The Critical Connection Between Alliance Management and Key Account Management

The following article first appeared in the latest edition of the Association of Key Account Management magazine.

Best practices in alliance management and KAM

Supplier alliance management and key account management have converged over the last 20 years and are now closely connected, the mirror image of each other. The two management disciplines can both become more effective through further integration under the general categorization of strategic relationship management.

Not surprisingly, KAM and alliance management best practices are very similar. A research project scoring best practice application for key accounts showed that those with the highest scores were also the most commercially valuable accounts and likewise, those with the worst scores were the least valuable and most problematic accounts.

Clearly the two are linked, though which is ‘cause’ and which ‘effect’ isn’t conclusive. But it does strongly imply that alliance management and key account management are closely related. So there are useful lessons for exponents of KAM in these cases from the IT sector.

High street retailer

A well-known UK high street retailer wanted to bring together its technology suppliers into a coherent and collaborative group that could together amount to more than the sum of its parts, and dream up added value projects and activities to benefit the retailer customer.

The thinking around how to achieve the desired breakthroughs with multiple partners developed actionable best practices through which the retailer could manage and benefit from its valuable ecosystem of suppliers and partners.

Researching common success factors in commercially successful alliance relationships led to identifying a range of best practices that can be divided in to 5 areas as in the table:

1. Commercial

2. Technical

3. Strategic

4. Cultural

5. Operational

The case demonstrates the very substantial value that can come from working with the ecosystem – beyond traditional, two-party buyer-seller pairings. It should be a lesson in the potential of such an approach for key account managers struggling to find differentiation and new value for their key account.

Engineering manufacturer

This manufacturer had identified five elements in its global physical logistics which cost it well over ￡100,000 per year, and had set a target to reduce costs by 20% within 4 years.

• Road transport
• Warehousing
• Freight forwarding
• Packaging
• Inbound/outbound logistics

The company believed that collaboration between chosen preferred partners in each area would drive process improvements and lead to cost savings. Personal interactions between the key account managers in each of the chosen elements were critical to achievement of the target.

As would be expected, the business was extremely valuable to the account managers identified. But despite the long-term contract value of the business, some of the key account managers were simply incapable of acting in a collaborative manner. Instead of viewing each activity and process from the perspective of the value it would create for the client they consistently viewed it from the perspective of ‘What’s in it for me’.

They were loath to attend brainstorming sessions and share knowledge with the other account managers in the group and they very often criticised other account managers to the client (not a wise move in a customer-driven project!).

The manufacturer reluctantly came to the conclusion that they must request the removal of certain account managers from the project. In at least one case this led to a company being excluded from the project altogether.

Learning point Some account managers seemed to find it impossible to act in an alliance related manner and consequently lost business.

Global systems integrator

Some years ago one of the biggest wanted to develop a consistent and coherent alliance sales process. The best practice research led to the development of a methodology called ‘The Collaborative Business Experience’ in which the systems integrator partnered with technology companies to deliver more holistic value to clients.

They looked at how a Collaborative Business Experience could be a unique feature of their account management programme. The systems integrator’s key account managers would aspire to become ‘Trusted Advisors’ of major clients and would use the partnering techniques and processes in the Collaborative Business Experience to partner effectively with the client. As one major account executive put it: “We don’t want to be an order taker, we want to be a trusted adviser to our key clients, and to do that we need to treat them as a partner and not a customer. A customer is someone you sell to. A partner is someone you create joint value with”.

Learning point If you are a major account manager treat your client like a partner not a customer.

For further information on the Collaborative Business Experience please see: https://www.capgemini.com/se-en/insights/research-library/the-collaborative-business-experience/

Telecoms

Internal research showed that, in answers to the question, ‘What skills do you currently lack that you will need in the future?’ collaboration came in the top three places across all divisions of the telecoms company. So they set up training in collaboration for all account managers. Collaboration is much more than just a positive mindset, it has its own principles and practices to be learned and trained in (see Institute of Collaborative Working (ICW)).

As a result of the change in approach from its key account managers, the company consistently outperformed bigger competitors and gained significant market share through demonstrating and deploying exceptional agility and innovation through collaboration.

Learning point You can gain big dividends by training your account managers in alliance management techniques.

Large global systems integrator

In 2021 a global systems integrator surveyed over 300 of its partners and produced a paper entitled ‘Building high impact partner ecosystems’. Click here https://www.accenture.com/content/dam/accenture/final/a-com-migration/r3-3/pdf/pdf-150/accenture-future-of-partner-relationships.pdf

The research concluded: “It’s a different world out there now when it comes to the interactions and business relationships between providers and partners. Providers must lead with a mindset focused on shared ecosystem success that fosters co-innovation and collaboration with partners or face existential threat to their businesses. Providers should offer their partners a path for growth and help develop the capabilities they need to achieve that growth. Create a partner strategy with partner and customer experiences at the core—experiences that enable meaningful outcomes and profitable growth for the partner, supported by the provider’s capabilities, data and support.

Partners have more choices of providers than ever. Be the provider of choice”.

One account stood out. The key account manager for the customer set up regular two-weekly face to face meeting with another technology company’s general manager who was responsible for the same customer on their side. They had only one agenda item ‘What can we do together to improve the customer’s business in the UK?’. The account’s CIO and other key suppliers to the same company asked if they could attend too, with the result that revenues for the account increased fourfold in three years!

Learning point If you want to increase the revenue from your key accounts, improve the client’s performance by involving both your client and your client’s ecosystem of suppliers and partners in joint alliance planning.

What does this mean for the future of Alliance and Key Account Management?

Best practices in both KAM and alliance management are converging and the future for both disciplines lies in developing collaborative relationships with clients, utilising alliance skills and approaches to create joint value.

The approach is not without its challenges:

• Some people are not natural collaborators and will fail in the role if forced to act in an ‘alien’ way.
• Account managers in established and valuable accounts are extremely important and powerful people in the hierarchy of many companies. Firing them when they do not act in a collaborative fashion is not an option. The revenue implications are too dire to contemplate.
• Drawing the line between active and value add collaboration and ‘going native’ is extremely fine and it takes real skill to manage both aspects.
• Both alliance management and account management are heading towards strategic relationship management and a fusion of both disciplines into a collaborative approach to partner ecosystem development, with selected key accounts at the centre of the ecosystem.
• In such a model the key, indeed the only question that the ecosystem managers should be asking themselves, is ‘How can we help our client improve through acting collaboratively together?

Mike Nevin, Managing Director, Alliance Best Practice Ltd

If you would like more information regarding this topic or if you would like an alliance or key account aseessed for best practices then please contact Alliance Best Practice Ltd at either of the following email addresses.

[email protected] or [email protected]