Brexit for NAMs - Where Now?

In what will be seen to be one of the most fundamental and far-reaching developments affecting how we conduct the NAM Job, Brexit is sending a signal that the savvy consumer has added politics and trust to what defines being a stakeholder in today’s markets, bringing with it the realisation that politics is too important to be delegated  to the politicians.

...and we are all savvy consumers under the skin...

Business is still about reward for risk, fair share dealings, and above all, a need to build and maintain a consumer's trust that the contents will always exceed the description on the tin...

In this inevitable period of uncertainty, we need to revert to basic principles that in some cases can seem like cliches:

• If the numbers don't add up, they probably don't
• If I don't understand my business idea, what can I expect from a distracted buyer?
• If I cannot make the product for less than the consumer is prepared to pay, why bother?
• Continuous Satisfaction of consumer need has to be a fundamental driver, with trust an integral part of the equation...

Brexit, albeit a monumental leap in the dark, means the following:

•  A fall in the value of the pound, meaning that exports will be cheaper, i.e. If your company is UK owned, there will be a positive impact, an advantage vs. imported competitors
• However, brands that rely on imported ingredients will incur higher costs
• Given the inevitable period of uncertainty, many major investment decisions will be put on hold, at least while the numbers are re-run...
• Companies that set up in the UK to ensure 'easy' access to the EU will probably place relocation at the top of the agenda, although it is likely that a new UK government line-up will introduce lower corporation taxes by way of being an offer that few can refuse...
• Above all, running the numbers will become a way of life i.e. The ability to calculate real cost and demonstrate value to the buyer will become increasingly important amidst the uncertainty...
• A NAM's ability to calculate and factor in the risk associated will all business decisions will become a way of life... (even the ability to label ourselves, our company and the customer as risk-averse, risk-neutral or risk-seeking, and acting accordingly, will help...)

Given a reasonably open mind, Brexit will restore our faith in our common sense, and the use of that common sense as a criterion for making decisions.

In these unprecedented times, we the suppliers, retailers and consumers need to work together, using trust as our most valuable resource, keeping to the spirit rather than just the letter of the law or regulation, always aiming to deliver more than it says on the tin, recognising that opportunity lies available now for those that attempt to move forward using basic principles of acceptable reward for risk in business, while others await a return to normal…

Above all, using a slogan that worked well in other times, NAMs need to keep calm and carry on….

Restructuring for the new UK retail trade environment

With all attention focused on the structural changes occurring in UK retail, in particular the growth of the discounters and Waitrose at the expense of the Big 4, in a flat-line market, very little attention is being paid to the most obvious of knock-on implications, the need for some adjustment in how we manage this new mix of retail routes to consumer…

At current rates of large space redundancy, the economics of selling off ‘spare’ space – at a rate that forces buyers of the property to achieve sales intensities of £1,000/sq. ft.+ to justify the investment, the resulting property lock-in prevents major retailers from scaling down to the smaller, closer convenience outlets demanded by consumers shopping more often in smaller quantities.

This has to result in a gradual loss of market share from Kantar’s current levels of 73.5% for the Big 4, to a combination of the discounters, Waitrose, online and emerging formats. Incidentally, even if the Big 4 retain their fair share of online growth, online success does little or nothing to address their bricks & mortar surplus issues…

This has to result in losses in market share for the Big 4 – the only issue is the point of settlement..

All of this means that the requirements of the UK NAM role are changing, along with the relative importance of the Big 4 in supplier portfolios.

Time for a market-led change of emphasis at NAM level? 

Subscribers can access the implications and options for NAMs in the June issue of NamNews.

Multi-Channel Retailing - a business consulting role for NAMs?

John Nevens’ article in yesterday’s NamNews revealed an unanticipated consequence of the development of Multi-Channel Retailing: the resulting need for NAMs to be experts in all routes to consumer. 

This requirement, coupled with the need to place all initiatives within a continuous ‘time-framed’ strategy, can place an impossible burden on busy NAMs with barely manageable workloads.

But it can and should be done – the real issue is how?

Essentially, NAMs should see themselves as business consultants to the customer, providing a unique insight that answers the fundamental question in a buyer’s mind: How am I doing compared with the other guys? (They are looking for context)

A retailer/buyer is an in-depth but narrow expert in their own business, and a ‘permanent’ fire-fighting mode coupled with excessive buyer-churn can prevent them from taking a strategic view.

