Global Account Managem ent John F. Tallitsch Managing Director Why Do Com panies Expand Beyond National to Global Account Managem ent? Because m ultinational custom ers seek strategic partners w ho: 3 understand specific international business needs; and 3 are able to deploy solutions on a global basis.
Global/regional customers Global/regional channels Transferable marketing Lead countries Global economies of scale High product development costs Fast changing technologies Competitors globalized I ndustry Globalization Drivers Global market participation Global services Global value chain Global marketing Global competitive moves Global Strategy Organization structure Management processes People culture Organizational Response Consistent worldwide service One point of contact Partnering with customers Outsourcing for customers Global account management structure Compensation and incentive systems Uniform purchasing and pricing I m plem entation Need for Global Account Management 2 Benefits of Successful Global Account Managem ent. Speaking to custom er w ith one voice, avoiding internal conflict. I ncreased ability to gain revenue through custom ers 9 international expansion.
Efficiency gains and reduced costs 3 scope and scale economies. Leveraging custom er know ledge. Learnings 3 e.g., sharing best practices.
Good service leading to reputational benefits 3 that can be transferred to new strategic regions or industries. Links ... more. less.
across regions that institutionalize custom er relationships. Raising custom er sw itching costs 3 e.g., supply chain elevates interdependencies and com petitive distinction.<br><br> 3 Risks and Costs of Global Account Managem ent. Low est national price, term s and/ or conditions becom e the global standard. Pricing inconsistent w ith local service requirem ents 3 e.g., low er price than historical and higher service com m itment.<br><br> Loss of internal support and conflict w ith geographic m anagers 3 from dim inished roles of geographic m anagers. Restructuring the organization to accom m odate global custom ers 3 incurring additional fixed costs. I m plem enting controls and com m unication channels betw een all levels of m anagem ent and across geographies.<br><br> Hiring appropriate m anagers and resources w ith skills and know ledge to w ork in foreign environm ents. 4 Sim ilarities Across Successful Global Account Managem ent Fram ew orks. Cross-country reach 3 not necessarily to all countries, but: 3 to most important ones; 3 for most important customers; and 3 for most important activities.<br><br> Goal 3 coordinated, consistent w orldw ide service. A global account m anagem ent structure. 3 One point of contact.<br><br> Through assigned Global Account Manager (GAM). Resident near customer 9s headquarters. 3 Focused account team.<br><br> 3 Coordinated cross-country sales/service resources. Solutions-oriented, value-added or interdependency- oriented custom er/ supplier relationship. Account inform ation system s track account details and activity country-by-country.<br><br> 5 Dim ensions of GAM Com pensation. GAM responsibilities: 3 worldwide customer sales, support and satisfaction; 3 assurance company is: perceived as one company at all customer locations; and organized and staffed to service opportunities in global account. 3 leading dispersed resources assigned to support account.<br><br> 6 Dim ensions of GAM Com pensation. Perform ance m etrics: 3 worldwide performance of global account (revenue, costs, profitability); 3 revenue and profit management span: account quota by country; and country quota by product/service. 3 cost management: encompass full costs 3 e.g., staffing, cost-to-serve, discount expenses; and compiled and held separately country-by-country.<br><br> 3 may include metrics pertaining to company 9s overall global account program 3 to ensure: transfer of learnings associated with working with customers; and efficiency gains and reduced costs are realized. 7 Tw o GAM Com pensation Profiles. Critical Sales Success Factors Product innovation and supply chain execution Engineering and manufacturing capabilities, outsourcing Consum er Products Com pany Medical I nstrum ents Com pany Sales Objective Use new products to renew sales in ctired d products Grow sales significantly through high-value systems sales Team Perform ance Goals Excellent Outstanding 102% of Quota 106% of Quota 130% of Quota 140% of Quota Target Perform ance Total Pay Incentive Base Salary $140,000 $20,000 $120,000 $140,000 $60,000 $80,000 Salary/Incentive Mix 86/14 Salary/Incentive Mix 57/43 Excellent Perform ance Total Pay Incentive $165,000 $45,000 $215,000 $135,000 73/27 37/63 Outstanding Perform ance Total Pay Incentive $190,000 $70,000 $290,000 $210,000 63/37 28/72 8 Tw o GAM Com pensation Profiles.<br><br> Critical Sales Success Factors Product innovation and supply chain execution Engineering and manufacturing capabilities, outsourcing Consum er Products Com pany Sales Objective Use new products to renew sales in ctired d products Grow sales significantly through high-value systems sales Team Perform ance Goals Excellent Outstanding 102% of Quota 106% of Quota 130% of Quota 140% of Quota Portion of Overall I ncentive Opportunity 3 Overall Account Performance 3 75% at Quota declining to 68% at Outstanding 3 Product Category Performance 25% at Quota and Excellent 32% at Outstanding 3 Pay/Performance Accelerator Above quota opportunity for product category rises somewhat faster than team award 3 Overall Account Performance 3 45% at Quota declining to 15% at Outstanding 3 Product Performance 55% at Quota 77% at Excellent 85% at Outstanding 3 Pay/Performance Accelerator Above-quota opportunity for product category rises faster than team award Out-perform bonus picks up the pace of product incentive escalation Medical I nstrum ents Com pany 9 GAM Com pensation Success Factors. Perform ance and activity tracking/ reporting: 3 reinforces geographic and account responsibilities of assigned resources; 3 facilitates balance of geographic, product and customer sales strategies; and 3 enables GAM decisions independent of geography. Pay strategy and incentive system s encourage cooperation across country, national and global account m anagers.<br><br> 3 GAMs linked to worldwide account performance. 3 Country-resident sales resources connected to both: " country-specific global account results; and " worldwide account performance. Com pensation linked to the profitability of the overall account relationship 3 com pelling a focus on long-term relationship profitability rather than transactions.<br><br> 10 A Clear Perform ance-crediting Policy Facilities Quota Setting and Ensures Proper Paym ent. Single Credit Credit only one resource for sale. Simple.<br><br> Easy to administer. Doesn 9t work in team environment. Description Advantages & Disadvantages Split Credit Each resource involved in sale receives partial recognition.<br><br> Role in sale, resources involved and policy determine split. Percentage credit totals 100%. Provides recognition/reward 3 based on contribution.<br><br> Encourages teaming. Crediting disputes can arise. Pressures quota allocation accuracy.<br><br> Quota setting is business as usual. I m pact on Quota Allocation Split credits must be included in GAM and team quotas. 11 A Clear Perform ance-crediting Policy Facilities Quota Setting and Ensures Proper Paym ent.<br><br> Credit multiple resources involved in sale. Role in sale, resources and policy determines credit. Total credit 100% 3 e 200%.<br><br> Can increase cost of sales. Pressures quota allocation accuracy. Masks performance against business plan.<br><br> Quota > business plan can be confusing. Description Advantages & Disadvantages Each account, geographic and country resource receives full credit. Total credit e 100% Optimizes cooperation.<br><br> Increases cost of sales if not rigorously modeled and calibrated incentive. Works best in higher volume and attractive margin situations and where efficiencies can be captured in cost-to-serve. Double or Multiple Credit Sum of quotas greater than business plan.<br><br> I m pact on Quota Allocation Quota setting is business as usual. Full Recognition 12