M., editor. (1995): Companion Encyclopedia of Marketing, London-New York, Routledge. Rhoades, D.L. (2003): Evolution of international aviation: phoenix rising, Aldershot, England, Aschgate pp.50-55.
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Delfmann , W., Baum, H., Auerbach, S. And Albers, S., editors, (2005): Strategic Management in the Aviation Industry, Aldershot, England, Ashgate, pp.98-99.
McDonald, M.Millman, T., and Roger s, B. (1997): Key Account Management: Theory, practice and challenges, Journal of Marketing Management, 13, pp.737-757.
Jensen , O. (2001): Key-Account-Management: Gestaltung-DeterminantenErfolgsauswirkungen, (1st edn), Wiesbaden, Deutscher Universitts-Verlag. pp.162167.
Khler, R. (2001b): Marketing-Controlling: Konzepte und Methoden, in Baguhl, O. (2004): Key-Account-Controlling im Marketing fr Industriegter, Mnster, LIT-Verlag pp.87-90.
Markow itz, M.H. (1959): Portfolio Selection: Efficient Diversification of Investments Available from: URL: http://cowles.econ.yale.edu/P/cm/m16/index.htm (Access 03.04.2008) Wengler, S., Ehret, M. and Saab, S. (2006): Implementation of Key Account Management: Who, why, and how? An exploratory study on the current implementation of Key Account Management programs, Industrial Marketing Management, 35, pp.103 112. Abratt, R. and Kell y P.M. (2002): Customer-supplier partnerships: perception of a successful key account management program, Industrial Marketing Management 31, pp.467 476. Terho, H. and Hal inen, A. (2007): Customer portfolio analysis practices in different exchange contexts69, Journal of Business Research 60, pp.720-730. Guenzi, P., Pardo, C. and Laurent, G. (2007): Relational selling strategy and key account managers relational behaviours: an exploratory study, Industrial Marketing Management 36, pp.121-133.
This study is part of the LIIKE Research Program Finnish Companies and the Challenger of Globalisation
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References EUROCONTROL, European Air Traffic Management, Available from URL:http://www.eurocontrol.int (Access: 10.03.2008) Single European Sky, available from URL: http://www.eurocontrol.int/ses/public/subsite_homepage/homepage.html (Access: 10.03.2008) CRDS, available from URL: http://www.eurocontrol.int/crds (Access: 03.03.2008) CE ATS, available from URL: http://www.eurocontrol.int/ceats (Access: 18.02.2008) Matrix of Key Account Selection (2008), available from URL: http://www.themarketingprocessco.com/key%20account%20management/kam.htm (Access: 07.02.2008) NGOs and their Relations with Business and Commerce, available from URL: http://www.staff.city.ac.uk/p.willetts/CS-NTWKS/NGO-ART.HTM (Access: 03.03.2008)
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Eidesstattliche Erklrung
Ich versichere, dass ich die vorliegende Arbeit ohne fremde Hilfe angefertigt habe und keine anderen als die angegebenen Quellen und Hilfsmittel benutzt habe. Alle Stellen, die wrtlich oder sinngem aus Verffentlichungen entnommen sind, sind als solche kenntlich gemacht.
Berlin, den 09.05.2008
Unterschrift: Jekaterina Vassiljeva

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University of Applied Sciences of Bremen Faculty of International Economics and Nautics School of International Business International Studies of Tourism

Introduction of Key Account Management concept to the CRDS organisation

Jekaterina Vassiljeva Matrikel Nummer 151439 Althoffstrasse Str.14 Berlin 12169

9th of May 2008

3.5.2.2 3.5.2.3 3.5.2.4 3.5.2.5 3.5.3 3.5.3.1 3.5.3.2 3.5.3.3 3.5.3.4 4

Introduction ATM sector on the way to becoming more market-oriented.

The objectives of each chapter are given as follows:

CRDS in the context of the European Air Traffic

2 CRDS in the context of the European Air Traffic

European air traffic management

CRDS in the context of the European Air Traffic

Single European Sky

CRDS CEATS Research and Development Simulation Centre

Brochure of the European Air Traffic Management / Master Plan

CRDS in the context of the European Air Traffic

Changing environment of the CRDS

CRDS Business Plan 2007-2011.Strategic Goals

CRDS in the context of the European Air Traffic

Key Account Management as a part of Relationship Marketing

Key Account Management

3.3.2 Justification of the term Key Account

3.3.3 Objectives of Key Account Management

. Moreover, the supplier gathers

Theoretical Framework Objective 2: Maximising Customer Value

3.3.4 Reasons for a company to introduce KAM

3.3.5 Decisive factors for KAM implementation

3.4.1 Structuring KAM

Scale and scope of key account management Selection of key accounts

Planning Coordinating Controlling

Staff organization Line organization Matrix organization

Figure 1:Dimensions of Key Account Management

3.4.1.1 Strategic Dimension

3.4.1.2 Functional Dimension

3.4.1.3 Organisational Dimension

3.4.2 Controlling as a part of the KAM concept

Key Account Controlling: its objectives and role

The process of KAM implementation

3.5.1 Selection of Key Accounts as a cornerstone of KAM initiation

3.5.2 Implementation of KAM - step 1: Selection of Key Accounts

3.5.2.1 Criteria for Selection

3.5.2.2 Qualitative and Quantitative Criteria

Theoretical Framework investment and the other complex accounting calculations49.

3.5.2.3 Unidimensional Criteria

3.5.2.4 Multidimensional criteria

Wengler, S. (2006), p.78 Wengler, S. (2006), p.73

3.5.2.5 Assessment of Customer s Attractiveness for Selection of Key Accounts

McDonald, M. and Woodburn, D. (2007), p.31

McDonald, M. and Woodburn, D. (2007), p.35

3.5.3 Implementation of KAM-step 2: Categorising Key Accounts via portfolio

3.5.3.1 Origin of portfolio method

Market Growth Rate

Low High Low Relative Market Share

(Boston Consulting Group)

Size Market Growth Pricing Profitability Competitive Structure Market Diversity

Figure 3:A nine-box directional policy matrix

Baker, M. (1995), p.459 McDonald, M. and Rogers, B. (1998), p.66

Cash cows High

3.5.3.2 Customer portfolio

3.5.3.3 Key Account Portfolio

Status customers High

Streamline customers Low

Suppliers relative business strength as seen by the customer

Figure 5:Key Account Selection Matrix (KAS-Matrix)