A NAM can provide solutions for these deficiencies in the buyer role, and transform relationships in the process.

As a business consultant that happens to carry a supplier’s bag, the NAM needs to be an expert in how the consumer can be helped to buy the category, however, whenever, and wherever they choose – a truly multi-channel approach to retailing…

However, it is not necessary to know as much as a dedicated expert in a particular channel.  The NAM is meant to be a broad but, of necessity, a relatively shallow expert in how their category functions and can be optimised in each of the different routes to consumer.

In other words, a NAM needs to know enough about a channel to be able to place their brand and its category in that channel in a way that meets consumer need and does not compromise other routes to consumer, especially that of the buyer in question. The NAM also needs to think short, medium and long-term in order to be able anticipate and respond to opportunities down the line..

It is for other people in the NAM’s business to take an overall view of the different roles of all channels for the brand, and label the channels invest, maintain or divest, as appropriate. It would obviously be unwise of a company not to involve the NAMs in these deliberations….

(I personally believe that being able to translate everything into cost and value, within an ROCE and commercial context, can then help place the trade initiatives within a strategic context and makes the NAM job manageable)

So, applying the NAM role in terms of broad, but shallow multi-channel category expertise, and combining this insight with the narrow, but in-depth expertise of the buyer can help the NAM to meet the increasing demands to create and sustain strategic rather than purely transactional relationships with retailers.

A small step on the way to fulfilling the new requirements of the NAM role identified by John…. 

Retailers' share prices - a useful KPI for NAMs?

Tesco shares have collapsed by 43%, Morrisons is down 33% and Sainsbury’s share price has fallen by 30% during the past 12 months, as anyone that matters, knows...

Given that most key executives are remunerated in part with share options, it follows that optimising the share price has to be high on the agenda in the mults. This means that understanding share price drivers can add another dimension to a NAM's insight, and negotiating repertoire...

First, the professionals want to ensure that the value of all the cash, stock and property owned by the company is worth more than the current share price, i.e. Market capitalisation.

Second, they try to get an estimate of future earnings, in order to judge the likelihood of getting some part of what remains after the other creditors have been paid.

All of this can be driven by the retailer's ROCE, the ultimate measure of profitability, a KPI that can be directly driven by the NAM's bag of brands...

Still feeling that the share-dimension pits you against the experts overmuch?

If so, it should be kept in mind that most shareholders and their advisers study open domain data in arriving at their perception of what a share is worth. Their experience of retailers as businesses is usually confined to shopping in the aisle, whereas NAMs actually work in the engine room, negotiating with the guys that drive the business. This means that a stock market-literate NAM can possess a level of insight that far exceeds that of a NAM limited to ‘the five selling-points that make our brand unique’.

Incidentally, one way of adding some immediacy to a NAM’s share-price sensitivity is for a supplier to authorise the purchase of £100 of shares in the NAM’s retail account, on expenses. Nothing beats owning a piece of the customer to add focus…

However, the NAM should be forbidden from owning much more than £100 worth, to avoid any temptation to use Trade Investment or improved credit terms to add value to the share price (!)

The Amazon KAM - A new way of Managing Major Customers?

News of Amazon’s latest issues with publishing giant Hachette and its authors, reveals the extent to which Amazon can affect markets in its aim to bring cheaper books to the public.

The row has come to a head because Amazon and Hachette have failed to agree new terms under which the online retailer can sell the publisher’s books. Amazon in turn is reducing its stock of Hachette titles and blocking pre-orders, which are vital to secure early sales and nudge a book up the charts.

For a good summary of the detail and implications, see Graham Ruddick’s latest treatment in The Telegraph.

Nothing like Amazon has happened before in terms of scale and influence. So perhaps it requires a different approach in terms of account management?

Obviously, Walmart is big and increasingly global, but Amazon has the capability of straddling the globe - albeit next day delivery might present some problems in the Amazonian jungle -, without the need for the same degree of ‘bricks & mortar’ infrastructure that would be required by a ‘walmart’ hoping to achieve the same coverage and access to consumers…

In fact, it could be said that Amazon is heading towards a 50% share of anything that can be sold anywhere, to anyone, at least…, and perhaps we should budget with that in mind?

