Impact of Key Account Management Code on Account Managers' Learning Culture: A Case Study, Lecture notes of Law

Download Impact of Key Account Management Code on Account Managers' Learning Culture: A Case Study and more Lecture notes Law in PDF only on Docsity! The Role of a Key Account Management’s Code of Conduct in Improving Learning Culture of the Account Managers: The Case of VICTORI Code of Conduct at TELKOM Indonesia Muhammad Subhan Iswahyudi TELKOM Indonesia msubhan@telkom.co.id, msubhan.iswahyudi@gmail.com Abstract— Key Account Management (KAM) is a term started as way of improving selling techniques to a few key customers/major accounts. It is more strategically oriented than sales-oriented or relationship-oriented because the importance of the key customers. The strategies to keep, sell, and make profit with key customers cannot be short-term sales driven. By implementing Key Account Management, a supplier company will benefit from KAM relationship in terms of business growth (e.g. selling to new customer division, retaining customers, identifying more opportunities with customers) and cost reduction (e.g. shortening learning curve, avoiding formal tenders, improving sales forecasting). This study uses a qualitative design with an observation and document analysis to discuss the case of a particular key account management code of conduct at TELKOM Indonesia in order to improve the learning culture of the Account Managers. VICTORI code of conduct as an improvement of The Account Management Way 1-3-5 is compared with two theoretical concepts of Account Management. One of the key improvements in the new code of conduct is the mission to provide an ecosystem solution to business customers instead of a generic ‘dream plan’. It shows a clear direction on the new focus of key account management at TELKOM Indonesia. Another key improvement is the change of terminology from ‘partner’ to ‘synergy’. It reflects the vision of the idealistic relational model of KAM from the level of Partnership KAM toward Synergistic KAM that allows a seamless integration between TELKOM and key business customers in creating synergistic/joint value in the marketplace. Finally, the code of conduct approach plays an important role in nurturing the capabilities of an account manager in fulfilling key customers’ need. There are three orders of customers’ need that have to be fulfilled in Key Account Management: Product need, Process need, and Facilitation need (the way in which business is done, rooted in joint problem resolution and mutual adaptation). A professional certification process that involves observation of the practices of account managers ensures the institutionalization or internalization of the key account management code of conduct. Keywords: key account management; code of conduct; learning culture I. INTRODUCTION Business to business marketing is a branch of marketing that focuses on business customers. In a telecommunication industry, the requirement of business customers is more complex than retail customers. The telecommunication needs of business customers mainly consist of: basic telephony services; internet and data communication services; software and application services; and other value added services. Identifying and fulfilling these requirements are the main concern of a telecommunication business marketing unit. Apart from the complexity in product specification, the decision making process in the business segments usually involves more than one person, known as decision making unit. Personnel involves in a decision making unit may vary across industries but mainly depends on the business size of the customer. Typically it consists of: the user of the services, the purchasing people; and the finance personnel. Responding to the complexity in the product and the sales decision involved, a company usually employs a relationship approach to business customers by maintaining relationships with key decision makers and ensuring continuous efforts in monitoring the company’s business objectives. The implementation of Key Account Management (KAM), an approach aimed at building relationships with key business customers or key accounts, can maximize the benefit of long-term relationships in business to business marketing [1, 2, 3, 4]. TELKOM Indonesia has developed key account management since the early 1990s. It started with a task force allocated in each branch deploying relationship marketing approaches with business customers in their allocated territory. The special task force, named Special Services Unit, worked based on an isolated regional based database of business customers with revenue growth as their main metrics. In the 2000s, a transformation program started in the company along with the strategy known as ‘on becoming a 3rd International Seminar and Conference on Learning Organization (ISCLO 2015) © 2015. The authors - Published by Atlantis Press 0246 1 customer centric company’. The account management improvement program was one of the core transformation projects. It resulted in the formation of a nation-wide approach of key account management that managed all key business customers under a single unit, Enterprise Service Division. Latest financial performance report shows the dominant contribution of the segment to the company’s overall performance. The adoption process of a management approach into a company operation can be analyzed using diffusion theory in which the elements of communication channel, time, social norms, and the idea itself will determine how and how long the adoption process will take place [5]. Furthermore, technical works to provide detail specification of the approach