Kamcity Library - KAM – the New Centre of Gravity?

With the growth in trade funding from 5% to 20% of sales to the trade, possibly at a cost to above-the-line budgets in a zero-sum game, it is perhaps useful to explore the possibility that an equivalent shift is taking place in the potential power of KAMs vs. their colleagues in brand marketing. Adding to this the growth in trade concentration having resulted in fewer, larger customers, it is probable that a KAM is now managing a business unit far larger than a key brand in terms of sales and profits for the company.

Ownership of the consumer

Whilst the issue of brand integrity and priority should never be in doubt, the question of ultimate ownership of the brand consumer is also being challenged. If ‘ownership’ of a consumer is defined by extent of knowledge, then retailers combining Clubcard and scanning data to produce a shopper-profile that includes name, address, age, sex, family structure, income-level, state-of-health, recreations and travel, dietary habits, insurance, debt-profile and bank-balance, have to have a greater claim to ownership of the consumer than a marketer knowing that the consumer is probably grey-haired and living alone in the country, two children having left home… The KAM represents potential access to that retailer insight.

Moreover, the retailer’s attempt to maintain a one-to-one personal dialogue with a consumer-shopper has to represent more potential for development and use of insight than the marketer’s use of broadcast and increasingly fragmented media to communicate with a consumer already saturated by media coverage and resistant to non-focused messages.

As private-label development is focused more on Generations 3 and 4 (equal and better functional performance than national brands, respectively) so the retailer’s influence over consumption behaviour is increased. The KAM, as manager, coordinator and information expert on the retail business unit, is by definition closer to the real action in terms of changing dynamics in the market and impact upon company performance.

The KAM as a business manager

As the KAM becomes more of a professional business manager, working with demanding trade partners that represent increasingly effective access to the brand’s consumer profile in their shop traffic, so the key customers increase their share of, and influence upon, the company’s business. The trade budgets are larger, and the KAM’s use of outsourced help is increasing...

In the process the role is becoming a gateway for service providers hoping to replace revenue streams that previously originated in traditional media. However, this new target of service-providers probably represents far more of a networking challenge than traditional points-of-contact with client companies.

The KAM has to be more pragmatic and results-focused than marketing colleagues of equivalent status. What the KAM lacks in knowledge of the subtleties of media dynamics and drivers can be compensated for by their unashamed emphasis upon deliverables. They are in a better position to quantify and relate investment directly to result on shelf than many spenders of media money...

Finally, when it comes to the price, it might be useful for service-providers to bear in mind that KAMs are accustomed to dealing with the world’s toughest buyers, and negotiate by reflex, with some success, given their day-to-day practice on best-in-class practitioners. Whilst it might appear that service-providers should bypass the marketer and appeal directly to KAMs, a more productive route to restoring and building brand equity probably involves a three-part dialogue based upon a realistic assessment of consumer need, the retailer’s shopping insight via the KAM, the brand owner’s consuming insight via the marketer, and the demonstrable ability of media to deliver appropriately, via the service-provider, with an emphasis upon cost-effectiveness.

Outsourcing and Buying Services in the KAM Role…

As KAMs become more influential gatekeepers between the company and its major customers, coupled with a possible lack of expert help in-house, it can become necessary to outsource a variety of services from promotional, print, PoS and trade research providers.

This provides the KAM with an interesting opportunity to change hats and assume the buying role. Apart from the immediate realisation that the ability to ‘write a cheque’ makes a bad buyer good, a realistic KAM will see this additional role as an opportunity to optimise the purchase of services and thus enrich the quality of the supplier-retailer relationship, facilitating access to the brand’s consumer-shopper.

Given that buying is simply the other side of the selling coin, so most of the classic negotiation techniques can be flipped over and applied from a buying perspective. An added bonus can be the additional insight into buying behaviour that can enhance performance in the KAM’s relationship with the buyer.

For those wishing to take the entire concept on board, the EMR Negotiation Roadmap spells out every move (www.kamcity.com/roadmap/). However, as a starter, the following steps can help:

Size of deal on the table: spells out the extent of mutual dependency (our share of their business, their share of our business, annual potential purchases and provider’s gross margin) and provides overall context for the negotiation process.
Competitive-set: keeping in mind the fact that service can only be experienced in retrospect, it is particularly important that KAMs identify alternative providers, and compare them objectively.

Here the reverse use of the EMR-Buying Mix Analysis tool (www.kamcity.com/namcalc/) can be used to spell out and score each provider’s ability to meet the KAM’s criteria in terms of the product/service, price, presentation and place.
KAM Needs: given that the provider may not be accustomed to applying needs-based-persuasion to KAMs, it can be helpful to spell out requirements in terms of objectives, deliverables and guarantees. Service-level requirements may need some additional emphasis. Keeping in mind that the provider also has business objectives, some exploration of their specific needs can help in optimising the negotiation process.
Concession management: essentially, in the search for a bespoke offering, the KAM needs to bear in mind that the provider’s business model (time/cost/quality balance) is based upon standard ingredients and any ‘specials’ will cost more by definition. This could jeopardise quality and/or timing. In other words, it is crucial to clarify ultimate output in terms of retailer satisfaction and work back from that to a precise requirement from the provider, together with a clear description of what constitutes success.

Next identify potential concessions from the KAM side in terms of what costs less to give than the value to the provider. Apart from the obvious benefits such as early/staged payments, and onward use of insight, it can be useful to bear in mind the value the KAM can represent in terms of continuity, prestige/potential endorsement, and access to other KAMs and affiliates. Adding value to concessions from the KAM’s perspective should pose no problem, whilst the pleasure of devaluing the provider’s concessions, after years of being at the receiving end, may reveal a darker side of the KAM’s nature, best treated by the medical professionals...
Closing the deal: it is important to agree what has been agreed, in writing and complete with KPIs and compliance clause; in fact all of those elements the KAM would like to build into agreements with the retailer…

Finally, outsourcing services only works with a context of building and maintaining brand equity via the brand marketers, and has to be seen as a means of facilitating access to the consumer.

All else is simply buying and selling….

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Date article published: 01/03/2006

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