This means that the traditional NAM/KAM model could be inadequate.

Traditionally, as you know, as in-house champions of their accounts, NAMs were seen as business managers of a customer-business-unit, often within a global context for that customer, charged with maximising sales and optimising long term profitability of the account, without compromising the company’s dealings with the customer in other countries, and with very little consideration of the impact on other  customers.

It was the job of senior management to ensure that each major customer received its fair-share of the action.

Amazon needs to be managed differently….

Whilst a company should never try to hold back a major customer’s growth in order to limit its share of the company’s business – in the current flat-line environment any growth should be cultivated – perhaps the role of the Amazon KAM & NAMs should be to not only enable Amazon to reach its full potential, but also be the in-house ‘educator’ to ensure that Amazon’s online disciplines and KPIs are applied to any other customers aspiring to compete online. In other words, Amazon standards should be used to raise the company’s total game, and to assess how trade support is apportioned among other members of the customer portfolio.

Amazon have found a way of growing in a flat-line environment and perhaps it is time for us all to learn how to optimise this new future...

Finally, it hopefully goes without saying that the Amazon NAMs should have an open-line dialogue with their Board-colleagues to ensure that immovable trading limits are set, and strictly maintained, as Amazon approaches what could be 50%+ of the company’s business… 

Ethics in selling: why an ethical approach always made sense, even in precedented times!

In these unprecedented times, the savvy consumer/buyer is no longer willing to outsource their decision-making to marketers, salesmen or retailers.

In buying a product/service, they are choosing a mix of Product/Service, Price, Presentation and Place that represents good value for money. In making the choice, they are factoring in a combination of product performance and integrity of the seller.

Any short-changing by the seller automatically makes the price seem expensive - a bad deal - causing the consumer/buyer to refuse to buy, or even litigate in some cases…

More importantly, the praise/complain ratio kicks in, whereby a satisfied customer tells one  friend, whilst an unhappy customer tells ten…

Ethics, apart, it surely makes sense to manage expectation down to a point where the customer always receives more than expected, and willingly comes back for more….

Our contribution to a discussion led by Peter Ramsden on the Key Account Managers Group

The NAM as cash manager - how Working Capital works...

Given the pressures on sales and profits, major suppliers have turned to improved management of their working capital as a source of cash in the business.

According to the latest  EY 2014 Analysis of Working Capital Management, reported in The Grocer, the world's nine biggest food and drink companies, improved their 'cash-to-cash' days by 15% in 2013.

As manager of the supplier-retailer interface, the NAM is in a position that impacts, and is impacted materially by, improvements in the use of working capital.

Essentially, as can be seen in the diagram, working capital is a combination of Current Assets - Current Liabilities, and ideally should be kept as low as possible in order to improve the ROCE.

A NAM can influence the amount of working capital by better forecasting and promo-planning, resulting in lower stockholding, and negotiating better payment terms to reduce the DSOs, all without jeopardising the business. 

Finally, the full EY Report gives a 13-point Action checklist for optimising Working Capital (more detail here) and I have highlighted those affected by the NAM.

EY 13 initiatives to drive working capital excellence:

1. Further streamlining of manufacturing and supply chains
2. Closer collaboration with customers and suppliers, enabling enhanced demand and supply visibility, improved forecasting accuracy and better supply chain reliability
3. Better coordination between supply, planning, manufacturing, procurement and logistics functions and processes
4. Improvements in billing and cash collections
5. More effective management of payment terms for customers and suppliers, including renegotiation of terms
6. Intensification of spend consolidation and standardization
7. Implementation of a larger, more unified shared-services organization
8. Increased use of VMI practices, enabling better ordering, production and delivery planning and scheduling for the supplier, and reduced inventory levels and risk of stock-outs for the customer
9. Alignment of business processes and information systems up and down the value chain to share real-time and accurate supply and demand information
10. Increase use of financing solutions as a way to provide attractive and flexible alternatives to customers and suppliers
11. Active management of the trade-offs between cash, cost, service levels and risks (choosing, for example, between customer payment terms and sales price rebates, supplier payment terms and early payment discounts, or inventory levels for consignment stock arrangements and customer service levels) that are sometimes required with various WC strategies
12. Implementation of more robust supply chain risk management policies,
13. Tracking and monitoring WC metrics

By the way, if you need pointers on optimising Working Capital, check out your major customers where, being a cash business, shoppers pay them in cash, whilst the retailer pays suppliers in 40+ days... In other words, retailers use negative working capital i.e. at any time they can have as little as £10 available to pay every £100 they owe...

