Key account negotiating - Sales Management

The objective of negotiating with key accounts is to use strategic selling and negotiating skills to match your company objectives with a key account’s needs, strategies and opportunities, and to increase the overall level of your business with the account (interns of volume, turnover and share of product sector). Within the scope of this text we can only give limited coverage to the topic of negotiating,in a fashion that will mainly assist sales managers in some negotiation training sessions.

Negotiating takes place where either or both the key account manager and the key account have needs for changes to progress their businesses (e.g. product ranges or mix,marketing programmes), and where a programmer proposition offers ways for each party to progress towards his or her objectives,but where each party has areas of difference that need to be resolved (e.g. cost,resources, timing, monitoring, etc.).

As illustrated in Figure, the gap closes through a series of concessions. Each party concedes on a point where he or she feels the value of the concession is less to him or her than it is worth to the other, so trades it for something he or she values more.

Typical pattern to the annual round of negotiations

At the annual round of negotiations the key account buyer may bring up a variety of issues, but in the main they will normally revolve around issues of:

● price, terms, discounts, rebates,allowances, etc.
● profitability
● turnover (for retail products) or volume needs (for industrial products)
● cannibalization of sales for other brands(for retail products)
● continuity of supply contracts (for industrial inputs).

The key account manager must develop presentation that addresses all these issues,in whatever form they are raised. When negotiating with retail trade distributors the key account manager must particularly focus on demonstrating to the satisfaction of the key account that his or her proposals will produce a net increase in account turnover and profit for the product category, after allowing for any cannibalization or steal from other category products.

That will require good knowledge of the account’s overall sales performance within the product category,and the preparation of detailed calculations to support proposals. Negotiations are likely to be drawn out over several meetings,as illustrated in Figure.

Moving-through-the-negotiations-to-points-of-agreement

The actual process of negotiating can be broken down to show the stages the negotiator typically passes though en route to a contract,the processes he or she will be going through to achieve a satisfactory conclusion, and the outcomes he or she will be aiming for at each of the stages. This is illustrated in Figure.

Follow-up to negotiations

Negotiations may finish when the deal is signed, but the key account manager’s job does not. When all the negotiating is concluded the key account manager must work to ensure all the commitments are met, and that the customer is completely satisfied with the product and the service. There are invariably significant amounts of follow-up activity within the supplier company, and also within the customer organization.

Follow-up with retail accounts

  • With retail accounts ensure follow-up to motivate local branch ordering/display in the buying organization with other departments or with individual branch managers and their field controllers. Persons likely to be the focus of post-order follow-up contacts include:
    • buyers
    • area field controllers
    • branch managers
    • stock controllers
    • product end users
    • merchandising and marketing staff.
  • Ensure follow-up through your own sales office departments to ensure efficient order processing, and also within your field sales force if there is a network of other salespersons involved in contacting branches or customer field managers.
    Internal follow-up is likely to be with:
    • order processors
    • distribution departments
    • field sales managers
    • field salespersons
    • brand ambassadors
    • sales promoters
    • marketing specialist (on promotional activity).

Stages-in-the-annual-round-of-negotiations

Follow-up with industrial and commercial key accounts

  • Ensure follow up to motivate use in the client company, and satisfaction with performance. Persons likely to be the focus of post-order follow up include:
    • end users (production managers,engineers, technical staff, etc.)
    • product specifies (research specialists,engineers, technical experts, quality control personnel, etc.)
    • other section managers in the account likely to be able to benefit from use of the product in their immediate environment.
    • Ensure that your organization provides full training and technical support.

The sales manager will normally have responsibility for recruiting and training key account management team, and for establishing the systems and controls to support their activity.

The-negotiating-processThe-negotiating-process1

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