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“Introduction of Key Account Management concept to the CRDS organisation”
Jekaterina Vassiljeva Matrikel Nummer 151439 Althoffstrasse Str.14 Berlin 12169
1. Prüfer: Prof. Dr.Felix Bernhard Herle 2. Prüfer: Dipl.Ing. / Master of Science Philippe Debels
9th of May 2008
Table of contents
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
18.104.22.168 Strategic Dimension ..............................................................................17 22.214.171.124 Functional Dimension ............................................................................18 126.96.36.199 Organisational Dimension ......................................................................18 3.4.2 3.4.3 3.4.4 3.5 3.5.1 3.5.2 188.8.131.52 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
184.108.40.206 220.127.116.11 18.104.22.168 22.214.171.124 3.5.3 126.96.36.199 188.8.131.52 184.108.40.206 220.127.116.11 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
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 18.104.22.168 22.214.171.124 126.96.36.199 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 Supplier’s 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
......................................................................30 Figure 6:Identification of CRDS’ key accounts..........28 Figure 4:A four-box directional policy matrix ................................................................................17 Figure 2:The Business Portfolio (Boston Consulting Group).....................................29 Figure 5:Key Account Selection Matrix (KAS-Matrix).....................Table of contents IV List of Figures Figure 1:Dimensions of key account management ..................46 Figure 8:Balanced Key Account Portfolio of CRDS ........41 Figure 7:Key Account Portfolio of CRDS ..................................................27 Figure 3:A nine-box directional policy matrix .............................................................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 ....................................................................................
they usually do not plan commercial strategies towards their stakeholders. Although the public organisations act on a non-profit basis. this entity is forced to enhance and amplify the business with its customers. Modern companies aim to permanently increase their value by the means of customer orientation and retention. Moreover. categorised and planned. the relationship marketing literature suggests overhauling the economic decline through focusing on the business with the main contributors to a company’s budget. This study suggests introducing of the Key Account Management concept to a public organisation CRDS. occupied in the European air traffic sector. The thesis provides an insight on the concept of Key Account Management and develops an option of its implementation to the CRDS organisation. . the focus lies on formulating the guidelines of how the crucial customers should be selected.Abstract 1 Abstract Key Account Management is regarded as an important approach to create value through implementation of the processes targeted on the most important customers. Because. they are equally concerned to direct their resources on their main contributors. But as far as their business activities equally depend on their most important customers and stakeholders. the Key Account Management is proposed as solution for increasing the value through a focused orientation and planning for its most important customers. who generate the value of organisations. Hereby.
would be prioritized in the ATM sector more than ever before. the commercialization. It must be clear. Thereby any presence of the market economy mechanisms in this sector was excluded. In doing so. Therefore in this changing situation. in order to keep their business viable in long-term. the common tendency to think more market-oriented in the air transportation industry starts to involve the ATM services. have been privatised. remained a state-owned monopoly. Likewise. competition. the customer awareness and the customer orientation. the non-commercial intergovernmental organisations have overtaken the role of management and coordination of the European air traffic. airports and air traffic management services (ATM services). Consequently. These are: airlines. they need to apply helpful methods for reshaping the former business model. the third component – the ATM services. Initially. Conversely. so as each state saved a privilege to organize it independently. On the contrary. This would cause the necessity to adjust to the new situation and to develop a selling and marketing culture. Nevertheless. 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. while caring out their primary functions.Introduction 2 1 Introduction 1. Furthermore. But due to the liberalisation processes. which are perceived as the key success factors for any business. a suitable marketing concept would support any entity in the . aimed on ensuring a secure and efficient transporting to the airspace users. Hence. the ATM services. that it becomes difficult for the public organisations to act in the market-oriented environment without any adaption to it. Since then the majority of airlines and airports converted into commercial entities. which did not exist in the ATM sector before. the air transportation system was founded as a fully state-owned organ. quality and enhanced focusing on the customer. These participants interact and influence each other. 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. they will need to react promptly and integrate into market-driven and customer-oriented business environment. such a change would have an impact on the members of the ATM sector. the two components of it. namely the airlines and the airports.1 Background The air transportation industry builds up a system of three main components. as the last component of the air transportation industry. will therefore become valid for the ATM business. which saved its non-commercial character. This means that the cost-efficiency.
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 customers–oriented 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.
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.
The objectives of each chapter are given as follows:
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.
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.
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.
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.
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.
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.
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.
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.
Michaels, D. ”Airlines seek one EU sky ” The Wall Street Journal, February 2, 2008
when it founded the CEATS10 (currently being restructured as a function airspace block programme). to accommodate air traffic flow. Italy. the Slovak Republic and Slovenia. As it can be seen. Ukraine. Malta. when pursuing the SES initiative. 10 CEATS – Central European Air traffic Services. Ireland. Switzerland. . Austria. Spain. This organisation’s primary objective is to develop a flexible and efficient pan-European Air Traffic Management system. Sweden. Cyprus. Greece.the main contributor and partner of the European Commission. industry. airports. Croatia.CRDS in the context of the European Air Traffic 6 2. CEATS is a programme to create a single. Norway.aiming to reform the European air traffic control in order to meet future capacity and safety needs via legislation. Portugal. Germany. civil and military organisation and currently numbers 38 Member States9. The framework’s objective is to improve safety. Bosnia and Herzegovina. Bosnia and Herzegovina. known as SES –“ Single European Sky “ framework . EUROCONTROL incorporates interests of different stakeholders – both from the public administrative and commercial sector. Bulgaria. Armenia. EUROCONTROL confronts these challenges through close cooperation with national authorities. Montenegro. the European legislative organs are currently aiming to introduce a uniform approach and so to harmonize the European ATM system. professional organisations and European institutions. Hungary. Belgium. and as a consequence of it to create additional capacity and to increase the overall efficiency of the ATM systems8. Finland. air navigation service providers. Monaco. to restructure European airspace. Lithuania. which is an intergovernmental. unified air traffic control system for the upper airspace over eight nations – Austria.3 CRDS – CEATS Research and Development Simulation Centre EUROCONTROL has already created a building stone of the SES initiative. unconstrained by national borders. Poland. United Kingdom of Great Britain and Northern Ireland. while enabling coordination and planning for the collective implementation of European air traffic management strategies and their associated plans. The European Commission started an initiative. the northern part of Italy (Padua). Czech Republic. Hungary. Turkey. Romania. Luxembourg. Denmark. Netherlands. Slovakia. Croatia.2 Single European Sky Because of the high fragmentation of the European sky into numerous sectors. 2. France. Moldova. which has overtaken the processes of harmonisation of the sky above the Central European countries. Slovenia. The former Yugoslav Republic of Macedonia. Serbia. Deployment of the SES initiative will involve EUROCONTROL . civil and military airspace users. 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. the Czech Republic. It was established in order to improve the current level of 8 9 Brochure of the European Air Traffic Management / Master Plan EUROCONTROL has 38 Member States: Albania. where the Member States apply their own ATM policies.
financed by the budget contributions that flow from the eight CEATS countries. To support the CEATS programme. The CRDS suggested finding external revenue through focusing on its former and potential customers and through commercializing its ATM services13. and in particular to develop and validate the most suitable operational and technical solution. the CEATS Research. CRDS’ defines its mission in development of Air Traffic Management through validation and applied research. 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 15 14 13 . it has assigned “revenue increase” as a new objective. 2. 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. they also can be adapted at the CRDS. Hungary. The solution was seen in the intensification of customer focus12.CRDS in the context of the European Air Traffic 7 safety and airspace capacity in the CEATS area. the CRDS will still continue fulfilling its specific objective14 and acting according its mission and vision. constrained by the specific business environment of ATM sector and membership at EUROCONTROL. the CRDS needs to reshape its business model accordingly and for that should introduce some common marketing measures. CRDS’ vision is to be the Central European centre of excellence in Air Traffic Management validations and studies. The example of the 11 12 CRDS Business Plan 2007-2011. CRDS was created as an R&D centre for a CEATS programme. But as far as it already experiences the changes in the ATM sector and as a result of that. supporting the ATM community in the realisation of projects. For that reason.5 Summary The increasing market-awareness and cost-dominance are affecting the public administrative organisations and Non Governmental Organisations15(NGOs). the centre was later requested to initiate self-financing and to search for alternative funding sources11. Meanwhile. in July 2001. It must be considered that for CRDS exist some legal restrains on entire commercialisation of services. Development and Simulation centre (CRDS) was inaugurated in Budapest.4 Changing environment of the CRDS Within the five-year history the CRDS has undergone an evolution. which is actually a member of a public noncommercial organisation EUROCONTROL and whose objectives are different as those of the commercial entities. so as to integrate the region into the common European ATM system. Being founded as a fully public entity. 2.“Strategic Goals” CRDS launched the project ““Business development Strategy” in order to revise current business and to identify new opportunities. recognised as such through SES contribution. The project highlighted focusing on the customer. Although commercialization and customer orientation are broadly applied in private businesses.
which were aimed at raising cost efficiency and creation of competition. 16 . current and potential customers. Likewise. Hence. the ATM segment likely undergoes a change process. organisation. In this context. the customer orientation should be intensified for that. which considers these implications in planning a successful customer approach. the CRDS. while staying focused on the customer and on the other hand continuously increasing the revenue. stakeholders and competitors16. it needs a concept. as being occupied in the European ATM sector. is also influenced by the common tendencies of adoption of the market economy structures. 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. For this reason the centre sees its opportunity in selling more of its services to former. The Key Account Management is suggested to be an optimal method for the CRDS. Consequently. which would meet these requirements. the CRDS necessitates an optimal marketing – management method. In other words. the ATM sector. Obviously. 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. The next chapter provides some theoretical background to the Key Account Management and introduces how this concept can be implemented in practice. The so-called customers-competitors are CRDS’ customers. if they stop to buy CRDS’ services and instead produce same services for own use. but they can be competitors.CRDS in the context of the European Air Traffic 8 liberalisation processes of the European air traffic system. the CRDS ought to adapt a model. which would strengthen organisation’s business. has proved that the participants of one system integrate to the common frameworks. as being a component of the air transportation industry.