Poundland getting serious, a new challenge in NAMland?

pic: City AM

News that the Pound shop leader plans to float in March, on the back of a new line-up of retail talent in the boardroom, and probably raising £700m in the process, means new resourcing issues for suppliers...  In other words, it is time to take the single-price discounters seriously.

Traditionally, whilst our marketing colleagues have little trouble assigning their best and most energetic talent to launching new brands, the allocation of our best NAMs tended to be on the basis of sales turnover, or in a few instances, net profit... Even more seriously, this allocation to the Big Four is often determined by career-minded NAMs that are unwilling to besmirch their CVs with anything less...

After all, 'looking after the poundshops' does not carry quite the same cachet as 'Technically I managed Sainsbury's in the afternoons, but my real job was opening up our top-secret UK multi-channel strategy' in job interviews...

The 17% CAGR of Poundland, and the 26% CAGR of Amazon are equivalent to Walmart's 40-years 25% Compound Annual Growth Rate that produced today's global No.1 player, and are not only setting new standards in new retail, but are also presenting a new basis for allocating account responsibilities of our best NAMs.

All things being equal, why not consider early growth rate as a way of identifying embryo major accounts, acknowledging if the formula is right, that profitability and scale will follow...

Whilst we are not quite suggesting that "suppliers should ditch 'no growth' supermarkets, in favour of high growth areas of the food market like online and discounters" (Booker's Charles Wilson, City Food Lecture), perhaps a fundamental shift in NAM responsibilities would help to keep several balls in the air?

Ten fastest growing jobs in US at risk from automation

The Atlantic reports a recent Oxford University study by Carl Benedikt Frey and Michael A. Osborne that calculated the odds of "computerization" for the 600+ jobs that the US Bureau of Labor Statistics tracks. They range from 96% automatable (office secretaries) to 0.9% (registered nurses).

Here are the ten fastest-growing jobs and the odds that robots and software will replace them:

1) Personal care aides: 74%
2) Registered nurses: 0.9%
3) Retail salespersons: 92% i.e. shop-workers
4) Combined food prep & serving workers: 92%
5) Home health aides: 39%
6) Physician assistant: 9%
7) Secretaries and admin assistants: 96%
8) Customer service representatives: 55%
9) Janitors and cleaners: 66%
10) Construction workers: 71%

Obvious food for thought, given that NAMs do not feature on the list....

In fact as Derek Thompson points out in The Atlantic article, computers are historically good at executing routines, but they’re bad at finding patterns, communicating with people, and making decisions, which is what managers are paid to do. This is why some people think managers are, for the moment, one of the largest categories immune to the rushing wave of AI.

Time for emphasising your skills at  finding patterns, communicating with people, and making decisions, and above all, avoid allowing the job to become dull, boring and repetitive, just in case...

Hat-tip to Andrew Sullivan

Creditors pay £1bn for retail failures, enough said?

Creditors, such as suppliers and landlords, are likely to have lost more than £1bn from the retail sector's 20 biggest insolvencies since the start of last year, according to the credit information specialist Company Watch, just published in The Independent.

This figure obviously represents just the tip of the iceberg, in that many smaller retail business, often below the radar of suppliers have also gone bust over the same period, with the evidence available in the level of  boarded-up high street outlets.

But are we using the correct KPI?

Incremental sales as a measure of Threat or Opportunity
As we all operate sales-based business-models, our only access to wealth generation is via the net profit on sales made to third parties. This means that when we count the cost to us and the value to our business  partners, it is best to calculate the incremental sales of the sum given or received.

Thus the above loss of £1bn would translate into incremental sales of £10bn, assuming all suppliers had a net profit margin of 10%...a mean achievement for many, in the current climate.

Application to the role of the NAM
Apart from being responsible for the early warning when a customer is in difficulties (demands for more credit, cash–based incentive, lack of compliance….) the NAM is also the one who has to generate the incremental sales via other customers when the liquidator intervenes. (Can you imagine anyone else generating extra sales?)

