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Relational Selling and Key Account Management Essay

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Updated: Jun 20th, 2020

The changes which are characteristic for the contemporary market spheres are associated with a number of challenges for firms which are forced to operate within the new environment in order to achieve success. The competition in the market acquires new features, and the focus is on long-term relationships between buyers and sellers. The only way to achieve success in the market is to develop close relationships with the customers. The principles of relational selling are actively used in the market because firms try to maintain their long-term relationships with the customers which are the guarantees of the prolonged success because these relationships are based on understanding, trust, and shared goals. Thus, many companies concentrate on developing relationships with key accounts as customers in the business-to-business environment (Cheverton 2012, p. 112).

From this point, Key Account Management (KAM) is discussed as one of the best ways to support these positive relationships in the business-to-business environment. Although the advantages of KAM are still actively discussed by the researchers, it is possible to state that the principles of KAM and relational selling work to support the optimal and profitable business while depending on the approaches to protecting the partners’ interest, predicting and resolving conflicts, and facilitating interaction.

The Ways Used by Parties to Protect Their Interests in the Business-to-Business Relationships

Supporting the business-to-business relationship, two parties can protect their interests when they are focused on developing such types of contracts as legal contracts based on laws, agreements, and psychological contracts based on the ideals of promise and trust (Schultz & Evans 2002, p. 23). To understand why different types of contracts and agreements work to regulate the business-to-business relationship, it is necessary to understand such concepts as the strategic alignment between two partners and the ARA model.

Legal contracts and agreements such as Service Level Agreements are verbal or written contracts which state terms and conditions according to which the process of selling or other business-to-business activities are realised. Jobber and Lancaster note that one party offers conditions, and the other party accepts them because of the necessity to promote the business (Jobber & Lancaster 2012, p. 28). However, to ensure that such deliverables as agreements can be achieved, the companies should focus on the legislation basis, on the laws which regulate agreements between sellers and buyers, and on the companies’ specific policies. Interests of each party should be protected by the law (Bird 2005, p. 98; Ingram 2008, p. 56).

Coca Cola managers pay much attention to checking the contracts and agreements in order to state that the terms and conditions address the company’s policies, the current contract cannot be harmful for the brand, the aspects of the obligation are stated, and the terms and conditions describe the seller and buyer’s behaviours (Coca Cola Reports 2014). Moreover, contracts can help to achieve the company’s interests while dealing with untrustworthy business partners. It is important to ensure that they are closely involved in the development of the contract. Thus, the legal contract is the way to make the business-to-business relationship formal (Evans, O’Malley & Patterson 2004, p. 38; Solomon, Bamossy, Askegaard, & Hogg 2009, p. 115). At this stage, a key account manager should think of developing strategic alignment between the firm’s values, goals, and objectives with those ones of a strategic partner.

Two parties can also ensure that such agreements as Service Level Agreements can be easily achieved because these partners collaborate and support the prolonged relationship while sharing the core values and aligning the strategic goals. While focusing on the idea of alignment, partners are inclined to concentrate more actively on psychological contracts because of understanding that both parties are interested in promoting similar strategic goals. In this case, Lai, Chou, and Cheung pay attention to the fact that partners rely on trust and promises (Lai, Chou, & Cheung 2013, p. 137).

The parties take risks of psychological contracts because of sharing the idea of the strategic alignment of their interests and goals. Referring to the example of Coca Cola, it is important to note that psychological contracts are based on the trust and promises which are the results of the company’s reputation. In this case, the buyers decide to behave in a certain way in order to achieve the alignment, and they respect the agreements made to support business. Coca Cola as a seller protects the firm interest while winning the trust of the other party and guaranteeing that that party can benefit from the relationship (Coca Cola Reports 2014).

When both the parties respect the psychological contract in addition to legal contracts, they can achieve their objectives more effectively (Ming-Huei & Wen-Chiung 2011, p. 83). Furthermore, following the ARA model, bonds between the parties, resource ties, and activity links also play the important role in order to ensure the partners that the psychological contract will work in relation to such a reputable and actively developed company as Coca Cola. The effective approach to developing psychological and legal contracts is necessary in these companies.