(2003).1 Relationship Marketing “Relationship Marketing is a company’s behaviour purposing to establish. (2003).40 Grönroos.21 The detailed research has proved that the profitability of the firms practicing customer relationship management increases significantly. R. M. pp. Kelly. Orr. 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. and Hougaard.105-108 Keillor.J. which directly influence the firm’s revenue stream. proposing several models of how the customers should be treated.. M.22 Moreover.. the business relationships are defined as intangible assets of a company. M. and Hougaard.12-19 Orr. and Keillor. a base of loyal customers is more profitable than one-time transactions from a long-term perspective. B. so as improving the business with them20.” 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.9 .467 Bjerre.L. pp. S.J. to maintain and to develop competitive and profitable customer relationship to the benefit of both parties17. B. Researchers of the “Marketing in the 21st Century23” assert.19 The buyer-seller relationships became a focal point of marketing research and were extensively investigated. C. P. (2007) Abratt. Hawes. and Hougaard. M. (2002).27-29 Bjerre. M. who have selected a particular supplier over time and intend to buy from that same supplier in the future. S. (2000). pp.. Meanwhile. The ultimate goal of Relationship Marketing is to acquire loyal customers. that Relationship Marketing is critical for a successful business strategy of any firm operating in modern day business environment.D. M.D.M. M. p. p. and Hawes. S. 17 18 19 20 21 22 23 Bjerre.Theoretical Framework 9 3 Theoretical Framework 3. (2003). (2007).L. p. Today’s business world seeks for long-lasting business relationships and companies orient their strategies on customer satisfaction and loyalty..
Indeed. ”tailored to their individual needs”. This special treatment has significant implication for organisation structure.XI . Thereby. benefits.Theoretical Framework 10 3. p. p. crucial for the company’s 24 25 Wengler. and it requires an appropriate marketing-management organisation with the establishment of some KAM structures and processes. 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. Some customers represent higher profits than the other and therefore they need to be treated differently. KAM deals with finding out who are those customers.3. S.3 Key Account Management This paragraph explicates the main ideas of the concept of Key Account Management and discusses the reasons.1 Terminology As from the notion above it becomes clear that for a company not all clients are equal. but very important customer with a purpose to build up a stable long-term business relationship24. centred on a single. so as a company mainly dedicates resources to the key customers. B. (2006). defined as ”key accounts”. and Rogers. for introducing the KAM in any company. M. Key Account Management is an approach adopted by selling companies aimed at building a portfolio of loyal key accounts by offering them.. selling companies typically form dedicated teams headed up by a Key Account Manager. T. 3. (1998). To co-ordinate day-to-day interaction under the umbrella of a long-term relationship.” The essence of KAM can be concluded in the highlighted keywords of the quotation: “customers of strategic importance”. cited by McDonald. 3. a product/service package tailored to their individual needs.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.12 Millman. when the companies started to increase market orientation in order to secure long-term profitability. (1995). communications and managing expectations 25. KAM was primarily defined as a focused RelationshipMarketing program. “portfolio”. on a continuing basis. The relational approach is directed towards strategic customers. as well as decisive factors.
Hence identifying these important customers is as critical as choosing a portfolio of investments – some must give a quick return. some are longer term. cited by Wengler. As from a company’s perspective. in order to finally offer the best possible service solution maximally tailored to customers’ needs. p. Despite this. The essence lies in the characterisation of a customer as an investment made by a supplier for its own future. over the last decade the KAM-research succeeded to establish the two main objectives of KAM. p. some authors perceive KAM tasks for objectives. some definitions are very dispersed and it becomes difficult to distinguish between the tasks and the objectives. the Key Account Management emerges as a method to manage a special customer as a valuable investment. 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 27 . 3. Objective 1: Customer Retention KAM is objected to raise Customer Retention and concentrates on holding those customers. making it impossible to exactly define what the KAM focus lies on.3. Furthermore.3 Objectives of Key Account Management As far as the literature on Key Account Management is very fragmented. 26 27 Cheverton. (1999).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 key accounts appear as those. KAM assigns a specific approach for managing these key accounts – summarized in a portfolio method. P. who continue to regularly purchase services by the same company. S. while others are speculative.29 . balanced by those that offer more certainty26. These are Customer Retention and Maximising Customer Value.3. who bring the business to a desirable position. Logically. (2006). which KAM pursues as a management concept.Theoretical Framework 11 business – the customers of strategic importance. In this context. 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. 3. In the earlier KAM research. depending on its origin.“ Moreover.8 Reichheld (1990) and Sasser (1993).
and identified the reasons. Initially. In order to continue the discussion of the practical value of KAM. which a customer delivers to a firm. Once the company achieves these goals. S. lead to an expansion of the customer network... for instance such as provision of valuable information.4 Reasons for a company to introduce KAM The theoretical objectives of KAM as a marketing-management concept were discussed above.3. the objective Maximising Customer Value was seen in only bringing the monetary profit and revenue increase to the firm. I refer to the exploratory study “Implementation of KAM: Who. that also a non-monetary customer value. seeking for a customer-oriented marketing-management program.Theoretical Framework Objective 2: Maximising Customer Value 12 The second intention of KAM is proclaimed to be in maximising the customer value – in the total value. S. Monetary value is summarised in all earnings and profit. who use the KAM and those companies who do not. while non-monetary value is seen in all customers’ contributions. that the customer’s references and recommendations contribute to building up the firm’s image and hence.104-110 . Maximising the both values means that the company creates more profit by doing so. influence indirectly the company’s revenue29. of references or contributing to the reputation.S. Now. But the later investigations identified. p. such as reputation. As from the discussion on the KAM’s benefits for the firms.31 Eberling (2003). M and Saab. 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. This is explained by the fact that information transfer helps to reduce costs. I refer to its practical perspective and investigate for the reasons and intentions of the companies who implement KAM. pp. 32 Wengler. 3. tasks and factors. S. and additional know-how transfer28. (2005) . which determine the decision itself to 28 29 30 Wengler. (2006). it can secure the long-term profitable business relationships. p. the concept seems to be of a great interest for a supplier. cited by Wengler. recommendations. This value can be both of monetary and non-monetary character. Why and How implement KAM30?” which investigated the common tendencies and conditions of implementation of KAM. Ehret. This study examined the companies.
It is interesting to note. this conceptual KAM objective corresponds to the first reason for KAM implementation. as the main motivators for introducing KAM. both see KAM as a useful marketing-management concept. According to study’s results. 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. . Moreover it is used as a tool for “minimising market risk”. which are the two objectives of KAM according to the theory. while 16% of the companies without such established KAM structures seriously consider its implementation in the future. As far as Customer Retention can be achieved through customer satisfaction and orientation. the companies highlighted Customer Retention and Maximising Customer Value. the study investigated as well the tasks. because KAM enables to gain more customer knowledge. more than 50% of the business-to-business companies in Germany already apply Key Account Management. The companies also apply KAM for the management of business relationships. which the KAM fulfils in the organisations. Indeed. they use KAM as a differentiation strategy. corresponds with the conceptual objectives of KAM. 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 tendency on applying the concept looks positive: similarly to the US. For instance.Theoretical Framework 13 implement KAM concept in a company.3. the developers of KAM and those who apply KAM in practice.3. noted in the exploratory study as “Increase of customer orientation”. that the perception of the value of KAM concept in practice. Additionally. which were represented in the theory in paragraph 3.
stated in theory as under the objective Maximising Customer Value. because it provides a uniform and central coordination of marketing-management in the customer processes. forcing the companies to introduce KAM: Factor 1: Intensity of competition The study concluded that those companies. In this manner. which KAM facilitates. In this manner.Maximising Customer Value with the study’s notion. the firms maximise the total Customer Value as they already get the required market knowledge due to KAM. corresponds to the fourth motivating reason for KAM introducing. Hence. KAM proposes to . these companies succeed to win crucial customers through a better customer approach and to mark out from the competitors. the theoretical basis of KAM and the way how the companies perceive the concept are balanced. defined as “minimisation of market risks”. the “information and know-how transfer”. which as well explored the factors. the companies acting on competitive markets can differentiate themselves through a harmonised corporate customer marketing. Hence. 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. which KAM facilitates entirely. The study detected the next three factors. As a result of that. the company that uses KAM transmits a homogeneous corporate image to its most important customers. than those companies with low complexity of coordination. 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. For instance.3. who act in an intense competitive environment. This raises the reliability of implementation of KAM as an efficient marketing-management tool. The KAM supports them in doing that. implement KAM with a purpose to improve their positioning at the market and in order to raise their competitive advantage. influencing the decision for using KAM in a company.5 Decisive factors for KAM implementation To understand in which environment KAM is applicable I refer to the same study. Hence. corresponds the second KAM objective . 3. The companies can minimise market risks and customer behaviour through a better knowledge of the customers. that the companies use KAM for the reason to minimise market risks. Thus. The role of KAM is thereby seen in simplifying the coordination of processes with customer involvement.Theoretical Framework 14 Similarly.
12 . p. (2006). S.M. (2005). and Saab. 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. who frequently integrate customers into product development processes.S. (2005). p. can increase the cooperation effect with the customer due to applying KAM.” These characteristics will be further applied in the practical chapter 5. Ultimately. Such a personalised customer approach allows avoiding hesitations and misunderstandings. 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. that those companies. the study concluded the common characteristics of the companies. Thereby. Being developed in the US. its scientific research was broadly developed in different streams and experienced a great evolution32. and Saab.4 Concept of KAM Although. Factor 3: Integration of customers in the product development process The study concluded.108 Wengler. 3. Ehret. improving significantly the customer’s buying experience and building a good relationship with the company. in intense coordination of business relationships and interested in close product and service development with their most important customers. p.34 As a 31 32 33 34 Wengler. Ehret.Theoretical Framework 15 assign a direct contact person. see the KAM as a method to make the involvement of customers more effective and to raise cooperation with them.S.104 Wengler.. examining the suitability of KAM concept for the CRDS. should seriously consider the implementation of Key Account Management 31. S. as follows: ”Companies operating in a very intense competitive environment. with the complex customer processes can improve coordination of business relationships through adoption of KAM.. who will guide the client through the whole buying process. which integrate their customers into production processes. pp. M. it was further elaborated by the European researchers. The companies. the companies. (2006). S. there is no coherent definition of the uniform keystones of the KAM concept. the concept of Key Account Management is young. which necessitate KAM.19-23 Wengler. Hence. S.
