A guide to small and traditional distributors on managing modern trade accounts

1. ABC FOOD CO.
Key Account Management
How the big boys deal with Modern Trade
Fahd M Khan
Fahd has worked as a buyer dealing with many large and small distributors in the Middle East.
The document was drafted as a guide to modernization for smaller distributors keeping in mind
the best practices in the region leading to consistent processes increasing competitiveness

2. Key Account Management
INDEX
• Profile, Objective, Responsibilities
• KPI’s for a Key Account Manager
• Management of Key Account Relationship
• Internal Coordination
• Talent Management

3. Profile, Objective and Responsibilities
Profile
The Key Account Manager is the first contact point between ABC and the Retailer to
ensure that objectives of both parties are met through a win-win relationship
Overall Objective
Manage and strengthen relationships with Key Accounts so as to achieve long term
sustainable & profitable growth consistent with ABC’s overall strategy
Responsibilities
A Key Account Manager should have the following deliverables
• Channel Management Plan (Yearly)
• Customer Management Plan (Yearly)
• Yearly customer contract with business terms favorable for ABC
• Product Management (Forecast, Availability, Listing, Merchandising, Shelf
Share, Pricing)
• Sales Management (Targets, Margins, Category, Promotions, Rentals)
• Monitoring Customer Service levels in close collaboration with category
manager and logistics
• Consistent Business Review Process to ensure achievement of targets and
commitments
• Streamlining of promotions so as to maximize the coordination between sales,
marketing, logistics and the customer

4. • Execution of BTL activities so that products of ABC are consistently and
profitably highlighted by the customer
• Identify and act on cost reduction opportunities especially those that arise out
of increased collaboration with the customer
• Monitoring and reacting to competitor activity in Customer Outlets
• Design and Agree on process for internal and external coordination
• Manage overall profitability of the account
• Coordinating with accounts to ensure collection and dispute resolution
• Manage the sales team by outlining clear objectives & ensuring a transparent,
standardized incentive structure
• Plan the allocation of the Trade Marketing Budget between accounts and
activities
• Set up Standard Operating Procedures to service Key Account Customers.

5. Key Performance Indicator’s
ABC’s Vision (Hypothetical)
‘To be the leading food solutions partner in the Middle East by 2012’
ABC’s Strategy (Hypothetical)
The company wants to be a market leader in the food category by providing complete
solution to retailers.
- This solution means offering a Premium, Mid Range and Price Fighter product
in the categories that ABC plays in.
- The company will not enter categories which are too heavily contested except
with an established market leader.
- The company is pushing its own brand by to further increase its bargaining
power with Retailers.
- The company plans to take advantage of the trend towards organic food by
offering the full range of organic products in the region
KPI
• Sales Growth (Adjusted for Category, Company Objectives & Share of Category)
• Key Account Profitability
• Customer Feedback
• Internal Feedback (Sales Team, Marketing, Logistics, Accounts)
• Product Management (Availability, Listing, Merchandising, Shelf Share,
Execution of Promotional Activities)
• Improvement in Trading Terms

6. Measuring Tools
• Sales Report complete with Margin Analysis by customer (an example is
provided in the Sales report that is the part of the project)
• Normally a 360 degree analysis is the tool used for customer and internal
feedback. Alternatively feedback forms might be used
• Product Management can be monitored through market visits and internal
audits by the management
• Trading terms can be monitored by comparing yearly contracts and the internal
targets of the Key Account Manager
• Market Share report within the stores to monitor the share of category within
Key Accounts
• Key Account Profitability is the understanding of the money earned from
servicing an account. This could be calculated in the following manner
Gross Margin
(-) Rebates
(-) Other expenses (Rentals, Activities)
(-) Allocation of Merchandising Costs
(-) Allocation of Logistics Cost
(-) Returns & Damages
The result will allow us to manage our costs and customers better. The process
could be revisited on an ongoing basis and made more sophisticated.

7. Management of a Key Account Relationship
Scope
Function Owner Objective Process
The yearly contract should cover all expected
investment including Rebates, Space Rentals,
Activities, POS Information, Listing etc.
Annual Key Account Maximise Return on Investment with the
This would allow ABC to understand its complete
Contract Manager Account
investment and plan accordingly to maximize
return. Progressive Margin can help incentivize
over achievement
Design a sales report format and get the same
implemented by IT. Monitor Sales Daily together
Agree on aggressive targets with the with the Sales Team and react to fall in sales with
Key Account
Sales sales team and create the best the help of Marketing. Ensure monthly checking of
Manager
conditions for them to achieve the same Price List. Implement a standard incentive
structure to cover volume, value, collection and
product presentation
Work on a yearly Marketing Plan for each
customer keeping in mind the activities planned
Key Account To ensure strengthening of ABC's by Budget Allocation, ABC's Marketing,
Marketing Manager product by increasing proportion of sales Customer's Calendar and Last Year's Activity. Also
Brand Manager within the category ensure coordination when reacting to changes in
sales. Support Marketing by reporting competitor
activity. Ensure execution
On being informed by the accounting department,
the KAM should get the discrepancy resolved by
Maintaining Customer Price File, Account opening a channel of communication between
Finance Team
Finance Statement, Collection of Cheques & relevant parties. Cheque should be collected by
Member
follow up discrepancy of accounts the sales team. In case of nonpayment KAM
should resolve the issue with stopping of delivery
as measure of last resort
A request should be made by the KAM for the
To create promo codes and ensure that creation of the code and the stock to be
IT IT Team Member
stock is transferred to the same transferred. An IT team member linked to Key
Accounts should be incharge of executing it
The KAM should visit stores constantly and follow
To ensure that ABC's products are up discrepancies with the Merchandising
Merchandising
presented in the best possible manner, Supervisor. Ensure that the sales team follows up
Supervisor
Merchandising follow up with the store teams for and keeps track of the shelfs, prices and product
Key Account
orders. Ensure adherence to planograms availability. Constant collaboration required with
Manager
and shelf share as per the contract the retailer's store team by the sales team and
KAM
To ensure execution of promotions as The KAM should follow up promotions to
Key Account per the marketing calendar & react to understand their impact on sales and margins.
Promotions
Manager changes in sales by planning & executing Finalize the promotion plan in collaboration with
promotions with the brand manager the Marketing team and the customer and get the