The Role of a Key Account Manager in Resolving Conflicts between the Parties

A Key Account Manager plays the critical role in addressing and resolving conflicts between the parties which can occur while developing the business-to-business relationship. The conflicts between partners can be associated with strategic issues and with practical issues. Depending on the type of the issue, the plan of actions performed by a Key Account Manager can be different. When the parties participating in the business-to-business relationship fail to address the conflict, there can be a barrier to develop the future fruitful relationship between two firms. For this reason, a Key Account Manager plays the role of a regulator, a strategic leader, and a mediator (James & Ryals 2012, p. 360).

The problem is in the fact that following the idea of the strategic alignment, both the parties focus on supporting prolonged profitable relationships. However, any changes in the companies’ visions can lead to significant conflicts. In this situation, a Key Account Manager is a representative of the company’s interests who can see the whole picture and who can orient to creating the optimal conditions for developing the relationships (Richards & Jones 2009, p. 305). As a result, a Key Account Manager is expected to demonstrate developed consultative skills, focus on persuasion, contribute to the further collaboration, and to demonstrate the remarkable decision-making skills.

If there is a conflict between the parties which is based on visions of strategic and practical issues, a Key Account Manager should analyse the factors contributing to the conflict and the possible causes from the perspective of the prolonged goals. Concentrating on the example if the work of Key Account Managers in Apple, it is important to note that these mangers focus not only on selling but also on creating conditions for selling (Gummesson 2012, p. 114). The work of Key Account Managers in Apple is the illustration of the effective decision-making process because all the managers’ activities are based on the judgments made to conclude about the effectiveness of this or that action. Key Account Managers in Apple focus on analysing the situation without depending on the timescale, the potential achievement of the goal is the priority (Gummesson 2012, p. 114).

As a result, to resolve the conflict it is necessary to analyse the original agreement between the parties and identify the commitments. These elements should be analysed in relation to the potential for completing the main goal of the developed business-to-business relationships. The next step is the decision-making process, and the analysis of the observed balance of power ((Gummesson 2012, p. 114; Paparoidamis & Guenzi 2009, p. 1053). For instance, Key Account Managers in Apple should clearly understand what role the buyers play in the prolonged relationship and what demands should be addressed because of the necessity to serve the other party’s interests (Gummesson 2012, p. 114).

Key Account Managers protect the interests of the company at all the stages of the negotiation process, and the next step is the development of a dialogue in order to persuade the other party to accept the set or proposed terms and conditions. It is necessary to focus on a win-win approach while developing the dialogue and demonstrating the advantages of the collaboration. In spite of the balance of power observed in the business-to-business relationship developed according to the principles of relational selling, Key Account Managers’ task is to create the situation for gaining more profits while resolving the conflict or working with the customer.

The Role of Account Managers in Facilitating the Interaction and Successful Work of Collaborating Teams in Two Interacting Companies

Key Account Mangers should facilitate the interaction between the collaborating teams working for the companies-partners in order to contribute to gaining more profits. It is possible to contribute to the successful work of two different teams while being involved directly in the activities of partners and while being focused on aligning the resources to the customer’s needs. The main approaches to improve the interaction between the collaborating teams are the focus on the ARA model and concentration on the social and economic benefits and the direct coordination of the work of selling centres in both the firms (Gounaris & Tzempelikos 2013, p. 129).

While facilitating the interactions, a Key Account Manger should use the techniques of the project management to contribute to the interests of the buyer, realise effective coordination of the teams’ collaboration oriented to achieving the business goal, operate the strategic planning tools, and demonstrate the developed leadership qualities.