discussing its most significant implications. (2005). the practical application of KAM has suffered. According to the pyramid. an insight on the main processes.4. (2005). because no common definition on its tactical implementation was yet defined. that KAM promises to bring benefits both to seller and buyer. S. The Figure 1 provides a comprehensive overview of the main functions and activities of KAM. it is required to implement KAM systematically.106 .Theoretical Framework 16 result of this conceptual insufficiency.1 to 3. which needs to be a part of or integrated in the sales and marketing function.5 outline the structure and functions of KAM in a firm. S. which should be considered during the practical introduction of KAM to any company.4. 35 36 Wengler. which are given in the right column. The previous section emphasised a certain insufficiency of formulation how to launch KAM exactly. depending on the type of tasks they complete. the practical application of KAM is seen narrower and in business life it is reduced to the sales function in most of the cases. M. Therefore. that the 65 % of the researched companies still understand KAM as a classical sales task. The exploratory study deduced.36 The next paragraphs 3. M. through improving their business relationships and securing the Customer Retention. the managers still face some difficulties when deciding how and at what time to implement KAM35.. p. and Saab. Despite a number of theoretical facets.103 Wengler. But in order to achieve the overall goals. Ehret.1 Structuring KAM It was discussed. involved in KAM would help to realise the complexity of all implications that KAM has on a firm. as a marketing-management concept.4. establishing specific structures and processes. S. According to the above-mentioned research study. and Saab. S. p.. Ehret. the KAM activities are distinguished in three dimensions. 3.
mission. the KAM has strategic. 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. 3. tasks and responsibilities of the key account management program. responsibilities and accountability of the KAM programs Selection of Key Accounts and categorising them.Theoretical Framework 17 • 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 next sections clarify each dimension and specify its tasks. The functional dimension entails the operational tasks.1. Within the strategic dimension. the KAM is being planned. Within the strategic dimension. which supplier delivers to customer .1 Strategic Dimension This dimension sets the scope of how far KAM will be introduced in the company and which contents will it have. The organisational dimension concerns the alignment of KAM in the firm and assignment of its responsibilities. the company assigns the expected value. in terms of: o o o Identifying of key accounts from all customers Formulation of a Key Account Portfolio Assessment of company’s strengths and customer’s needs and formulation of competitive advantage.4. actions and functions. enabling to put KAM in force. functional and organisational implications on the supplier’s company.
as well as assessment of economical success of KAM application. Controlling This function provides information for planning.4. Planning This function concerns planning of the services development process with the involvement of the key account into it. the company plans the institualisation and alignment of the KAM processes. enrolment of one key account representative.1.Theoretical Framework Assignment of tasks and geographical reach of customers Selection of efficient marketing channels Selection of appropriate key account manager 18 Finally.1. maintenance of strong customer orientation. management and controlling the singlecustomer-focused business relationship. 3. 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 of KAM on the strategic level seizes development of an individualised strategic management approach towards each key account. 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. controlling of the realisation of KAM strategy. 3. There are several propositions .2 Functional Dimension In this dimension the set of strategic objectives enters into operational tasks and actions.4. who embodies the company competencies and secures a completed information flow. This function’s overall goal is to secure a transparent and problem-free product planning process. Coordination entails marketing after sales.3 Organisational Dimension When the KAM programme is set and the tasks are formulated. Coordinating ‘Coordinating’ focuses both on the informing and the planning processes. development of customised solutions. The controlling tasks comprise Selection of Key Accounts.
isolated KAM. operative management level. unstructured KAM. and Rogers. M. Interestingly. B.Theoretical Framework 19 how to allocate KAM in a company37. the results of the study Implementation of KAM: Who. O. the company’s efforts on launching a customised KAM program produce additional costs. and in lacking understanding of the economical benefits. even though these approaches miss methodical development. and Saab. In this context. which KAM as a customer-oriented program result.4. Ehret. D.. but the value. through comparing KAM input and output. emerges as a helpful concept to facilitate and measure the KAM performance. should be higher. called the “Hidden KAM” and featured by the absence of established KAM processes. In his research Jensen identified the next eight options of KAM placement in a company38: top-management level. McDonald. M. Concluding this. that they already use a differentiated approach to their most important customers. (2007). “No-KAM”. 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. knowledge. “Hidden KAM“. the functional level takes care of the integration of KAM processes into the supplier-customer interfaces. 162-167 Wengler. M. time. It is therefore essential to track the success of KAM. 3. which a structured KAM may bring to a company. the crucial contribution of controlling is to support efficient KAM 37 For detailed discussion see authors McDonald. (2005). (1998) 38 These institualisation types of KAM were identified through analysis of 385 enterprises and are explored in the dissertation of Jensen.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.109 39 . (2001). and Woodburn. through meeting of individualised customers’ needs and maintaining of a trustful relationship. but it must primarily bring profit for the supplying company. The arguments against a structured implementation of KAM may lie in costs. S. Why and How implement KAM39?” have also detected that some companies have KAM in a not formalised form. S. pp. organisational implications. “Golf-club” KAM. backed by some provable factual data. But companies with “Hidden KAM” asserted. Controlling with its prior tasks to cover the information demand. whereas the organisational KAM deals with the assignment of the KAM duties and responsibilities. senior-management level. p. to allocate and to assess information. cross-functional KAM. Surely.
as a relationship-marketing-management program. Controlling guides a company to sustainable development and helps to move to a target-performance. while informing a company about its current performance.Theoretical Framework 20 implementation by the means of provision of relevant data. coordination of information in marketing planning. Controlling supportive functions accomplish the pursuit of long-term objectives. 3. such as maintenance of liquidity.87 Köhler. provision of specific marketing information for different marketing organisations and in management of human resources within marketing and sales. p. realisation of profits and avoidance of deficits. A reference to Marketing Controlling is required for a better understanding of why Key Account Controlling must be involved in the introduction of KAM. processes and methods. fulfilment of corporate demand.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.R.87-88 . (2001b). In this context. it becomes evident that certain controlling structures need to be launched for the use of KAM. The objectives of Marketing Controlling lie in: realisation of Marketing Controlling and marketing audits. aimed at supervising the realisation of the corporate strategic objectives.4 Key Account Controlling: its objectives and role Since KAM is a complex marketing-management approach. The primary goal of KAC is to deliver information for strategic decision-making on 40 41 Köhler. tasks. aimed to provide information about corporate management and coordination for the purpose of analysis and corporate planning. pp.4. 3. Consequently. controlling of marketing enables to reach the strategic marketing goals according to a strategic marketing plan. it needs to “control” the KAM planning processes and therefore the KAM developers have included controlling as an integral part of KAM.4. cited by Baguhl.3 Marketing Controlling Controlling is known as a subsystem of corporate management. R.41 Summarising. applied in the process of introduction of KAM. O. (2004). O. it has own objectives. (2004). Defined as Key Account Controlling (KAC). The Marketing Controlling is defined as a concept. (2001b) in Baguhl. Marketing Controlling assists in the implementation of any marketingmanagement program through provision of valuable specific information.
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.43 As it was mentioned. the Key Account Controlling guides KAM at the very beginning of its implementation. pp. O. Finally. Social and Technological Analysis Baguhl . gives information on the past. current and future business volume with the company. followed after the strategic dimension (see Figure1). Besides the above-named tasks. which are later derived from the Key Account Portfolio.3. It is also needed to point out.3. through provision of information. O. described in paragraph 3. that from the given three tasks. pp. the first task – provision of data for Selection of Key Accounts is considered to be the prime and the most important task. The KAM triangle has illustrated the position of controlling in the functional dimension. 134-190 SWOT – Strengths. it becomes clear. As well as marketing controlling. the KAC provides data. (2004).5. S. Summarising the role of KAC. KAC assists in identification of customers providing some numerical data from the current corporate analyses. a firm can analyse and measure the customers’ performance in terms of qualitative and quantitative aspects. Weaknesses.O (2004). that it facilitates to successfully introduce KAM.89 For further detailed discussion on KAC methods and tools see Baguhl. completed by key account controlling47. needed for definition of the strategies for key accounts. Economical. Customer data. p. KAC facilitates to correctly select the key accounts. KAC’s second task is to provide relevant data. Here. as described in paragraph 3. Opportunities and Threats Analysis PEST – Political.Theoretical Framework 21 planning and coordination of KAM42. p. it continues assisting KAM through offering numerous KAC methods. (2006). such as SWOT44 and PEST45 as well as using key data from the customer records on sales volume and other data sources. 42 43 44 45 46 47 Baguhl. using the reliable and provable data from accounting. KAC offers a set of methods and tools46 for assessment of economic success of KAM implementation programs. With the help of numerous KAC tools. (2004).2. Indeed. provided by KAC. In this manner. because it provides crucial data for the process of Selection of Key Accounts. designated for a particular task .69-71 .113 Napolitano (1997) in Wengler.5.for management of a single-customer-focused business relationship. KAC supports the implementation of KAM in the strategic dimension.
These decisions require the internal coordination and executives’ approvals and are the subject of the corporate management and marketing planning.5 The process of KAM implementation Both the KAM three-dimensional model. the company should then perceive the expected value of KAM and consider all expenditures involved in planning and setting up the program. Therefore. the discussion on KAM was aimed at provision of general understanding of the KAM concept.Theoretical Framework 22 In the context of the thesis. 3. given in section 3. There. where a company recognizes the need for it and defines the role of KAM as a marketing-management approach. the Selection of Key Accounts is placed in the strategic dimension. which are the topic of the next paragraph. Meanwhile.4. 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. this task is placed in the functional dimension of the KAMtriangle. The implementation of KAM starts in the strategic corporate level. 3. After the key accounts have been selected. as this is where the true initiation of KAM takes place. and is defined as the prime KAC task. the next paragraph proceeds the discussion with a subsequent step in implementation of KAM. . as only then a correct KAM program can be developed. secondly it enables to strategically prioritise and differentiate the key accounts in terms of KAM planning within the strategic dimension. provided an overview of KAM activities and its implications on the corporate management of a company.1 and the KAC tasks. This paragraph introduces the theoretical framework of KAM in terms of its practical implementation. Moreover. This task is important and constitutes both strategic and functional dimensions as it can be interpreted from the KAM-triangle (see Figure 1). In this manner. Because the process of Selection of Key Accounts is a start-up in implementation of KAM.1 Selection of Key Accounts as a cornerstone of KAM initiation The task Selection of Key Accounts deserves particular interest. because this is where the company chooses who are those crucial customers. Till now. the Selection of Key Accounts has a dual role: firstly it appears as a controlling function. due to offering a certain method on how to select the key accounts. the next step is to formulate the KAM approach towards selected accounts and to set customised strategies. to be treated as “investments”. it is essential to accurately select accounts.5. The discussion aims to examine which concrete actions should a company undertake for launching KAM in the corporate management.