A reflex-calc for NAMs?
For this reason it is vital that NAMs calculate their company net profit margin and factor in the resulting incremental sales requirement when ANY money is invested in a customer, whether via free credit, settlement discount, trade funding or deductions.

In other words if your company makes a net margin of 5%, you need incremental sales of £20k for every £1,000 invested in a customer… (£1,000/5) x 100, which needs to be  a reflex-calculation for every pound spent…

Incidentally, on the Opportunity side, your retail customer with a net margin of 2.5% needs to appreciate that every £1,000 you invest in their business represents incremental sales of £40k…more valuable than they think, in these uncertain times?

(For this reason we have added an automatic incremental-sales-multiplier for supplier and retailer to many of NamCalc’s 32 tools) 

Beth Davis on courage in the NAM role?

KamBlog is meant to be a thought-provoker for National and Key Account Managers, treating them like CEOs, Managing Directors of business units, applying all the skills of a business leader, striving against the odds for growth in flat-line markets, with the added restraint of responsibility without authority...in practice, NAMs that make a difference know that real authority comes from a proven track-record in developing and implementing a profitable customer strategy, especially in crazy times…..

It could be said that profitability and ROCE are issues for others higher up the company hierarchy, that in unprecedented times, NAMs need to focus on keeping the fires down, and leave the bigger picture to the bigger artists...

We happen to believe that without a big-picture context, continuous fire-fighting limits, rather than stimulates, personal growth. Use of numbers shortens the odds, whilst taking a chance without running the numbers smacks of recklessness…

But the real issue is courage…with the bar raised higher with every high street casualty…

However, in the buyer-seller day-job, fighting for time and even risking humour in the face of ever shortening attention-spans, working from the bigger picture can be scary in that, by encouraging the use of numbers and their impact on the retailer’s P&L, our ideas and recommendations can be quantified.

This means that, in unprecedented times, where history is of little help, a buyer following the advice will sometimes hold the NAM accountable for good results, and always in the case of a bad outcome.

It takes courage to persist until signs of success begin to emerge, increasingly conscious of the fact that a better than average promotion becomes a higher hurdle for the next initiative, especially when we apply the numbers and risk an ROI analysis…

Eventually, however, this continuous drip-feed of quantified initiatives begins to make an impact on joint-profitability, while others focus on nasal cleanliness and await the emergence of new guidelines when markets eventually settle down..

Meanwhile, the proactive NAM has the courage to focus on output rather than input, in a continuous stream of creativity that over time, results in the growing satisfaction of perhaps a few good ideas in retrospect…

Beth Davis, was old actress who often quipped about the difficulties of growing older…

Had she lived a little longer, she might even have said:                                                                      ‘National Account Management ain’t for sissies…’

Walmart bases training on British military academies!

According to People Management, Walmart has turned to British military leadership training expertise at Sandhurst, Lympstone and the Ministry of Defence’s Staff College to speed up the development of its managers in America.

However, before eager NAMs reschedule their weekend leisure, the retailer’s leadership training does not include assault courses or shooting exercises, instead it emulates other areas of military academy learning.

Promoting on performance, the academy also works to push people beyond their current capabilities, so attendees are not just trained for their current job, they are trained for the next rank up and the one beyond that and for two more levels beyond that.

In other words, rather like our NamNews training, where even new NAMs are treated like CEOs, as many of today’s ROCE-based leaders will confirm, by personal example…

Google, Amazon, Apple and Facebook - the new big four in retail...

We shop on phones, compare on Google and ask our Twitter-mates what they think. Even more importantly, we also have the ability to complain to 100 friends when a supplier/retailer misses our expectation…
This revolution in shopping behaviour is causing traditional retailers and suppliers to play catchup with multichannel marketing, or else…

Whilst historical purchase data reveals what we bought, social media reveals why and indicates the future. Think about it, we have been waiting 30 years for this insight…now we have it, are we doing enough?

The real opportunity
In fact, do we accept that the real  breakthrough hinges on the willingness and ability of the retailer to respond accordingly. For suppliers, the key issue is whether it is easier for traditional retailers to remodel the business based upon shopper-need, or for the new big four to fulfil the shopping transaction, profitably.

