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.
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 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….