these tools can be differentiated according to the type of selection criteria. It must be understood. customers’ return on 48 For detailed discussion on the tools applied in Key Account Controlling for the Selection of Key Accounts refer to Wengler. Particularly for these accounts the company would plan an individualised KAM approach.2 Qualitative and Quantitative Criteria Quantitative criteria are applied in those key account selection modes.71-81 .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.2. to which it makes sense to pay more attention. It is required. analysing their sales volume. The researchers distinguish between the next types of criteria – quantitative. used as a basis for selection. which assess the customers’ numerically. qualitative.5. The attractiveness is hereby measured according to the different criteria. customers’ gross earnings. 3. that the criteria provide a good reasoning for that. unidimensional and multidimensional according to the type of data. innovative strategies for each individual customer. (2006). who secure current and future long-term business. Basically. pursuing the goal to retain them. 3. specified in the next paragraph. KAM research has developed numerous tools. These analytical data can be obtained through calculations of customers’ contribution margins. used for evaluation of customers48.1 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.2. This can be done by the means of analysing and scoring the customers in terms of their attractiveness for the company. 3. pp. A real KAM is expensive and requires delivering customised. serving for the Selection of Key Accounts. Making choice between important and less important customers is a challenging process.Theoretical Framework 23 From a KAM point of view. the supplier should differentiate between the customers and concentrate on those prospective ones. For doing that. and there is a need to find definitive criteria. Companies should define consistent parameters according to which they can measure the significance of an individual customer for the business. customers’ profit and customers’ investment cost. S. Therefore the company needs to pick out those “attractive” key accounts. Based on these criteria will be decided which customers are the company’s key accounts. that for a company this capacity is limited.5.5.
because it integrates decisive internal and external factors. but may alter their buying volume in future. Such measuring of customers’ needs gives assumptions on the amount of services the customers may require in the future. which are both highlighted by qualitative criteria.2. multidimensional criteria unite both the qualitative and quantitative aspects simultaneously. to cooperate and who are seeking for longterm business relationships. such as his needs and business relationships. p. 3. However.73 .Theoretical Framework investment and the other complex accounting calculations49.4 Multidimensional criteria Conversely to the narrow look on customer data. given by application of unidimensional criteria.5.3 Unidimensional Criteria For Selection of Key Accounts the KAC offers a number of tools. a company may succeed in planning how to bind the customer in long-term business. application of a selection method. 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. This multidimensional approach entails the complexity of the managerial decision towards customer selection much better. based solely on a quantitative customer analysis appears as one-sided and excludes other indicators. unless he has equal interest. evaluates customers in terms of their relationship to a company. The well-known tools such as ABC-Analysis. Therefore. Although. S. based on the quantitative criteria. p. Therefore. “attribute-based” criterion. S. it do not concern other strategic outlooks on the customer’s business potential. also crucial for choosing profitable customers50.2. The second qualitative criterion. these criteria help to recognise those key accounts.78 Wengler. the customer may not always correspond to the plans. who are willing to be partners. which currently do not contribute a lot to business. such as market forces. the unidimensional criteria deliver precise factual data per customer from a cost-benefit perspective. In this context. 24 On the other side.5. customers’ needs and 49 50 Wengler. (2006). 3. the “attribute-based” criterion is substantial in Selection of Key Accounts. (2006). the qualitative criteria measure the customers’ significance in terms of customers’ “needs” and “attributes”. who appear as prospective and reliable customers.
exactly those clients appear for a company as “attractive”. the multidimensional approach transmits to the company a more enriched insight. and Woodburn.23-51. weighting the relative importance of each criterion. in the practical part of the thesis is applied a key account selection method. The method was suggested 52 as a universal tool for identification of key accounts from existing customers and it obtained recognition throughout the managers. (2007). unachievable by using the unidimensional criterion. the company reflects on how important it perceives each criterion. in order to select accounts correctly. it scores how far each of the customer fulfils these criteria. D.5. Consequently. 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. pp. The outcome of multiplication summarizes a total score of customer’s attractiveness for a firm. M.Theoretical Framework 25 quality of business relationships in the customer assessment. comprising an enriched customer data and therefore enabling to adequately identify the key accounts. This method is practically applied and explained in detail in chapter 5. 3. . This method applies multidimensional criteria and thus combines both qualitative and quantitative customer information. The questionnaire attached in Appendix 1A. and Woodburn. McDonald. Whereby the amount of their total contributions determines whether they can be matched to the key accounts or not. Therefore. In this manner. distributed per customer are multiplied with the scores of relative importance of each criterion. Using this method for selection of accounts. This process is described in the next section. customers’ needs and relationship scope. (2007). based on the multidimensional criteria. p. Moreover. Finally.5 Assessment of Customer’ s Attractiveness for Selection of Key Accounts Whichever method is deployed for Selection of Key Accounts. For this reason. the company should firstly score them in terms of three criteria: profit.2. specifies these parameters for scoring.31 The method of Selection of Key Accounts based on the assessment of their attractiveness was developed by the Key Account Management research Club. discussed in the previous section. based on different interrelated criteria. D. M. the focus always lies on the contribution of a single customer to a firm. who bring higher contributions. For detailed overview of the method see McDonald. M. Further on. This method appears as a versatile tool. the scores. the criteria for selection should involve different aspects that detect the customers’ future buying potential51. conducted at the Cranfield School of Management in collaboration with 15 leading companies and leaded by Prof. 51 52 McDonald.
this method allows the supplier to compare very different customers.g. customers’ behaviour in relationships. M.35 . p. Finally. which represents the dependence or a need to be served by this supplier. its needs in services. Besides. Goal of this selection criterion is to assess the probability of customers’ repeated purchase and prospects of his retention. This criterion clearly determines the scope of business with the customer. Moreover. Besides. this criterion can also measure alignment and conformity of customers’ business with the suppliers’ business (e. customers interest in relationship).g. distributing the total score of 100 per each one and weighting how far the buyer fulfils the criteria. As a result of multiplication of the ‘relative importance’ rates with the customer’s scores. which a customer results to the company. These outputs give an overview of customers’ attractiveness per criterion and help a supplier to analyse total contributions of each customer in quantity. but its attractiveness can be reduced by its low attitude to long-term business relationships. shown in the second white column. level of decision-making. the supplier obtains the relative numerical rates of attractiveness per customer. this scoring helps the supplier to identify the key accounts. McDonald points out53. through the combination of quantitative and qualitative customer data. the supplier can objectively score the buyer’s attractiveness. the company estimates the importance of all three criteria. (2007). The customers’ contributions are hereby measured by to the next criteria: Profit. the method facilitates a comprehensive and deep customer analysis. which will have an impact on business. because there are several determinants of customer importance for the business. Applying this method. D. and Woodburn. Customer needs-based criteria. similarity or coincidence in business strategy and vision with the supplier. that one customer may score well on actual sale volume size. which are given in green column of the table. as shown in the yellow row. 53 McDonald. as shown in Appendix 1A. required for accurate selection. Customer attributes need to be weighted in order to identify what type of relationship between the customer and supplier is likely to persist (e. alignment to the supplier’s business strategy).Theoretical Framework 26 Accordingly. prioritising those customers who obtained the highest scores.
Further on this method was developed by the Boston Consulting Group in a portfolio management approach. 55 54 Markowitz. by the means of a four-box matrix. Key accounts require major investment and individualised managerial approach. H. McDonald.458 56 . (1995). businesses or market segments. 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. This approach is aimed to analyse the products.5. as shown: B. B. organised and grouped into “portfeilles”. so that for each group was assigned a proper approach55. The developers of KAM suggest a specific method to analysing. The next paragraph outlines the origin of portfolio method and leads the discussion to the explanation of its procedure and application in KAM. has adapted the portfolio method into key account management practice. The matrix plots the ‘market growth rate’ against the ‘relative market share’ and sets the four categories. determined by application of the “BCG-Matrix” or a “Growth-Share Matrix” (see Figure 2).M. (1959) Hedley.3.5. leaded by Prof.. M. M.3 Implementation of KAM-step 2: Categorising Key Accounts via portfolio When the key accounts have been selected on the basis of their attractiveness. as a method to diversify and optimally manage financial assets and investments.1 Origin of portfolio method A Nobel Prize recipient Harry Markowitz primarily developed a portfolio method. p.C.G. 3. categorising and prioritising the key accounts using the portfolio method54. 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. (1977) ‘Boston Consulting Group approach to business portfolio’ in Baker.Theoretical Framework 27 3.
as depicted in the lower box of the matrix. and Rogers. p. The possible criteria options are listed on the left and right sides of the two dimensions. but replacing the variables from BCG-Matrix with the new ones – market attractiveness (Y) and business strength (X). 57 58 Baker. ‘Market attractiveness’ represents how attractive is the market or industry where the firm operates. significant are the positions of the analysed objects. and the dimension business / company strength shows how strong is the position of a firm in this market. M. to make selective choices or just to harvest and divest the business.459 McDonald. 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. This approach was however criticised as it relied only on two factors. However the nine-box matrix is a uniform technique to select businesses and to assign strategy per target businesses. owed to its complexity. which have a bearing on the product and business performance57. For calculating the variables of dimensions. (1998).66 . (1995). it was neglected by practitioners. several multiple criteria are used. customers or markets. for instance technological environment or legal requirements. The criteria may be chosen according to the purposes of the business analysis. B. Later on the General Electric and McKinsey jointly developed the next multi-factor portfolio approach using the same structure as the Boston Consulting Group. The directional strategies suggest to supplier three strategic options: to invest in business. ignoring the factors of external environment. p. as they represent the relative position of a product or business at the analysed market. which derive from the positions of the analysed business in the cells. M.Theoretical Framework 28 Hereby.