When I break from writing this KamBlog post to accept delivery of the Amazon book I ordered yesterday, at a 15% discount, while hesitating to drive to the nearest Tesco for a bottle of breakfast milk, somehow the answer suggests itself…

Just the first layer?
The multichannel e-commerce combination is obviously making it easier to buy, but I believe that as suppliers we are simply skimming off the first layer…

The real pay-off will result from re-engineering the entire brand offering to better meet consumer-shopper need, arriving at a minimal compromise between what a consumer is trying to tell us they require and our ability to provide the solution, better than the available competition.. In other words, building trust by delivering more than it says on the tin…always.

What this means for NAMs
This process includes adjusting our channel strategies to optimise their strengths, via NAMs that have the imagination to see that the accounts with real career-potential are the new retailers in emerging e-channels.
Sure, making real change in uncertain times is an uphill struggle, especially having to negotiate more with your own colleagues than with the customer.

However, given that we learn more from risk, mistakes, uncertainty and overcoming resistance (a buying signal?), numbers-based NAMs that are prepared to swim against the tide somehow move faster...

Roy of the Rovers - a lesson in fair play?

Last week’s demise of The Dandy brought to mind another childhood source of entertainment and insight, Roy of the Rovers.
Like most other 10 year olds, each week I eagerly awaited the arrival of The Tiger comic, featuring the life and times of Melchester’s star player.

Fair Play?
However, on one shocking occasion, a rival player, in full view of the reader, but out-of-sight of the referee, actually flicked the ball with his hand to enhance his shot. This unlawful move so outraged me I rapidly scanned the rest of the strip in vain for evidence that the move had been noted as the subject of a penalty, at least..
My sense of injustice was such that for the next five weeks I was on the newsagent’s door-step by opening time, awaiting delivery of the latest edition to check whether the authorities had taken any action..

Gradually it dawned on me that perhaps football, life and even business itself was not always fair.

I then began to wonder if there were other potential career-enhancing insights available via Roy’s storyline?

A source of continuous education…?
Unlike more gently-reared modern players, Roy enjoyed a 39 year playing career, until the loss of his foot in a helicopter crash in 1993. To keep the strip exciting, Melchester was almost every year either competing for major honours or struggling against relegation to a lower division, allowing repeating opportunities for readers to develop their numeracy skills, especially in calculating the odds in each scenario.

Planning & focus?
The strip followed the structure of the football season, thus providing  great awareness of deadlines, the need for planning and teamwork, but especially the ability to optimise output within the time constraints of a match, against rivals intent upon minimising the impact of such endeavours.

Global reach?
Geographical insight was enhanced via the team’s foreign travel. In the several months each year when there was no UK football the most common summer storyline saw Melchester touring a fictional country in an exotic part of the world, often South America, where they would invariably be kidnapped and held to ransom.

Negotiation against the odds?
During the first ten years of his playing career, Roy was kidnapped at least five times. This obviously enhanced readers’ negotiation and financial skills, helping them to distinguish cost and value of experience and longevity in a high-output career…

Career application?
Given the benefits of this source of inspiration and early induction, readers that later chose a NAM career appeared to arrive ready-made, exhibiting the ability to demonstrate "real 'Roy of the Rovers' stuff", displaying great skill, or results that went against the odds, in their dealings with the UK trade….

And often without the benefit of much formal training, curiously enough…

Just a virtual Hut?

Following the success of Amazon, it is unlikely that many will underestimate the potential of The Hut, especially given the direct involvement of Terry Leahy and now Stuart Rose…
For those who may have been a little distracted by the 7 years preparation for the Olympics, The Hut sells fast moving consumer goods that are non-perishable with high levels of repeat purchase, and premium luxury products with higher average unit sales and strong consumer loyalty.

Investment and backing
The business has expanded greatly since their launch in 2004, and with the help of c£75m (raised over three years from both individual investors such as Terry Leahy and financial institutions).

Key websites
This investment capital has funded the organic launch of websites across a number of sectors including clothing, footwear, bags and accessories plus a number of acquisitions including gifts, health & beauty HB1, HB2, HB3  and sports nutrition, a total of 16 web-sites.
The Hut Group’s huge customer base is split between Consumer, Prestige and Lifestyle with fashion falling under both Consumer and Prestige

Making The Hut real for suppliers 
The issue for suppliers is how to justify treating the Hut as a major customer, with a share of attention and NAM-talent far in excess of its actual size, when many suppliers  allocate resource and talent based on historical size of business.
These same suppliers normally have no problem allocating their best brand managers to embryo products, leaving their lesser talent to maintenance marketing of established brands.

