- Email: [email protected]
Payoffs from national account management
coun
anage
Thomas H. Stevenson
Recent articles [Stevenson and Page, Industrial Marketing Management8,94-!&J (1979) and Stevenson, Industrial Marketing Management, 9, 133 -136 (i 980)] discussed how industrial marketers determine if their firms can use national account marketing, and how industrial marketers determine which customers should be classified as national accounts. This article focuses on the advantages that an industrial marketer can achieve through thp use of national account marketing. The information presented here is based on afield stud)! of national account marketing,
large sellers. The membership roster Account Marketing Association lists co Union Carbide, American C~I, Clrlin, house, Celanese, aad others among membership of 250. Yet, although wide1 been little research to help industrial marketers the value of national account. marketing in environments. This article deejcriks the fi empirical study of national account rn~~t lyzed the advantages accruing to marketers that procedure.
NATIONAL ACCOUNT MARKETING USER ADVANTAGES National account marketing is widely used by industrial marketers. Basically, it means that very large and/or important customers are afforded special Weatment and special status by the national account marketer. Once designated as a national account, the customer will generally be called on by a special sales force, and may receive inventory concessions, better prices,, and special service arrangements, for example. Users of national account marketing are generally Stevenson. Associate Professorof of North Caroliinaat Charlotte.
Industrial Mwkcting Mmrrgenrent 10, I 1%I24 ( 1981)
@ Elsevier North Holland. Inc., 1981 52 VanderbiltAve., New York, New York 10017
Four hypotheses, regardi industrial marketers from u ing, are discussed here. T came primarily from an earlier tional account marketing (I 1. Th users of national account m velop closer working relati6 to improve internal coo&n garding major customers, to ae sales at and services to major plish more productive call tunities. hll of this would
and profits with customers cl;t.&ied as national accounts. Thus, the following hypothesis were examined to refine previous suggested payoffs resulting from the use of national account marketing. Furthe:, they were designed to provide quantitative data which could be examined through! statistical hypothesis testing. The hypotheses considered are the following: Hypothesis 1. The introduction of national account marketing results in an increased share of sales at national accounts. Dollar profits increase from accounts Hypothesis 2. designated as national accounts. Hypothesis 3. Two-way communication between the seller and the buyer is improved by the national account system. Hypothesis 4. Internal communication of the seller regarding national accounts is improved in comparison with nonnational accounts. MElliODOLOGY The data base for this study/ came from personal interviews with 34 upper level marketing executives at 33 large industrial firms. Of the 34 interviews conducted, 23 were conducted at companies presently using national account marketing, 4 were conducted at companies that had previously used national account marketing and had stopped using it, and 7 were conducted at compmies that had never used the procedure but were familiar with it. In order to provide homogeneity within the sample, users and nonusers of na”cionalaccount marketing were matched by size and S .I.C number where feasible. However, since the bulk of the data regarding advantages of national account marketing came from the users, the hypotheses discussed here were tested via information gained from the 23 users of national account marketing. Further, the organizational level and experience of the respondents make their insights particularly relevant, even though the sample size is relatively small.
THOMAS H. STEVENSON is Asslociate Professor of Business Administration at the University of North Carolina at Charlotte. He received his academic training at Syracuse University (B.S. and M.B.A.) and Case Western Reserve University (Ph.D.). Dr. Stevenson is the author of severall articles and cases in the area of industrial marke!ing. -~---~~~-_~____---~_-__-_ ___---____-_-_-__-____ --c_ -- -____
120
TABLE 1 peroeiw Mvantages to the Selling Company in Using Account Marketing (N = 23)
Advantage Mentioned -1. 2. 3. 4. 5. 6. 7. 8. 9.