K.2 Customer portfolio The customer portfolio is being used for strategic and operational management and for planning of customers in industrial markets60. but applies other dimensions on the X and Y-axis. and the way to represent the customers’ business volume in form of “bubbles” is borrowed from the BCG-matrix.5. Hereby.g. in Baker. pp. Customer attractiveness. “question marks”. businesses.3.140-148 . Here the horizontal and vertical dimensions remained the same as in the nine-box directional matrix. Customer Attractiveness-Relative Supplier Position. “to selectively invest” or “to manage for cash/withdraw”. Customer Growth-Supplier share portfolio. 3. 59 60 61 McDonald. this matrix categorises the analysed subject in four groups: “cash cows”. T. pp. M and Rogers. portfolio of business relationships.M. B. p.67 Möller.Theoretical Framework 29 The nine-box directional policy matrix was later on modified into a four-box directional policy matrix (see Figure 4). applied for measuring the customer performance61. (1998). For detailed discussion see Baguhl. e. J. markets and products.relative Customer Satisfaction. the portfolio strategies serve as directives for planning individual managerial approach per category. (1995). (2004). and Wilson. Accordingly are suggested the following strategies to apply for each group: “to maintain”. several customer-controlling methods were developed. “to invest/grow”. but it was also further developed into a customer portfolio method to be used in the customer management. O. The customer portfolio method suggests managing customers and the relationships with them according to their cluster position in the portfolio. The simplified matrix is easy to handle and is widespread practiced in management. The latter approach got recognition not only as a technique for analysing of assets. “stars”. it incorporates the matrix of the four-box directional policy matrix.811-812 As a result of the variance of applied criteria. These dimensions change according to the type of criteria.” dogs”.D. Withal. 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.
These are: the Key Account Attractiveness. focusing on the most prospective ones. who bring the current income (Status and partially the Streamline Customers). placed on the vertical axe. p. because this is where the future big business lies. the supplier should switch off the investment from the less-promising customers. The Key Account Portfolio is also named as KAS-Matrix62. that the key accounts must be managed as an investment share. The idea of Key Account Portfolio lies upon proposition. and Woodburn. Status Customers and Streamline Customers. The thesis applies the both definitions. & Woodburn.24 . M. as shown: Key Account Selection Matrix High Key account Attractiveness Strategic customers Star customers .3 Key Account Portfolio The customer portfolio served the basis for development of the Key Account Portfolio (Figure 5). identifying and prioritising key account using portfolio management. it is proposed to maintain the customers who realise current business. matching those having similar characteristics to the four groups63: Star Customers. It also enables the supplier to compare key accounts. M. 2007). 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.Theoretical Framework 30 3. The KAS-Matrix provides a solid methodology for analysing. (2007). This method suggests.5. 63 McDonald. to categorise them and to plan the future business strategies for managing them. the Supplier’s Relative Business Strength as seen from customer’s 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. D. Strategic Customers. that supplier acts upon current or future customer’s income potential. At the same time. while investing in business relationships with prospective customers of the future.3. The matrix categorises all key accounts. Therefore.Key customers spend Status customers High Streamline customers Low Low Supplier’s 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. D.
The third dimension – Customer Spend is represented in the shaded customer-circles shown in the matrix boxes. The data serving for the Y-axe is same to the outcomes of the calculations. the more attractive the company evaluates the account.2. either current or past. For doing that. they are converted into a Key Account Selection Matrix. The data for the horizontal dimension comes out from the calculation of the Supplier’s Relative Business Strength comparing to the competitors. conducted within the assessment of Key Account Attractiveness and is detailed in section 3. the supplier gathers the data by the means of a self-assessment questionnaire. 64 The software for creating the KAS-Matrix was developed in conjunction with Prof. Meanwhile. according to the time frame which company defines. which quantify the position of customer for the supplier and the supplier’s competitive position. McDonald. where the following three questions are asked to detect the supplier’s 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 supplier’s strengths. The portfolio method for key accounts measures the potential of every key account to yield growth in profit shown in the vertical axe. After all three types of data are collected.5. The practical application of the method is given precisely in the chapter 5. the higher the “bubble” is allocated. Some companies apply special KAM software to create the matrix for their key accounts64. Information for the vertical and horizontal dimensions is provided through the self-assessment questionnaires. This data represents the volume of customer spending.Theoretical Framework 31 Customer Spend. as perceived by its key accounts are given on the horizontal axe. The business strengths of the company. 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. expressed in bubbles. as seen by the customer.5. M. which can be sales volume or budget contribution. .
The supplier derives much of its growth in sales and profits from accounts in this cluster. The supplier must see this group as a business opportunity for the future. The recommended strategy is to try to move this customer to the left cluster. to adapt pricing. to be attentive to accounts’ needs. trying to stay the leading supplier for them. the supplier should act cost-efficiently when managing this customer. Status Customers – proactive maintenance These are the loyal customers and the supplier should concentrate on withholding their position. (1998). improving the competitive position.5. defining the characteristics of each key account group and suggesting an appropriate strategy depending on where the key account is located in the matrix. 65 The portfolio strategies and characteristics are adapted from McDonald. Further guidelines consider upgrading of staff working with key accounts and tight cost control.79 . Supplier’s primer strategy towards managing this customer group is to foster the sustainability of earnings. to offer a differentiated product. Their position must be hold and if possible improved. converting him into a Strategic Customer. The supplier should hereby recognize the customer having high growth potential and should “selectively invest“ there. Therefore. to reduce the time-spent and limit marketing and other variable costs. For doing that a focused allocation of business resources and investment in them is required. 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. Star Customers – investment for growth / invest selectively These customers are seen as attractive key accounts for the supplier. M. as this is his prospect for growth.Theoretical Framework 32 3. and Rogers. Besides. which is achievable through investing and concentration on the customer today. the KAS-matrix categorises the key accounts. the supplier should enhance his position and improve the business case with this customer. as the other portfolio methods. This can be achieved through continuing to deliver a successful product and service. to raise the service levels and to offer a differentiated product or even offering a new product. In the following the directional strategies and characteristics for each portfolio group are summarised65. The recommended strategy for supplier is to continue investing in this group.3. but the supplier’s position with them is currently weak. B. for instance he is recommended to stabilize prices.4 Categories of key accounts Equally. without letting customer feel that. As the more tactical strategies it is recommended to put in action more marketing. p.
The benefits of KAM and in particular of a Key Account Portfolio method were understood. which would cover all operational and tactical aspects. exploiting all business potential and maximising cash flow. Moreover. emphasising the use of its application for the CRDS. for maintaining or changing the customer’s business positions. This can be done through maintaining or increasing the prices and through minimising marketing and other business supportive expenditures. the portfolio method offers strategies. 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. moving a Star Customer to the cluster of Strategic Customers helps to visualise the options of business development with the key account. the supplier derives directional strategies from a portfolio and according to them plans the product. Therefore. shifting of key account to the desired cluster positions.Theoretical Framework Streamline Customers – management for cash 33 This customer group is the one who brings income. but nonetheless it does not neglect the less favourable customers. Namely it prioritises the most attractive customers for doing business.and price management. Hereby.g. As it can be seen. e. offering a suitable strategy for improving and holding business with ”weaker” customers. for planning of an individualised KAM approach. together with the design of promotion. which allow formulating a balanced approach towards very different key accounts. The next chapter continues the discussion on KAM. Furthermore. Such planning can be extended till formulation of a Key Account Management programme and Key Account Marketing Programme.and human resources activities. . Here. the portfolio method suggests the marketing and management measures. Nonetheless this is not the critical group for the future business. the supplier is recommended to manage this customer just for profit.
1 Hypothesis: KAM is an optimal concept for the CRDS The KAM concept offers an optimal solution for CRDS. which depends a lot on its diverse customers. 4. 4. discussed in paragraph 3. 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. referring to the needs of the centre. A proper customer-management concept would facilitate achievement of these objectives. 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. emphasising the context of the changing environment in the ATM sector and of the CRDS. the verification bases on assuring that CRDS intentions are conform to the objectives of KAM’s and to the characteristics of companies using KAM with. the hypothesis will be then proved. The concept suggests that the business can be improved through a consequent focusing and planning of management resources for the most important customers. Making a reference to the CRDS as a company. In this context. because they are the main contributors to the business. it is required to refer once again to the conceptual objectives of KAM and to identify whether they correspond to the CRDS’ goals.3.2 Verification of KAM suitability for CRDS This paragraph verifies the suitability of the concept for CRDS. Besides. if the further verification of KAM’s suitability for CRDS will result that the centre possesses the same features. 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.5. The hypothesis can be proved through finding out whether the KAM concept indeed suits to the CRDS organisation.Analysis of KAM suitability for CRDS 34 4 Analysis of KAM suitability for CRDS In chapter 1 and 2 the CRDS organisation was introduced. For doing that. whether the KAM would correspond to the CRDS’ expectations and if it could be an optimal concept for CRDS. as described in paragraph 3. like the companies that use KAM. enabling to effectively manage its customers and helping to strengthen the business.3. Besides. . KAM is proposed as a solution for CRDS. In this manner will be answered the questions.4.
Customer Retention on the CRDS’ perspective. which motivate the companies to introduce KAM. Hence. Hence. Besides. means that its customers repeat to purchase the services of CRDS on a continuous basis. who use KAM expect from the concept to obtain the following four benefits: “increasing customer orientation. differentiation from competitors and minimisation of market risks ”. these objectives ideally match to the centre’s needs. the both KAM objectives correspond to the intentions of the centre.2.Analysis of KAM suitability for CRDS 35 4. Customer Retention Realising the second KAM objective . discussed in chapter 2.3. this intention of CRDS coincides with the motivation of the firms that want to raise customer-orientation through KAM. As mentioned in paragraph 2. Putting this on a large scale. 4. the centre is surely interested in an improvement of its business relationships with its most important customers.4.4 the reasons were summarized. the first KAM objective coincides with the intention of the centre. succeeding to adapt to the common tendency in air transportation industry. improvement of business relationships.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 one’s products. The more customers buy the CRDS’ services and the more value they deliver to CRDS. Consequently. CRDS can extend its self-financing and become more marketoriented. this objective coincides with the centre’s intention to secure long-term business viability. The firms. the more satisfied the organization will be and the more it will achieve its target to increase revenue and keep business sustainable. the second objective corresponds to CRDS as well. . through achieving these goals. Considering the business expectations of CRDS. Thus. As far as the centre wants to increase its revenue and as far as the customers enable to do it. noted in the CRDS’ business plan.2 Conformity of CRDS with the companies using KAM In paragraph 3. 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. Maximising Customer Value Transferring the first objective on the practice. CRDS wants to become more customer-orientated.2.
these customers can be lost. because they start to produce for them the same services.3. aiming to offer the same ATM services to the CRDS’ customers and thus may endanger the CRDS’ business. Considering the last benefit expected from KAM and concluded in “minimising market risks”.5. the rival is increasing and some of the former CRDS’ customers convert into competitors. Thus. some new competitors may appear. 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. Summarising. which yet was not explicitly defined as the new targets of CRDS. Factor 1: Intensity of competition As it was defined in the section 3. the overall motivations of CRDS are conform with the reasons of the companies that adapt KAM. Moreover. helping to survive in the business featured by growing competition. it should consider that the ATM business becomes more competitive. it can be deduced that it is also valid for the CRDS. If no countermeasures for holding and enhancing business with the customers will be undertaken.3.2. as they used to buy at CRDS. this paragraph examines the availability of these factors at CRDS. . it can be concluded that this goal also complies with the CRDS’ intention. However. that competition is growing and therefore it sees the differentiation of products and services as own competitive strategy.Analysis of KAM suitability for CRDS 36 Considering the objective “differentiation from competitors”. to find out the way to minimise in future the risks of loosing the customers. 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.6. In particular. the centre assumes. 4. which named the determining factors for applying KAM in a company.3 Availability of factors for KAM implementation Referring to the paragraph 3. the CRDS needs KAM as a differentiated customer-management approach. 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.