Treating retailers and brands ‘equally’
This all goes back to the need to treat customers as equivalent business units to brands of the same size, never forgetting that in the end brand equity is sacrosanct.
However, if a customer generates 10% of sales and profit, and a brand represents 10% of sales and profit, then surely they require equivalent resourcing, at least… The same holds for potential shares of the business
Finally, if anyone at board level lacking a sales background needs convincing, it might be worth pointing out that a major customer represents a gateway to the consumer, and is in a position thereby to concentrate or dilute the brand message, depending on how well it appears to fits with the store offering…

The Hut is already too real to either ignore or short-change in terms of resourcing…  

Delegating NAM responsibility?

                                                                                                                     pic: BBC
Westfield Stratford shopping centre was displaying huge banners welcoming visitors from all over the world for the Olympics. The Council for Arab-British Understanding (Caabu) said the words were back to front and not joined up as they must be in Arabic.

The rail firm First Capital Connect made the same mistake when it sent posters to 13 stations printed in English and seven other languages intended to warn people not to leave items unattended.

Delegating to machine translation...
Luckily the computer-produced Arabic message was incomprehensible rather than rude but it does illustrate the problem of having to retain responsibility for the downside when delegation goes wrong, especially when the delegator is busy with the next fire…

NAM: Responsibility without Authority
Despite the progress in terms of tools and process, the NAM role still works best by taking full responsibility with very little designated authority...
While others await the completion of the definitive organisation chart and job description that acknowledge the status of Account Management, pro-active NAMs know that the job thrives on loose definition, with all necessary authority coming from a clear Account Strategy, agreed by CEO, and truck driver...

How it works in practice
This ‘job-box without walls’ allows the NAM to move persuasively at all levels, co-ordinating all key functions in both their own organisation and that of the customer.
Having to act without designated authority, the NAM is forced to use persuasion, in turn based on understanding, identifying and satisfying the job needs of each job-holder, and representing all desired output in terms of that colleague’s role optimisation, with unselfish allocation of genuine praise and credit.
This can be very frustrating for some NAMs given that ‘we are all working for the same xx company’, with the loosely defined NAM taking full overall responsibility for all to do with the customer, while colleagues apparently work within the comfort of their own clearly defined 9-5 boxes, especially in these unprecedented times....

Need a way out?
If this all becomes all too much, the frustrated NAM should try to squeeze in evening classes in Production, Finance or Marketing and transfer into one of these ‘safer’ jobs...
Meanwhile, pro-active NAMs who persist 24/7 in the ‘responsibility without authority’ route often find a soul-mate, not within their own company but rather in the role of the buyer, who in practice works in a mirror-image of the NAM role…

So perhaps some evening classes in buying might help?   

Economies of scale: Customers Looking For Savings From Suppliers

Yesterday’s NamNews’ item on Morrisons’ alleged demands for £500k savings from some suppliers produced our top visitor-count for the day.  
However, the issue is not whether larger quantities mean greater savings, but whether the discount demanded by the buyer matches the savings made by the supplier.

'Economies of Scale'

As you know, there are many potential sources of economies of scale, depending on the company and category in question, including:

- spreading administrative overheads over a bigger operation/quantities

- purchasing power to get better deals from suppliers of raw materials, packaging, etc

- lower costs in manufacturing - e.g. if longer runs result in lower costs per unit produced

- greater delivery quantities leading to lower distribution costs

- cross selling synergies

Any such savings will obviously depend upon your category and factory capacity/asset-utilisation levels.

The incremental sales route to fair-share negotiation

However, either way, the ‘incremental sale’ calculation allows suppliers to approach the problem from a more productive angle…

In other words, if a customer demands £500k cost-price reduction from a supplier netting 7% on the business with that customer, a ‘back-of-envelope’ calculation says the supplier needs incremental sales of £7.1m to cover the cost (i.e. £500k/7 x 100), unless you can identify and measure some real scale savings, and reduce the incremental sales requirement appropriately.