To improve the business-to-business relationship, Toyota focuses on making it work while reserving and creating the specific key account management teams which serve to realise the principles of relational selling. As a result, key account management teams of two partners collaborate effectively, while creating the conditions for achieving the business goal. According to Davies and Ryals, in order to achieve the goal, the teams work to benefit from a mutual relationship (Davies & Ryals 2009, p. 1027).

Key Account Mangers often refer to the ARA model in order to support the approaches used to stimulate the work of collaborating teams which represent the parties in the business-to-business relationship (Shi & Wu 2011, p. 635). In Toyota, Key Account Mangers focus on the actor bonds while developing the aspect of trust, concentrate on resource ties while discussing and assessing the risks and rewards, and focus on activities while promoting the communication between the teams (Toyota Reports 2014; White & Ramsey 2014, p. B3).

To facilitate the interaction, Key Account Mangers should not only be directly involved in the work of the partner but also concentrate on the other company’s needs. In this situation, Key Account Mangers should ensure that their motive in communication and coordination of the process is clearly understood by the other party (Reisel, Chia, & Cesar 2005, p. 483). The communication between the teams can be realised in many different forms. The first approach that Key Account Mangers can consider is to convince the other team’s leader to participate in the regular sessions (Jeffery 2010, p. 98; Shuman 2009, p. 36).

An agreement can be achieved, and the second option is the approach when Key Account Mangers representing both the teams receive the opportunity to discuss the issue easily and to focus on the mutual objectives (Pardo 2007, p. 17). If the Key Account Mangers agree on moving in their discussion forward, these managers take the responsibility of convincing their top managers to accept the relationship which can be advantageous for both the companies (Smith & Taylor 2004, p. 112). The third option can be discussed as the opportunity to organise a forum of the relevant managers from both the companies in order to discuss the controversial issues.

Conclusion

Relational selling is the effective approach in the current competitive market sphere, and Key Account Managers become the significant forces to help the firm to achieve success in this context. One of the most important tasks of a Key Account Manager is to help to find a solution whenever there is a conflict between a firm and its partner in the market. Furthermore, it is also necessary to facilitate the communication between the collaborating teams. The proposed solution should be realistic and achievable, and the focus should be on achieving the shared goals and benefits. The principles of the Key Account Management are important to stimulate the progress of the business-to-business relationship because of the accentuated role of understanding the needs of the parties. As a result, the stronger business relationships are created, and more significant results are achieved. The satisfaction of all the partners participating in the interactions increases, and the role of a Key Account Manager is extremely significant in this process.

Reflection

While learning the principles and ideas presented in the module, I received the opportunity to realise the rules according to which organisations promote their business-to-business relationships. I have learnt that it is extremely significant to contribute to the interests and expectations of the parties in order to gain more profits, and the issue of maintaining close relationships with the organisational buyers is the key one to discuss the question. I have also learnt that Key Account Management is important to be studied in order to facilitate the interactions between business partners who perform the roles of sellers and buyers. It is important to note the role of a Key Account Manager as an actor who can regulate the complex relationships between the parties and who can contribute to achieving the business goal.

While focusing on the experienced challenges, it is necessary to state that I found it rather difficult to apply the concepts of the ARA model and balance of power to the practical discussion of Key Account Management aspects. In spite of the fact that these concepts are basic to discuss relational selling, they are complex, and much attention should be paid t understanding their details. Thus, to understand the concepts, I chose to focus on their elements and associated them with the concept of Key Account Management.

After having understood the basic principles, I focused on the detailed discussion of the other ideas presented in lectures and textbooks. It was intriguing to learn that a Key Account Manager has the powers to make significant decisions even in cases where sales managers are forced to make consultations with senior marketing managers. I realised that a Key Account Manager can contribute considerably to developing business-to-business relationship with organisational buyers and suppliers.

In the future, I am inclined to change my learning approach in order to focus more on details while studying new concepts. I need to spend more time while learning the relationships between the concepts in order to be able to apply them actively to the practical discussion of the problem. I also need to pay more attention to discussing the issues form the large perspective, for instance in the context of Key Account Management.

Reference List

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