Finding direct contacts to the right customers seems to be difficult due to lacking information and some constraints on doing business. the centre broadly applies Project Management in production and simplifies the incorporation of the customers in the most important phases. It became evident. Nevertheless. KAM would improve the coordination of customer relationships and processes. The KAM would facilitate making a differentiated management approach and plan personalised strategies for such different customers. So. as they are being developed in a close cooperation with the customer. For that reason. Thus. launching of KAM would increase the cooperation effect even more. The CRDS is indeed a firm. operating in an intense competitive environment. In other words. . The centre even conducts lobby work for finding more customers. belonging to the contracting parties and financing the CRDS’ budget. it is suggested to adapt the concept for CRDS. as the centre would additionally be able to plan strategically the business relationship with a single customer and hence. In doing so.Analysis of KAM suitability for CRDS Factor 2: Intensity of coordination of business relationships 37 The business relationships of CRDS with its customers can be defined as highly complex and a lot of coordination is required. CRDS cooperates tightly with the customers while creating a service for them. This proves the availability of the second factor at CRDS. The CRDS pursues to continuously integrate the customers’ needs into the product development process. Considering this proposition. The next chapter shows the practical implementation of KAM for CRDS. would be able to differentiate. aiming to deliver the best quality. The centre is indeed featured by complex interactions with its customers. Factor 3: Integration of customers in the development process of services The CRDS services are tailor–made and very individualized. with a high coordination of business relationships and is being interested in close cooperation with its customers. that CRDS matches to the characteristics of those companies who implement KAM. because the CRDS can both sell and provide “for free” the services to those customers. who can originate both from public and private organizations. which customer needs more attention and a better treatment. But the centre is interested in serving more customers in order to balance its budget. while developing the services. the CRDS mainly provides services to its central customer and even a stakeholder – the CEATS ANSP’s. the availability of three factors at CRDS was proved.
to understand the value of each customer and to know its future behaviour.5. .Step 1: Selection of Key Accounts The implementation of KAM requires an accurate identification of prospective accounts. This chapter suggests an option of how the KAM can be introduced to CRDS. Only then the company can adequately plan a structured management approach. the most attractive customers were identified as the CRDS’ key accounts. to carefully analyse them. This thesis explores the introductory phases of KAM implementation and therefore suggests launching KAM at the CRDS. Based on its outcomes. It must be considered. Besides. that setting of KAM is a multi-level process and it implies a consistent planning and analysing the customers. derived from CRDS’ SWOT analysis. given in section 3. 5. undertaking the first steps. the KAC assisted in the process of Selection of Key Accounts providing qualitative and numerical customer data.5. In particular. For identifying the CRDS key accounts was applied the method of Assessment of Customer’s Attractiveness. This method has measured the grade of attractiveness of each customer as seen by the CRDS. The Key Account Controlling hereby accompanied the two phases of KAM implementation to CRDS. Business Plan and corporate accounting. given in paragraph 3. These contributions served as criteria for detecting the customer’s attractiveness for CRDS. shown in Appendix 1B. But before planning the business with such customers it is necessary. The next paragraph outlines the introduction of KAM to CRDS in two main steps.2. before an operational KAM program can be launched in practice. concluded in Selection of Key Accounts and in Categorising of Key Accounts via portfolio method. The Assessment of CRDS’ Customer’s Attractiveness was realised through a scoring table. KAM suggests withholding the most important customers and maintaining and investing into a long-term trustful business relationship with them.5.Introduction of KAM to CRDS 38 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.The latter was directed to the Head of the CRDS with the request to score all customers according to the amount of their contributions.1 Implementation of KAM . This chapter shows how these two processes were developed for the CRDS according to the guidelines and the theory of the KAM implementation process. the KAC provided customer sales data required for composing of KAS-Matrix and hence facilitated to accurately evaluate and interpret the CRDS’ customer data.
were given to those prospective customers. who currently does not purchase CRDS’ services but may do it in the future. was measured the customer’s attractiveness. Each customer was scored according to the sub criteria. 5. For assessment was offered a list of sub criteria (see Appendix 1A) specifying the volume of business prospects of a customer. aimed to particularly specify the amount of customer’s contribution (see Appendix 1A). as well as are bringing new businesses. These three criteria have measured the contributions of the CRDS’ customers. the customers’ contributions are categorised in three criteria: the profit-based. For example. Each criterion was divided into six sub criteria. if the customer indicated no interest for doing business with the organisation. the CRDS was requested to score a single client in terms of prospects for doing longterm business with the centre. was given to the customer. .8 and 10 respectively.Introduction of KAM to CRDS 39 The next sections discuss in detail the procedures of Assessment of Customer’s Attractiveness and of the Selection of CRDS’ Key Accounts. The score of 2 would get a customer. determined by the profit-based and the attribute-based criteria. 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. Each analysed customer was matched to one sub criteria and was scored according to this. he got a score of 0. the criteria were adapted to the CRDS business case and measured the customer attractiveness from the centre’s point of view. the higher he was ranked and scored by the CRDS. For instance. which characterised his demand for CRDS. It suggests analysing and selecting key accounts on the basis of their contributions to a firm. The higher was the customer’s input.1 Assessment of Attractiveness of CRDS’ Customers The method of Assessment of Customer’s Attractiveness was applied as a technique to identify and select the CRDS’ key accounts. who are willing to cooperate on a long-term basis with CRDS. Likewise. in order to assess a customer on the basis of the needs-based criteria.1. The score of 4. Hereby. the customer-needs based and the attribute-based. The sub criteria were put on the scale of ranking from 0 till 10. are contributing to the expansion of its business network. who was estimated to have interest in buying CRDS’ services now and till some period in the future. For doing that. The higher scores .
who constantly necessitate CRDS services and hence support the sustainability of CRDS’ business. For instance. the volume of sales per customer might count more than the intensity of business relationship with him. the CRDS rated its customers in terms of three criteria: profit. together with the attractiveness criteria.1. This was done by the means of a questionnaire table. According to the framework of technique of Assessment of Customer’s Attractiveness. the CRDS answered how much profit the customer brought to the firm over the last three years. Thus. than of the other. shown in column “Relative Importance of Criteria” in Appendix 1B. Assessing customers in terms of needs-based criteria.2 Criteria for measuring attractiveness of CRDS customers As it was discussed above. As a result. Applying this for Assessment of Customer’s Attractiveness. have obtained the higher scores. which customer’s contribution is more appreciated and expected by the supplier.Introduction of KAM to CRDS 40 5. when assessing a customer in terms of the profit-based criteria. which will be served in year 2008 and later. This is how. it is necessary to know. as well as those customers. The Head of the CRDS was asked to assess each customer. the CRDS was requested to indicate the importance of each criterion of attractiveness in percentage. The customers obtained the scores. needs-based and attribute-based criteria. which included the groups of CRDS’ current and future customers66. which were explained in Appendix 1A. So. Those customers. the centre has analysed the prospects of doing business with each customer. ranking them on a scale between 0 and 100. the profit-based criterion was prioritised as the most important determinant of customer’s attractiveness and was The assessment included the CRDS’ customers served in the last three years. The Head of the CRDS has estimated the relative importance of each criteria. in terms of profit-based. durability of customer demand and business relationship. 66 . The higher scores obtained those customers who indicated high purchase volume. the three criteria were used to measure the attractiveness of CRDS’ customers. according to the amount of their contributions (see the outcomes of the assessment in Appendix 1B). 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. the supplier does not equally perceive these three types of criteria and may value the presence of one contribution more. Therefore. the supplier must prioritise in quantity each criterion.
these are the CRDS’ most attractive customers and are consequently its key accounts. the six customers of CRDS. 5.Introduction of KAM to CRDS 41 issued for 50 points. As the diagram shows.1. have obtained higher attractiveness scores than the other customers. As the less important determinant was ranked the customer’s attribute-based criteria it obtained 15 points. the rates of Relative Importance of Criteria were multiplied with the attractiveness scores of each of customer. it became clear how much value each customer contribution means for the CRDS. The customers’-needs based criteria was scored with 35 points. the attractiveness scores per customer differ a lot. In this manner. placed in green columns of the questionnaire. The results of multiplication are given in white columns. as shown in the yellow row of Appendix 1B.3 Selection of CRDS’ Key Accounts The CRDS management team rated attractiveness of the customers’ according to the above-mentioned three criteria. marked in green colour. 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. some customers are seen by the CRDS as more attractive than the other. Finally. Hence. According to KAM framework. only the most attractive customers should be selected as key accounts. Hence. . The summary of customer’s attractiveness scores per criteria have resulted the total attractiveness scores of the CRDS’ customers.
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. on which the supplier will concentrate its business resources and towards whom he will further plan and deploy Key Account Management strategies. as it was discussed in paragraph 3. This measure aims to plan strategies for selected key accounts. The next sections explain the methodology of collecting this data. The KAS-Matrix generates suitable key account strategies.Introduction of KAM to CRDS 42 The purpose of Selection of Key Accounts is to choose those key accounts. to facilitate composing of the KAS-Matrix for CRDS was required to collect some missing data. Thus. analogue of which was already illustrated in chapter 3. These strategies can be derived from a portfolio matrix of key accounts. the Spend volume and the CRDS’ Relative Business Strength. serving as parameters for the matrix.3. In order to create this matrix is needed additional supplier and customer-related data.1 Key Account Attractiveness as a dimension for the Y. 5. was the Spend Volume of every key account over the last three years. compared to its competitors.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. needed for composing the KAS-matrix of the CRDS.2.1. 188.8.131.52 Customer Spend as parameter for the bubbles size The third dimension. 5. 5. the Customer Spend is a .2. that the CRDS’ customers are distinguished between those who buy CRDS’ services and those who obtain them for free of charge.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. because they already financed the CRDS’ budget. This data serves as variables for composing the KAS-Matrix.5. The next paragraphs explain how this data was collected and how the Key Account Portfolio was created for the CRDS. The next paragraph explains in detail how the Key Account Portfolio was formulated for the CRDS.3.5. This data was given by the CRDS management and was partially extracted from the CRDS’ Business Plan.3 to be the second step in implementation of KAM. prioritising the very important accounts from the less ones. It must be considered. In this context.