are required in order to guide operationalization of the management approach. Perkmann and Spicer [6] formula of a management approach institutionalization provides details of technical works to ensure accomplishment of the process. It mainly consists of: conceptualization, standardization, alignment with other common practices, and education. The key progress in the key account management implementation in TELKOM is the main theme discussed in this article with a focus on how the company uses code of conduct as their tools in ensuring improvement in KAM practices. Theories of diffusion and institutionalization will be used as theoretical framework. The subsequent parts of the article present theoretical framework; methods; findings of the study; discussion; and conclusion. II. THEORETICAL FRAMEWORK A. Key Account Management (KAM) Key Account Management (KAM) is a term started as a way of improving selling techniques to a few key customers/major accounts [4, 7]. It is more strategically oriented than sales-oriented or relationship-oriented because of the importance of the key customers. The strategies to keep, sell, and make profit from key customers cannot be short-term sales driven [3]. By implementing KAM, a supplier company will benefit from KAM relationship in terms of business growth (e.g. selling to new customer division, retaining existing customers, and identifying more opportunities with customers) and cost reduction (e.g. shortening learning curve, avoiding formal tenders, and improving forecasting) [2]. There are three orders of customer need that have to be fulfilled in KAM: Product need, Process need, and Facilitation need [8]. Another term that is closely related with KAM is relationship marketing. The term Relationship Marketing was first introduced in marketing literature in 1980s as an approach in service industries. Since then, it attracts many researchers to either challenge or support its role in marketing as it moves the definition and characters of marketing from product orientation to customer orientation. Marketing management that is based on relationships is now a common practice across industries [9], and even in unlikely conditions of the retail market and internet based marketing [10,11]. An expanded relationship building process for business- to-business marketing is suggested to follow particular steps involving internal focus of goal setting, strategy and culture formulation, defined alignment between strategy and culture, and implementation of customer service-oriented culture, as well as external focus of marketing strategy implementation social bond with customers and added value to the relationship. Bonding with customers is a dynamic process that can start with a basic force of the need and supply of products/services and then advance to social bonding involving personal relationships between parties from the buyer and the seller organizations [12]. Millman and Wilson [4] formulate stages of relational model of KAM as described in Table 1. Moving from pre- KAM to synergistic-KAM means more bonding with key contacts within the customer’s organization and requires a move ‘towards more relational and consultative approaches’ (p. 16). The key account manager plays a significant role in organizing total offers to the customers and facilitating exchange process across customer and seller organizations. This model is also supported by an empirical study by McDonald, Millman and Rogers [13] with 11 pairs of buyer- seller relationships with a conclusion that account manager trustworthiness is one of the main customers’ concerns. The other approach on the KAM relational model is based on typology such as dyadic (pair of seller-buyer) and collaborative [14] and bargaining power [15]. However, the former did not provide any empirical evidence while no specific stages of relationship were found in the latter approach. TABLE I. RELATIONAL MODEL OF KAM [4] Stage Key relationship activities Pre-KAM Gather basic information, provide basic services Early-KAM Explore more opportunities, provide tentative service customization Mid-KAM Frequent cross-boundary contact and the review moved to more senior level in buyer and seller organization Partnership- KAM Share sensitive commercial information Synergistic- KAM Create joint value in the marketplace B. Diffusion of Idea & Institutionalization of a Management Approach Rogers [5] deals with the question of how a new idea is adopted by a group of people. He identified the influential elements of communication process, called diffusion. Diffusion is composed of four elements: the idea, the channel, time, and the social system. These elements determine how an idea is absorbed or in some cases abandoned and how long the adoption process is. 3rd International Seminar and Conference on Learning Organization (ISCLO 2015) © 2015. The authors - Published by Atlantis Press 0247 2 TABLE IV. COMPARISON OF THE AM CODE: VICTORI (PRACTICES) AND ACADEMIC LITERATURES [4,22] VICTORI The AM Code [19] Account Management key responsibilities [4] Account Management key responsibilities [22] Value Ecosystem Strategically: Promote ecosystem value; Achieve sustainable results Responsibility for sales / profit growth of one or more key accounts, consistent with the business objectives of the seller’s total portfolio of key accounts Delivering Strategy : Realizing strategy & vision Managing Risk Marketing Insight & Changes Alignment of Strategy Value-add Invent White Space: Create value innovation; Abundance mentality Working with Customers : Developing relationships Providing supplier’s credibility Leveraging capabilities Monitoring competition Enable joint development