Irtcrtxfsedsales increased profits Increasedmarketshare Improvedcusfomer communication Improvedcustomercoordination Improvednew pmduct acceptance Improvedforecasting Better position with growth company Maintainposition
Nationat
Percent of Respondents Frequency _-____x-_-__-__ 21 19 17 17 7 7 4 4 2
91 83 74 74 30 30 17 17 9
FINDINGS Table 1 shows the responses of the users of national account marketing regarding the advantages to be obtained through use of the procedure. The data were generated by asking, “Why did your company adopt national account marketing ? ” After the respondent replied, additional reasons (mentioned by other respondents) were suggested to determine if they were appropriate for the company in question. All 23 respondents indicated that a key reason for using national account marketing was the advantages that would accrue to their companies if they did so. Table 1 indicates that companies gain other advantages in using national account marketing beyond those hypothesized here, i.e., increased sales share, improved profitability, improved two-way buyer-seller communication, and improved seller communications regarding national accounts. These additional reasons will be examined after a review of the originally proposed hypotheses. Hypothesis 0: Increased Share of Sales Seventeen of the 23 users of national account marketing indicated that they haJ experienced an increase in share of sales once they began to designate and treat key accounts as national accounts, i.e., once they began to use national account marketing. This response rate (74%), when compared to a chance rate of SO%, was found to be significant at the 0.01 level using a one sample test of proportions. Thus, the null hypothesis is rejected and it is concluded that share of sales tends to increase at accounts designated as national accounts. An additional consideration suggested by this hypothesis is the idea that sales will increase in an absolute sense, as a result of classifying an account as a
national account. Of the 23 respondents, 21, or 91%, indicated that a sales increase did in fact result Th!t; response is significant at the 0.0001 level, which strongly indicates that sales do increase at accounts designated as national accounts. Of two companies that did not indicate sales growth as an advantage in using national account marketing, one indicated that sales maintenance was the advantage, the other suggested share rather than sales was the factor of benefit. I3oth respondents participate in the automotive ‘ ‘after’ ’ market. Hypothesis 2: increased Profits Of the 23 companies responding, 19 (or approximately 83%) indicated that profits increased from accounts designated as national accounts, based on a comparison of profits before and after such designation. When compared with a chance rate of 50%, 83% is significant at the 0.01 level using a one-sample test of proportions. Therefore, the null hypothesis is rejected. and the alternative hypothesis, that sales increase at accounts designated as national accounts, is accepted. In the four cases where profit increase was not mentioned, the indication was that this may or may not be a factor, depending on the actions of price and competitors at the accounts. Hypothesis 3: Improved Two-Way Communication When comparing communication at national accounts with nonnational accounts, 17 of the 23 respondents (74%) indicated improved two-way communication with the national accounts. When compared with a chance rate of SO%, 74% is significant at the 0.01 level using a one-sample test of proportions. Thus, the alternative hypothesis, that two-way communication between the seller and the buyer is improved by the national account system, is accepted, Table 2 cross classifies ‘ ‘improved two-way communication with number of customer accounts. Although chi-square and contingency coefficients cannot be used due to small sample sizes (and low expected cell fiequenties), Table 2 would seem to indicate that where large total numbers of accounts are involve& noticeable improvement can be seen in communication with accounts classified as national accounts. In a similar manner, Table 3 shows that two-way communication improvement is more pronounced where sales forces are large (over 150). Thus, where there are many accounts and many salespeople needed to handle them, required two-way communications tend to improve through the use of national account marketing.
TABLE 2 Improvement in Two-Way Communication Classified by Total Number of Accounts Two-Way Commumcatlon Number of Accounts 10,000 and under
Improved 8
Total
.._
1’oW _
5 (38%)
13
I (12%)
8
@=6) 15
6
21”
(62%) 7
Over 10,000
Not lmprovad ____---_
“Totals to less than 23 because 2 companiesdid not indicate total nom of accounts.
Hypothesis 4: Improved Internal Communication Improvement in seller internal communication, however, was found to occur in only 7, or 30%, of the cases, which is clearly not significant. Even if this figure is combined with the response of improved ability to forecast due to national account marketing (perhaps another way to interpret improved internal coordination), the total is increased to only 10 companies (43 responses (one respondent indicated that both fomas!’ ability and internal coordination had improved) or sli Even with the inclusion of improved forecasting. 48% is not significarlt when compared to a chance rate of 5OQ using a one-sample test of proportions.Thus it cannol~ concluded that an a&a&age of national account m&eting is improved internal seller coordination at natianal accounts. DISCUSSION is clear from the discussion of these hy there tends to be a strong relationship between tion of national account marketingand improv sales, market share, profits, and commu tween buyer and seller. With regard to improvewmtsntin It
TABLE 3 Improvement in Two-Way Communication Clad Sales Force
by S
sales, a seeming dispartity in the data ocsurswhencompacing sales increases (21 of 23 respondents) to share of sales increases (17 of 23 responses). Since shateof sales refers to sales at the specific national account, it was expected that a sales increase would result in a share increase. However, this implies a static market. A more realistic situation would suggest a growth situation where overall sales increased to all suppliers and, thus, the relative shares remained constant. This could indicate that classifying the customer as a national account enabled the seller to participate in sales growth and to maintain his position, rather than to lose it to other suppliers. The data indicate that in three of the four instances where sales increased but share did not, the respondents mentioned that the customers had requested classification as national accounts. Without such classification, sales and share might have declined. The fact that internal communication regarding national accounts is not improved in comparison with nonnational accounts is not surprising. Normatively speaking, a reason for adopting a national account system is to improve internal coordination of key accounts. However, such improvement is usually not accomplished rapidly. Those companies that indicated improved communication, therefore, seemed to have either had a fairly long acquaintance with national account marketing or applied it to a relatively homogeneous group of products in their company. Others that adopted national account market-