In this manner. Hereby. An extensive market research can provide this data. making out 100 in summary. depending on the type of customer. which seized both the account’s purchase volume and account’s monetary contributions to the budget. the supplier needs to identify which competitor competes on serving particular key accounts. ranking the significance of each factor so. As next follows the analysis of competitor’s services and overall business performance.1. who compete on serving its key accounts according to the given four CSFs. However. As alternative. where CRDS is active.Introduction of KAM to CRDS 43 parameter. The Customer Spend shows how much business was done with each single key account. The business. is useful. briefly introduced in paragraph 3. because it allows to detect how better or how worse is the supplier positioned at the market. The importance of the factors is presented in points. the strength of competitors’ performance is measured by the Critical Success Factors (CSFs). it is hard to recognize how the buyer perceives the business performance of the seller and of its competitors.5. In the portfolio matrix this data is conveyed by the size of the bubbles. These CSFs serve to the customers as reasons for buying the services of a particular supplier and measure the attractiveness of the supplier’s offering. but this costs time and investments. is determined by the following CSFs: quality of services. The characteristics of the four CSFs are specified in sub-dimensions and are ranked in the same way as the criteria for Assessment of Customer’s 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. This technique measures the supplier’s attractiveness for the key account and is analogous to the method of Assessment of Customer’s Attractiveness for a supplier. valid for this type of industry. In particular. It is suggested. which represents how strong a supplier is positioned at the market.2. that the supplier scores himself and his rivals.3. he selects . To calculate it. 5.3. comparing to its competitors. applying the CSFs a supplier can evaluate his own business strength and those of the competitors. price and knowledge transfer to the customers. discussed above. technical competences. Here. the supplier likewise prioritises each of the CSFs. Knowing how the customer perceives the supplier’s offering and the competitor’s offering. as the key account would do it (see column “Relative Importance of CSFs” of Appendix 2A). 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.3 Calculating Supplier’s Relative Business Strength The Supplier’s Relative Business Strength is one of the three dimensions of the KASMatrix.
that the customer. getting 25 points. to assure high reliability and certainty of his services. The result of this subtraction represents in rates how strong is suppliers’ business comparing to his competitors. medium and low. Afterwards. The “Quality and Reliability of services” was rated as the second important factor. It was summarised. the price is not the . Hereby. it was easy to identify the Critical Success Factors. I firstly identified the Critical Success Factors. his scores are multiplied with the Relative Importance points of the CSF. which is needed for creating the Key Account Portfolio. the better scores he obtains and the higher is his business strength. Therefore. on the price and value of the product and on transmission of the product knowledge to the customer. Due to previous knowledge on the centre’s business. his offering includes Real-Time Simulations (RTS). as seen in the second column of Appendix 2A. the outcomes of these multiplications are set in relation with the scores of supplier’s business strength. through a simple subtraction of competitors’ scores from the supplier’s scores. the supplier gets the scores of the Business Strength of his competitors. every CSFcharacteristic is given a score from 0 to 10. Fast-Time Simulation (FTS). After each competitor is rated according to the CSFs. This method was applied for calculating the CRDS’ Relative Business Strength. However. e. Hereby. Model-Based Simulations (MBS) and additional value. the highest rate attained the CSF-“Technical Competences”. As the result. 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. each critical factor was weighted according to its importance for the customer and was summarised in points. because it is a requirement for the ATM service provider. valid for this type of business. The CSF “Price” was ranked as the third important CSF and obtained 20 points. The stronger is the business performance of competitor on the analysed CSF. which determine the level of business performance of an ATM service provider. first of all puts value on the technical competences of the provider. given in the white column of Appendix 2B. As shows the legend of CSFs parameters (see Appendix 2A). The level of reliability and quality was distinguished between high. than the other. that the customer appreciates some of the named CSFs more. which allow him to deliver a wide range of services.Introduction of KAM to CRDS 44 those characteristics of CSFs that suit best to each competitor. It was suggested. the better technical competences he has and the higher rating scores he obtains. who purchases ATM service solutions. For doing that. This factor is significant. the bigger is the provider’s assortment.g. These final outcomes are applied in the KAS-Matrix as variables of the X-axis. like CRDS. This factor measures the cost-value relation of the service. on quality and reliability of the delivered services.
Introduction of KAM to CRDS 45 most important factor in a buying decision of an ATM service solution. Owed to the price-sensitivity of the customers. in how a provider transfers his knowledge and expertise on services and tools to a customer. the scores of Relative Business Strength of each competitor were subtracted from the score of Relative Business Strength of CRDS. unless the customers are the ones who assess all providers. in other words. These differences are given in the lowest row of the table. who compete on serving its single key account. While scoring. as illustrated in Appendix 2B. because it was derived from analysis done in CRDS and is backed by corporate knowledge of market situation. The last and less important CSF in the ATM business was concluded in “Best Practice” or. with a purpose to see the relation of how better is CRDS positioned in front of each key account. here those suppliers were better rated. The CRDS was likewise scored in terms of the four CSF. . All the competitors of the CRDS were scored according to these CSFs. comparing to the competitor. This is how were specified the opponents of CRDS. I opposed the competitors with the selected key accounts of the CRDS and listed them correspondingly in the lower row. This is how the scores of Relative Business Strength of each competitor were calculated. acquired from the previous intern workshops for analysis of the CRDS’ rivals. providing consultancy and extra services have attained the higher scores in assessment of this CSF. It must be noticed. This CSF measures the level of customisation of services. The results of the calculations show that the CRDS is stronger positioned as its competitors. Those providers having high expertise. In doing so. who offered services of high value for the lower price. that the analysis of the competitors’ business strength cannot be considered as 100% adequate. The competitors and the CRDS were scored. These results were further elaborated for the need to compose the KAS-Matrix. the customer still pays attention to which extent the price corresponds to the value of delivered services. than the competitors. I referred to the data. The scores of CRDS’ and of the competitors represent how well or bad is their business positioned. However. as well as identifies the extra services and added value of the supplier’s products. obtaining the score of 920 points for its Relative Business Strength. the provision of consultancy and knowledge to a customer. The obtained results were multiplied with the rate of the Relative Importance per CSF. the obtained data is perceived as reliable and sufficient for composing the KAS-Matrix. In particular.
5 indicate the least capital input to the CRDS and key account Nr. But the business success also depends on the amount of budget each customer generates for the firm and the portfolio highlights it. according to their scores and spend amount.1. The key accounts have been plotted in the matrix.4 and Nr.2 – EUROCONTROL and Nr.3 – ANSP non-CEATS. which is required for a successful business. showing in circles the spending of the key accounts for CRDS’ services. Nr. As the graph shows. This data served as parameters for composing the KAS-matrix. as yet it didn’t indicate any spend volume. 6 – CSPDU. and therefore is seen more as a partner and not as a customer. compared to those of the competitors was assessed. placed across the four clusters.1 – CEATS ANSP. is not seen on the graph at all. As the graphic results. The key accounts Nr. shown in Figure 7. 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. the CRDS’ has three major contributors to the budget – the key accounts Nr. Hence.2 Portfolio of the CRDS’ Key Accounts The previous paragraphs explained how the key accounts of CRDS were identified.2. how their attractiveness for CRDS was measured and how the CRDS’ Relative Business Strength. the firm has a diversified customer portfolio. .Introduction of KAM to CRDS 46 5. CRDS has a mix of different key accounts. which are summarised in Appendix 3. The biggest and the main contributor stays however the key account Nr.
namely to the Strategic Customers or to the Star Customers. key account Nr. Moreover. Figure: “Investment of money and effort”. he can forecast the future business strategies with each account. Once a firm has various revenue sources. so as the key accounts can be moved to the desired positions. the CRDS’ portfolio is diversified.g. (1999). Surely.P. the current portfolio of the CRDS can be improved and redrawn. the portfolio should be diversified and balanced. 1 and its’ contribution can merely be compared to the payments of the other key accounts.1. e. giving more independence and options for doing business. it gets stable high earnings from the loyal customers – Status Customers. would become a more prospective and attractive one (compare characteristics of portfolio categories). an equilibrated Key Account Portfolio improves the supplier’s business. For the case of the CRDS. For detail refer to Cheverton. as the firm’s main source of budget is key account Nr. the firm itself knows best where it wants to position its accounts and whether this is achievable. which can be limited by having just one big customer in portfolio. as knowing business environment and its influential factors.3 Balancing the CRDS’ Key Account Portfolio As it can be seen from the Figure 7.175 67 . Hereby. 5. and hence. In such a portfolio the Spend Volume of the key accounts is distributed proportionally across all four clusters. From this money it can invest into strengthening the business with very promising. 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. referring to the portfolio characteristics. nonetheless it is not balanced. Such a portfolio secures supplier’s independence.Introduction of KAM to CRDS 47 Ideally. 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. resulting more benefits for the CRDS. Obviously. can be moved to a better position. Likewise.2. p. For example. as the contributions of the key accounts are comparable. but less budget-generating customers – into the Star Customers. Then. the key account who was plotted in the cluster of Status Customers. in a way that numerous customers generate company’s budget. the size of the circles does not differ largely from each other. This gives a good possibility to define where a supplier wants to see his key accounts positioned. the portfolio would be more balanced if the Spend Volume of the other key accounts would increase. On the whole. the CRDS’ portfolio can be improved if the positions of some key accounts would change.