8. requisite paperwork done. Maintain a file on
results of the various promotions and react to
changes in sales by being proactive in initiating
promotional activity
The KAM should work on ways to collaborate with
Distribution & the customer & help the D&L supervisor reduce
Distribution & To ensure smooth delivery of products
Logistics these costs. KAM also has to resolve disputes
Logistics and avoid discrepancy in price
Supervisor arising from discrepancies between ABC's invoice
and the receiver's copy
The salesman is responsible for deliveries on the
daily basis. However the KAM should follow up
Distribution To ensure ABC's service levels are 90%
Delivery service levels by requesting information from the
Supervisor and above
buyer (retailer) and ensure that any problems are
solved by sharing the results with D&L Supervisor
The products should have an expiry of atleast 6
To ensure correct barcodes, follow up on months. The KAM should be informed if stock of
Distribution
Warehouse expiry dates & wrapping of promotional any product is minimal. Promotional Stock should
Supervisor
products be followed up by the sales team to ensure that
the quantity is ready at the time of delivery
This has to be followed up by the sales team and
To minimize returns, damages & expiry the merchandisers. On being informed the KAM
Returns Key Account
by proper product handling, rotation and has to coordinate with the store team to dispose
Management Manager
Instore activity for short expiry of the products and minimize damages and
returns
Business Review Procedure
• The business review should be done quarterly
• The main elements of a business review are
- Sales Target Achievement by Category
- Year on Year Sales Growth/Decline
- Promotional Activity
- Competitor Performance/Category Shares
- Plans for the next quarter
- Customer Feedback
- ABC’s Concerns
• The objective of this exercise is to ensure that the goals of ABC are being met
within the store and the retailer is informed about ABC’s business concerns. At
the same time ABC can understand opportunities to increase its participation
within the outlet

9. • This is standard procedure with almost all major distributors and retailers and
should be implemented immediately
Customer Profile
A file should be maintained for each customer with all stakeholders comprising the
following details
(A) Customer Name
(B) Key Personnel
Position Name Contact Email
Central Buyer
Asst. Buyer
Store GM
Store Manager
Store Supervisor
Receiving Manager
Accounts Manager
(C) Contact Point in ABC
Position Name Contact Email
KAM
Sales Supervisors
(D) Sales
Budget Q1 Q2 Q3 Q4
Budget Actual Budget Actual Budget Actual Budget Actual
Volume
Value
(E) Scanned Copy of the Contracts (Previous Years)
(F) Quarterly Business Review Reports
(G) Report outlining the Objectives of the Year

10. Internal Coordination
Clear lines of authority have to be established by the KAM as far as Internal
Coordination is concerned. A proposed structure is proposed below
Support
Marketing
GM Coop GM ASD
Dist. & Logistics
KAM
IT
Accounts
Sales Supervisor Sales Supervisor
Coop ASD
Merchandising
/Promoters
The support departments should have one point of contact for the Key Accounts. This
would help smooth the work and follow up even when somebody else is deputizing for
the KAM.
The current structure of the company is divided under Coop and ASD. However the Key
Account Manager should ideally be responsible for the whole business with the Key
Account and therefore should have a sales supervisor reporting to him for ASD too.
Currently with limited Key Account Stores two sales supervisors are enough – each for
Coop and ASD. However as the no. of Key Accounts increase the no. of supervisors will
have to go up.
The Key Account Sales Supervisors should be one ideally for Modern Trade Channel.
This is keeping in mind the ethnic profile of buyers.

11. Talent Management
• The biggest problem facing CEO’s today is talent management
• In structured organizations HR has a career plan for different positions and the
managers are supposed to execute it
• In this instance the Key Account Manager just manages four – six people at the
Sales Supervisors Position
• It is thus the responsibility of the Key Account Manager to groom them into
future KAM’s and ensure that there is somebody to follow up in his absence
• The company and well as the customer’s are growing and therefore people will
be needed to service them in the future
• A sales supervisor groomed into a KAM will have the advantage of working with
the customer and therefore knowing the business and the people at the
retailer running it
• This will ensure continuity in the business and also encourage employees to
work harder and learn new skills
• There will be a ready replacement for a KAM and the current situation where
there is lack of focus will not arise
• Talent Management should be a part of the job description of the manager and
the sales supervisor should understand that he is being groomed to manage the
customer in a period of two years
• This should be a companywide exercise however Key Accounts provide an
opportunity because of the potential of the current people serving them