Managing resources Touch the Heart : Emotional engagement; Build loyalty and advocating Customize for customer success: Co-creation for unique solution; Grow the customer’s business Co-ordination and tailoring the seller’s total offering to key accounts Implementing KAM Effectively : Managing contact Orchestrating cross – boundary Process improvement Delivering the plan Tailored reporting Outperform for Achievement: Passion for extraordinary performance; Passion for people development Promoting the KAM concept in his/her own company Relate Partners for Synergy: Explore partnership opportunities; Gain competencies through learning Facilitating multi- level, multi- functional exchange processes Integrated Innovation: Break the silos; Seamless customer experience As stated in the prior introduction of the code of conduct, the actual challenge is on the internalization, i.e. ensure implementation of the account management approach that is well aligned and integrated from Top-management until key account manager and officers who have daily interaction with customers. Some learning programs are introduced to solve the challenge in the beginning of the prior code of conduct, such as Training Code of Conduct the AM Way, Account Management Apprenticeship, and Industrial Convention. The Training Code of Conduct the AM Way massively conducted involved almost 300 participants divided into 10 batches. The training also included sharing sessions with other industries that implement account management. Account Management Apprenticeship is a learning program designed as an action learning or experiential learning, in which Account Manager is involved in Customer’s business. AM Apprenticeship can be in the form of On The Job Training in Customer’s office or in Industry Association or Training in another related customer’s suppliers (as part of customer’s industrial value chain), and also in another global Telco [KEGM AM Apprenticeship, 2010]. As the nature of AM works that are not easily gathered in class room, some forms of e-learning and newsletter information sharing are also used. A simplified approach of Account Management learning at TELKOM Indonesia is found in the internal document as described in Figure 3. Fig. 3. Account Management Development Programs [23] The institutionalization process of key account management is also found in the activity of certification. There are two certification programs that endorse the implementation of account management practices in TELKOM: TCIMF (Telkom Certified Integrated Marketing Fundamental) and CSAM (Certified Strategic Account Management). In the TCIMF program, account management and account profiling are two aspects integrated as parts of the certification program. While in CSAM, the program consists of understanding organizational priorities; strategic account and opportunity planning; joint solution development, co- creation and reaching agreement; multifunctional account team leadership; overall relationship and outcome management [24]. The CSAM certification program involves observation on the actual practices of account managers that ensure consistency in the implementation. This type of institutionalization is part of cultural works [6] to promote professionalization and also serve as part of technical works, mainly to educate the practices of account management and to solidify the social norm of account management in TELKOM. V. CONCLUSION AND FUTURE WORKS The improvement in the AM Code shows a more focused approach of key account management in TELKOM to an ecosystem approach that will ensure not only product and process needs but also facilitation need of the key business customers. The new code also plays a role in institutionalization of key account management practices in 3rd International Seminar and Conference on Learning Organization (ISCLO 2015) © 2015. The authors - Published by Atlantis Press 0250 5 TELKOM. An organization with stated ethical code of conduct will improve ethical judgment in decision making [17]. The change in terminology from ‘partner’ to ‘synergy’ reflects the idealistic vision towards a more ‘synergistic’ relationship with key business customers to ensure a seamless integration in creating values in the marketplace. However, a detailed exploration on the business process and supporting resources are required to implement the vision as stated in the new code of conduct. The institutionalization process of key account management in TELKOM is in the stage of technical works (provide standard and education) and cultural works (professionalization) as evident in the Director’s decree and the certification processes. However, given the methods chosen, there are limited information about the impact of the institutionalization to the outcome of the organization and the formation of a new social norm. Hence, future studies that involve an in depth investigation on these topics are required. References [1] S. Gounaris, & N. Tzempelikos, “Conceptualization and measurement of key account management orientation”, Journal Bussiness Marketing Managament Vol. 3, 2012, pp. 173–194. [2] L.J. Ryals, & S. Holt, Sue. “Creating and Capturing value in KAM Relationship”, Journal of Strategic Marketing, Vol.15, Iss.5, 2007, pp.403-420 [3] D.P. Gosselin, & A. Heene, “A Competence Based Analysis of Account Management: Implications for a Customer-Focused Organization”, Journal of Selling and Major Account Management, Vol 5, No 1, 2003, pp.11-32 [4] T. Millman, & K. Wilson, “From key account selling to key account management”, Journal of Marketing Practice: Applied Marketing Science, Vol. 1, Iss. 1, 1995. [5] E.M. 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