Last Updated 27 Jul 2020

CRM focus

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It was mentioned that CRM focuses on retaining current customers rather than attracting new ones. Its development and endorsement lead to the development of Key Account Management (KAM). This is the most appropriate strategy for the company according to the relations with customers. This paragraph will show why managers have to consider implementing KAM in their organization and what are its pros and cons, according to the theories of the most famous authors in this field This is a new trend in strategic management which suggests an establishment of specific influence strategies for each key customer.

Key account management is a natural development of the strategy for guiding the business towards managing the customers' relations. The level of service which the enterprise offers is an indicator for the detention of the current clients, as well as for acquiring new. The higher level of services provided to key clients helps in expanding the demand, stimulating sales, increasing the volumes of revenue and profit. That is how the relations with customers become a core marketing objective of the organization (Diller, 1996: 49). There are many reasons for focusing on the KAM.

The clients tend to centralise their purchases. Some companies give the transactions with certain customers to one sales manager. This increases the volume of contracts, and accelerates the process of their conclusion and realisation. The cooperation between the seller and the customer is more efficient when the communication between them is executed by only one sales officer. Key Account Management offers wonderful opportunities for the creation of new commercial channels by establishing specialised purchasing centers (Wolf, 1994: 198).

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The vertical marketing integration is a precondition for the development of KAM. In the vertical integration one of the participants in economic life takes part or all of the functions of another participant and thus limiting or removing him from certain activities with key clients. Tree strategic approaches to vertical integration have been approved: corporate, administrative and contract (Pride and Ferrell, 1989: 305) . The contract approach is the most used tool for vertical integration in KAM.

It works in various forms- voluntary contractual links between retailers under the auspices of wholesalers, the cooperation of retailers, franchise agreements for a specific integration in a particular area (Kotler, 1993: 408, 458). These newly formed structures carry out the work with key clients. However, that excessive integration could have negative effects on the organization, like functioning clumsiness and inflexible management. That is why the optimal level of integration must be taken into account when working with key accounts.

The management team can carry out the construction of initial relationships with key clients in several ways. The first one is formulation of joint objectives. This can be achieved when both parties undertake joint actions for attaining pre- formulated mutually beneficial results. Providing support is another thing which management should do, in order to establish initial relations with key accounts. The company should guarantee good working conditions (financial, material, and organizational) for its partners.

Establishing two- ways communication is a crucial part in KAM. It includes mutual Information for favourable conditions and threats through the exchange of reports about the behaviour of competitors, overviews of the concluded transactions and references for complaints. When working with key clients, as in any interaction between two parties, there is a collision of interests, and conflicts may arise. Most often conflicts within a partnership arise when the objectives of one party do not coincide with those of the other.

The management team of the company should be aware of some other reasons which might cause conflicts, such as the formulation of different objectives, setting of targets which do not take into account market restrictions, formulation of objectives in case of insufficient communication. That is why efforts must be aimed at balancing the benefits, in order to reach total growth of economic and market indicators. The efforts of each individual party are aimed at achievement of the common objectives, which in turn helps buyers and sellers to reach their personal objectives (Pride and Ferrell, 1989: 312)

Marketing excellence suggests that relations with key customers should not be confined only to the conclusion of a transaction, but they must be focused on building, consolidation and management of those relations. The further development of relationship marketing when working with the key clients leads to the marketing of co-operation, which is based not only on the exchange of products against money, the information against behaviour, but also of sharing feelings (understanding and sympathy).

Different guidelines about the services of customers are at the base of these relations. Key Account Management strategy- stages The KAM strategy consists of tree main stages: Pre-sales services; Services during the conclusion and realization of the transaction; After-sales services. The development of KAM, however, also undergoes several stages. The managers have to analyse each one of them very carefully and decide whether the company will meet the requirements for adopting this system.

The organization must thoroughly study each stage, in order to avoid any mistakes which will jeopardise the whole process. Only after the management team is confident that they have enough information, technical, financial, marketing, analytical and human power, the system implementation can start. The first stage of KAM development is the preparatory stage. The basic aim of the management at this point is to determine which the key clients are. Their purchasing power is the determining factor. After they are targeted, the company must point out the necessary resources to draw them in.

In the next, so called Early stage, the company focuses all of its efforts in order to obtain favourable opportunities for a possible co-operation, and promote themselves in front of their potential partners. The main task here is to forecast expected results from these established relations with key clients. The Middle stage is the next step which the company takes in KAM implementation. The relations between both parties are strengthening, and the communication becomes more frequent. The partners are seeking guidelines for profitable joint work.

Basically the KAM strategies are formed during this middle stage. They determine the guidelines and means for the implementation of this co-operation. During the Mature stage, the partnership between these two parties is already established, and there is a constant exchange of information and know-how. Both parties gain benefits from this process. A KAM plan is developed to support this partnership. The Integrated stage is the last one in this KAM establishment process. Both parties appear as one on the market, benefiting from the synergetic effect caused by their co-operation.

Ultimately this effect is limited to the economic and market results from the joint activity, such as sales, income, profit, market share, market growth and competitive power. The qualifications and skills of the KAM specialists are crucial when working with key clients. They must have not only abilities to settle sales transactions, but also analytic, strategic, planning, organizational and individual skills. The creation of new foundations when working with key clients, helps for the better satisfaction of their need, and gathers direct information for the development of further co-operation between both parties.

A specialized KAM system is created, containing adequate and timely information about the development of sales plans and consumer- loyalty programs. The information about key clients allows better organization of the actions which the company performs, satisfying the customers in the best possible way and builds lasting and mutually beneficial partnership. Conclusion In the current situation of decreased consumption, it is increasingly important for managers and traders in the company, to have timely and systematic information on the interactions with their clients.

Managers, led by this necessity, are aimed at the Customer Relationship Management system, which becomes more and more popular over time. But hoping that the implementation of this system will solve all the problems with customer relations is groundless. The basic reason is that the software is just a tool which optimises the process and systemises data. The real questions, such as: which processes should be optimised and what information should be systematised, remain a responsibility of the management team. Often CRM systems give partial answers to these questions, especially if they are designed for specific industry.

That is why managers have to consider are there any implantations of the software in other business, before deciding whether to implement it in their organization. This of course, is a good reference, but does not mean that the problems with customers will be resolved, even with the selection of the most appropriate information system. Customer relationship management systems provide an opportunity to systematize data about customer relationships and guarantees traceability of the process of quantitative and qualitative indicators.

This is an incredible relief for the management body of the company, because on the basis of this information and by the control mechanisms, they may take on reasoned decisions for the initiatives of the company regarding its customers, as well as to control the performance of the staff which works with clients. Two areas remain a responsibility of management, and thus are outside of this system: decisions on policies and objectives, as well as analysis of the results and making decisions for the adjustment of the operations.

In order to develop an effective and successful CRM model which will improve the relations with customers, and thus to increase sales, managers must have clear answers and solutions not only about the type of this system, but about the processes and the ways of decision making which remain outside of it. This usually requires a broader understanding of marketing and trading activity of the firm, but without doing this, the possibility of having a CRM system while the relations with customers remain at the same level is quite large, and the efforts and resources invested in this project would have gone in vain.

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