The basis of your costing-model

Any credible negotiation stance means that you will need to reveal the basis of your costing-model ( i.e. even tougher negotiation with your colleagues?) in order to be able to quantify and argue with the buyer that there is a shortfall between the actual savings and the discount demanded, an additional discount that will not realistically be covered by the anticipated incremental sales. 

Quantifying in this way may result in something approaching a fair-share solution..

Simply saying no is not an option

Q1. Why not substitute your figures and see how much extra you need to sell in order to break-even on the new deal?

Q2. Some might argue that explaining scale economies to a customer is not the job of a NAM/KAM. If so, please explain to us mere earthlings why the global financial crisis is diminishing, rather than enriching, the scope of the job…

Bankers & Politicians, the remaining ‘trust’ evaporates?

Given the latest global LIBOR banking scandal, with politicians playing belated catch-up, the one certainty is that savvy consumers are becoming more entrenched in their determination never to outsource their product-buying decision-making to third parties like suppliers and retailers, ever again. Apart from the ‘obvious’ irreversible damage to the City and traditional banking brands (and unprecedented opportunities for the Co-op bank, Tesco-bank and other retailers that carry little banking baggage. They simply need the skill to count reliably and meet consumer needs) this new ‘unprecedented turmoil means that suppliers have to increasingly deal, and be seen to deal, in business reality.

A wake-up call to end all wake-up calls?

This current wake-up call from 30 years of credit-fuelled demand has already lasted four years (!) and as a result we are embarked upon 10-15 years of flat-line growth, to be overseen and driven by increasingly savvy consumers, who will be satisfied with nothing less than demonstrable value for money…a new culture that is spreading back up the supply-chain…with de-stocking simply one symptom.

With EU unemployment at 15%, rising to 25% in the age segments that matter, consumers, suppliers, retailers and whole countries deleveraging (i.e. using money to pay down debt rather than investing/spending), there will simply be little or no basis for real growth, anywhere, for a long, long time.

The new business reality

This is the new business reality…an opportunity for anyone prepared to face up to it…

In fact, in the current climate business success, and even survival, is about being able to optimise reality.  Indeed, if you do not face up to reality in business, others will do it for you…  Hence the reason why bankers and politicians gradually increase their influence on a faltering business until they eventually officiate in its liquidation. And the LIBOR crisis is currently demonstrating the reliability and trustworthiness of both…

Like never before, reality now counts, bigtime, and the responsibility for dealing in reality is now in your hands, where it belongs, and should be kept…

Q: Is this really the responsibility of NAMs & KAMs?

Making ideas work in the KAM role

In the same way that objections should be regarded as buying signals, so too should degree-of-resistance be seen as an indicator of ‘goodness’ in the spread of ideas. Fear of plagiarism can also be a constraint, however, as per Howard Aiken:  "Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats"

Have a persistent weekend, from the Namnews Team!

The future is now, for you and the customer

Today’s Guest KamBlogger, Jeremy Blain, Managing Director of Cegos Asia Pacific, explains how to get started, fast…

Globalisation, mobilisation, consolidation, collaboration, communities, technology, social networks, the Cloud – a lot happening in the world of business today, a lot more jargon to contend with,  and a lot of it enabled by whizzy new technologies and applications.

The new workforce

Just consider….in less than 4 years half of the Global workforce will be made up of Generation Y, and in less than 8 years Gen Z will be in the workplace. They will expect to work, communicate and learn in very different ways. These are the people who are comfortable with technology and its uses. These people may be your customers and colleagues.  It is up to the rest of us to stay in the game and get savvy, quickly.

Entry level jargon

So if you don’t know your Twitter from your Tumblr, your Pinterest from your Storify, your Gowalla from your Foursquare, your Doodle from your GroupMe, your elearning from your immersive simulation and if you are not yet married in Second Life or have some kind of Avatar……you may need to consider it!

Essential catch-up action, fast 

To get you started there are a couple of short white papers* on new technologies to help you learn, and how to get the best out of social networks. There’s always trusty old Google to pop some of these names into. Go on, grab a coffee and explore.

You never know what you might find……or what might find you…

* See Jeremy’s free white papers:

-   Learning through social and informal networks 2011

-   The rise of virtual learning 2011

Jeremy Blain (jeremy.blain@cegos.com.sg)