raising their attractiveness for the CRDS. to plan proper managerial and operational tactics for development of key accounts. Furthermore. His position should be clearly stated and developed accordingly. given in Figure 8.2 and 3 to the left. The positions of key accounts Nr. it is suggested that the key account Nr. 4 and Nr. the centre is supposed to identify clear objectives and strategies towards these key accounts. This change means that these key accounts would better perceive the business performance of the CRDS. putting him under question mark. As next. the matrix indicates an undefined position of key account Nr. .Introduction of KAM to CRDS 48 ? 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 . But in order to change the CRDS’ current portfolio into a balanced one.6. In both cases changing position means to him improving the business prospects with CRDS.Nr.2. In both cases. In this paragraph the current Key Account Portfolio of the CRDS was formulated and shown in Figure 7. it is suggested to move the accounts Nr. The balanced portfolio suggests withholding their positions or slightly moving them up. if some key accounts increase their Spend Volume and if CRDS improves its business position in front of the most prospective key accounts. 5 are placed in the cluster of Streamline Customers. This portfolio can be improved and converted into a more balanced one. Besides.1 moves to the right side and hence becomes either a Star Customer or a Strategic Customer. it is incumbent to adopt appropriate strategies. 3 and 4 would increase as shown by the bigger yellows bubbles.
this account can be developed through raising its Spend Volume on purchasing the CRDS’ services. that this account will have growth in sales and will continue to bring profits and a positive cash flow. 68 The portfolio characteristics of the key accounts were adapted for the CRDS from the “ Programme guidelines. B.80 . Meanwhile. that CRDS develops the business with its key accounts. there are still some recommendations on how these customers can be developed. Even though the position of Strategic Customers is regarded to be the strongest position of the portfolio. given in Figure 7. Launching a deep and multilevel relationship with this account can support this. Strategic Customers: ANSP Non-CEATS The most innovative and important projects should be developed with this key account. The CRDS estimated this key account as highly attractive and targets a large amount of business with him. McDonald. This would imply for CRDS strengthening its Relative Business Position.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. p. that the customer can be moved to the left side in portfolio. giving characteristics of key account and suggesting appropriate portfolio strategies for management of each key account group. as represented by Figure 8. M.Introduction of KAM to CRDS 49 The next section handles these topics. the further opportunities for finding and developing joint work must be investigated. the portfolio strategies suggest.2. In particular. It is expected. In doing so. 5. (1998). it is recommended to apply the portfolio strategies as directional policies for management of a particular category of key accounts. suggested for different positioning on the directional policy matrix”. Hence. The appropriate strategy would be to invest and build up a long-term business with this key account. The pursuit of these strategies would improve the CRDS’ current portfolio. The multi-skilled key account managers are required here for handling relationship with account. in order to strengthen own position in front of the account. adapting proper strategies for each account. given in the X-axis of portfolio matrix. It is suggested. Besides. This paragraph proposes the strategic options for managing of CRDS’ key accounts. the CRDS should concentrate on creating on-going value for the ANSP Non-CEATS. converting it into a more balanced on. & Rogers.
though at the moment they do not represent the biggest business. the CRDS should do a better communication with these key accounts. in order to secure a profitable business. This may be explained by two reasons: the first is that they do not know what the CRDS has to offer. For doing so.Introduction of KAM to CRDS Star Customers: EUROCONTROL ATM programmes. The CRDS has already built up a trustful relationship with him. the recommended strategies for managing this account would be both “proactive maintenance” and “strategic investment”.FAB CEATS 50 These two key accounts are the customers of the future. Considering the second key account – CSPDU/FAB CEATS. nonetheless this account has a lot of potential and in future he can indicate substantial growth in sales volume. as being a Star Customer. Logically. as it can be both categorised as a Status and a Strategic Customer in the same proportion. moving them to the left side of the portfolio. But as knowing the background of the relationship with this account it becomes obvious that this customer is currently changing his business position. However. For enhancing its image and business position. the CRDS valued this customer highly and appreciated him as a key account. Therefore. To improve this situation it is recommended to change position of the key accounts. Probably the . he should be treated likely. is required to develop and to invest more into the business with this key account. it was already recognised that his position and relation to CRDS is undefined. Definitely. this account was the strategic account in the past and brought many innovative projects and business to CRDS. 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. Thus. because it yet has not indicate any Spend Volume. this Spend Volume of the both key accounts should be raised. the problematic resides in the fact. the recommended strategy towards is to try to convert him into a more prospective account. Consequently. Status Customers: ANSP CEATS The portfolio position of this key account ANSP CEATS is unclear. that these accounts would not score the CRDS as high as CRDS did. Currently the cash flow brought by EUROCONTROL ATM Programmes may be neutral or even negative. namely he moves from the Strategic Customer to the Status Customer position. the second is that the CRDS’ offering does not fit to their needs. The assessment has showed that they are aligned with the CRDS’ corporate strategy and have potential. Additionally. Hence. CSPDU . this key account combines both characteristics of the two key account groups. However.
Therefore.4 – EEC should be held. Furthermore. as it does not show any new great prospects and will generate less business than it did before. It is further expected. and hence to improve the CRDS’ business position. This option appears as possible and should be further explored. whereby the options of raising its Spend Volume should be investigated. depending on the centre’s business intentions. But according to the portfolio method. it can be concluded that the ANSP CEATS is rather overtaking the position of a Status Customer. the position of the key account Nr. that these key accounts increase their Spend Volume for the CRDS’ services. The first option offers to develop a Status Customer into a Strategic Customer and hence to move his position into the upper portfolio cluster. At this point. the position of the key account Nr. Moreover. Moreover. even though it is low. If no changes in managing these accounts take place. EEC These customers are price-sensitive and require extended negotiation and do not bring big business. their position should be just withheld. Hence. they continue to deliver business.5 – R&D and Universities. The supplier has choice on how to manage these customers and depending on its will.Introduction of KAM to CRDS 51 business share of this customer will not grow in future as much as it did in the past. The best strategy for managing the two accounts is to “ manage them for cash”. The company may even tend to resign from serving these customers. the position of Status Customers cannot stay unchanged long and it needs to be altered and improved with time. The CRDS has options on whether to hold. Consequently. the recommended strategy will be directed on holding this account and maintaining the profits. this account must remain in focus of the CRDS as he brings the highest contribution to the budget of the centre. this customer may not form anymore the CRDS’ strategic vision of the future. it is suggested. This option does not fit. because these customers still bring positive cash flow. Nevertheless. these customers are the matter of some uncertainties when speaking about their share and attractiveness for doing business. Streamline Customers: Research and Development Universities. Likewise. because the ANSP CEATS is currently moving oppositely. There two options for doing that. Therefore. their current positions can be shifted to the other portfolio clusters. to develop or to eliminate these accounts from portfolio. Nonetheless. The second option suggests converting the Status Customer into a high-potential Star Customer. it can be recommended to move these key accounts to the left side of the cluster. should be . that this key account will continue to bring stable profits as well as positive cash flow. it is indispensable to meet strategic decisions on designing business with them.
Introduction of KAM to CRDS 52 maintained or improved. . the ultimate decision whether to withhold or to change the portfolio positions of the Streamline Customers will come out from the CRDS. since the CRDS’ mission complies with the mission of this account. Finally. having in common the goal of doing Research and Development. Supportive would be to clarify the roles of the both accounts in the CRDS’ business.
because if the customers continuously buy its services. apply KAM for achieving these goals. Thereby. the CRDS has some limitations on doing business. willing to increase customer orientation. provided by KAM would secure customer retention for CRDS. Moreover. to improve business relationships and to differentiate themselves from competitors. In doing so. Companies. it is easier and cheaper to retain the customers as to start business with the new ones. in this study I assumed that the business of CRDS could be enhanced through focusing on its customers and stakeholders. The organisation identified the opportunity for generating value in selling its services and focusing more on its customers. To prove this hypothesis. I explored the reasons and characteristics of the companies that use KAM and detected. I identified the concept of Key Account Management as an optimal for achieving these goals and proposed to introduce it to CRDS. In my thesis. forcing to increase its self-financing. that CRDS is similar to them. since CRDS operates in a business-to-business industry. But as still staying a public organisation. they generate more value to CRDS. I founded out that KAM promises to increase firm’s profitability through customers’ retention and through maximisation of their value and earnings. CRDS can also apply KAM to meet these objectives. I studied the concept and analysed whether it fits to the requirements of CRDS. I continued to verify the suitability of KAM for CRDS. on whom CRDS depends on. The same intentions were found for CRDS. The differentiated customer approach. had and has an impact on the CRDS. which is becoming more costconscious and oriented towards its users. which would help CRDS to increase profitability and business sustainability through focusing on the customers. Hence. the KAM is a concept. I aimed to ensure. An introducing of an appropriate marketing-management concept would help the centre to increase its earnings. However. what CRDS aims to achieve. The . would offer to effectively concentrate on its customers. the concept ought not to contradict to the mission and business specifications of CRDS. that Key Account Management is indeed a solution for CRDS. searching for three factors that serve as determinants for implementation of KAM in a company. This was exactly. Concluding. The changes in the Air Traffic segment. emphasising the durability and mutual benefit of the 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.
I concluded. cannot just be just deducted from the portfolio matrix. Planning of a tactical KAM-program would be the next logical step in introducing of the concept to CRDS. However. increasing the cooperation through a differentiated customer approach. The study analysed and concluded that not all the customers are seen as same important to CRDS. But before implementing portfolio strategies. KAM gives to CRDS an option to develop its business. improving the coordination of business relationships and advancing in the processes of development customised services. The strategies were specified and recommended the approaches for planning business with each key account. per single key account. CRDS would benefit from KAM. Equally. My findings resulted the portfolio of CRDS’ key accounts and enabled to classify and prioritise single customers within the categories of key accounts. To my point of view. that the portfolio of CRDS’ key accounts is not balanced and can be further improved. This thesis challenged to formulate for the CRDS the guidelines for the strategic management of its key accounts. The KAS-Matrix gives overall common guidelines how to manage accounts according to their portfolio positions. For further research I recommend the extended analysis of the suggested Key Account Portfolios and establishing final strategies. Moreover. to assure the correctness of the new strategic choice. Choosing a particular strategy for a key account has implications on the quantity of investment in relationship. setting of key account strategy and a tactical KAM program. . Because each business and account is very individual. 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. many implications and other factors should be considered in planning implementation of these strategies. as the other companies. from competitors. on organisational processes with the customer involvement and on the pricing of services and products for individual key account.Conclusion 54 analysis resulted that CRDS is as well having these three factors: intensity of competition. 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. KAM can even serve to CRDS as a strategy for differentiation of the centre. intensity of coordination of business relationships and integration of customers into the service development process. every single key account should be carefully analysed. which is being elaborated in the next step of KAM implementation.
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 .
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