And finally, in this video I want to quickly run through the life-cycle of a supplier – customer relationship. Key accounts aren’t binary.
This is something that gets switched on one day, drives a revenue and it gets switched off the next. They have a natural life cycle, so let’s run through this quickly –
One – Exploratory key account
This is where a customer has been identified as a potential key account but trading through the two companies is limited. Both sides are exploring each other’s capability here.
Two – Basic key account
This is mainly transactional and the supplier needs to prove their efficiency and reliability. At this point it is easy for the customer to exits the relationship but there is also good opportunity to grow the business in the account by demonstrating reliability.
Three – Cooperative key account
This is a stage where the supplier is one of the few preferred by the customer. There are perhaps multiple contact points between the seller and the customer although the main relationship is still with professional buying up trauma team.
There is somewhat limited information sharing and the supplier is not quite fully trusted by the customer just yet.
Four – Interdependent key account
This key account reflects a much closer relationship between supplier and customer and both sides acknowledge the strategic importance to working together. At this point the supplier may even be the sole supplier for a particular product or service.
There is lots of information sharing and a degree of cross organisational trust between both each other’s brand and the individuals within the account. There is likely again at this point dude strategic planning meetings and excellent opportunities to grow the business.
These are typically the best kinds of key accounts as the competition is locked out and you still have room for growth within the business.
Five – Integrated key account
This involves both the supplier and the customer working almost as a single organisation in the process of creating value for both parties. The salesperson at this point is not doing very much selling at all.
It’s typical that there are lots of interactions between not just sales but all the other divisions within the organisations. This is where you see co-branded products, e.g. laptops it’s an Intel inside and it is often for the benefit of the end user that the players in supply chains integrate product development on both sides.
Six– It goes to shit
Unfortunately, all good things have to come to an end. Most key account relationships decline gradually as commercial interests between the supplier and the customer diverge or the might be hit by crisis.
Sometimes this is a recession which comes around every 7 to 10 years, an internal issue, public relations scandal whatever it is. It is always important at this point that both parties agree to an exit plan and are mature about splitting up.