account, and improved new product acceptance. The responses of maintaining position and participating in growth were elicited from six different companies. The common denominator among them (in five of the six cases) is the fact that customers had requested treatment as national accounts. Thus the threat of loss of business or the reward of a growth in sales may have been used as leverage by the customer to attain national account classification. ; New product acceptance was not found to be faster when using national account marketing, perhaps for two reasons. First, some companies indicated that they purposely chose smaller nonnational accounts for new product introduction in order to avoid embarrassment or undue conflict at critical accounts. A second reason for slower introduction at national accounts was their generally larger size and internal complexity, which tended to make product introduction there more time consuming than at smaller, nonnational accounts. REASONS FOR AVOIDING NATIONAL ACCOUNT MARKETING Given the number of advantages that seem to be associated with the use of national account marketing, one might reasonably ask why $ome companies elect not to use the procedure or have used it and dropped it. Table 4 shows reasons for not using national account marketing
a threshold level necessary to support national account -marketing ing may not have felt any severe communications problems prior to its use or, due to the general complexity of the business, may not be able to see much improvement, either‘ due to other confounding factors or to the small percentage of accounts handled on a national account basis (the modal percentage of accounts handled on a na.tional account basis as a percentage of all company accounts is less than 1%). The three remaining advantages shown in Table 1 that were not specifically addressed in the hypothesis section were the advantage of maintaining position at the account, participating in presumed growth at the national 122
given by firms in this study. Although small sample size precludes generalizations to all industry, some interesting insights can be gleaned from the table. Most of the reasons displayed in Table 4 are selfexplanatory and do not require elaboration. In and of themselves, none is statistically significant, nor does there appear to be any particular industry-wide pattern evident. What is important here, however, is the support that this information provides for those considering the use of national account marketing. For example, the concept of a threshold level necessary to support national account marketing, and referred to in earlier articles 12, 31, is
TABLE 4 Reeaons for Not Using Netional Account Marketing Previously Never Used Used Total National Account Marketing -
Reason
Lack of qualified people to act as national account sales personnel. Use of decentralizedorganizationalsetup made national account marketing unworkable. No need for nptional account marketing-local users are decision makers (accountcoordination not needed). 4. National account system would merely duplicate local person’s excellent knowledge and rapport. 5. Small sales force did not requireoverall nationalaccount marketingto improvecoordination. 6. Use of dealers almost exclusively-fear that national account marketingcould upset this arrangement. 7. Customersdo not repeatedlybuy in large quantities. 8. Customersuse centralized decision making, branchesare not important(accountcoordination not needed). 9 Seemed to contributeto general problem of price attrition(customers lump dissimilar purchases). 10. Company not large enough to supply a significant share of buyer requirements. 11, Failed to correctly identify nationalaccounts \ and key contacts in those accounts. 12 All customers treated virtually alike, no price or service distinctiotls due to volume. 13 Droppedbecause it seemed synonymous with the concept of trade relations. 14 Productline of seller too nmow
reinforced here. Responses such as “product line of seller too narrow, ” “customers don’t repeatedly buy in large quantities, ” “small sales force, ” and “selling company not large enough to supply significant share of buyer requirements, ” all point to and support the “threshold” concept. Again, for national account marketing to be successful, a particular threshold level of buyer and/or seller operations must be achieved. The question of centralized versus decentralized operations as an appropriate organiiational climate for account marketing is brought out in Table 4, in reasons 2, 3, and 8. The centralization of buyer purchasing decisions was previously discussed as an important factor in classifying a customer as a national account [2]. Decentralization in the seller’s organization might make it difficult to use national account marketing if each product line and/or market had its own sales force. Generalizations beyond this are difficult without more data.
0
4
4
2
2
4
0
2
2
0
2
2
2
0
2
0
2
2
0
2
2
1
1
1
1
0
I
0
1
I
1
0
I
0
!
I
I 0
0 I
I 1
Perhaps the key reason, noted in Table 4, for not using national account marketing is the lack of qualified people ‘to act as national account sales personnel. Of those that indicated that their staffs were deficient in this regard, half also indicated tha,t they -gere actively working to correct this defect by either hiring people of the desired caliber or developing such people internally in order to move into a national account strategy. Not only did this indicated continued in.terestamong the business community regarding national account marketing, but it also indicated their understanding of the degree of sophistication and expertise required to successfully imp such a program. This is entirely consistent with the information reportedby the Conference Board study [ 1j in noting that companies using national account marketing ‘%ok for persons wiithexceptional experience and demonstrated abilities. ’ ’ Comments, in that study, from actual users of national account marketing support this 123
opinion, and describe national accounts peoples as “star salespeople, ’ ’ ‘ ‘hard-hitting and “fast moving, ” “heavyweights, knowledgeable in all areas of operations. . I ” [l]. Many similar statements were gleaned during interviews for the present study. Thus a key reason for not being a national account marketer is the a recognition that personnel are not qualified to institute such a program. SUMMARY AND CONCLUSIONS In summary, the key benefits to be derived from use of national account marketing are increased share of buyer’s purchases, increased sales, increased profits, and improved communication at national accounts. Other benefits, such as improved internal coordination of key ac-
counts, improved new pmduct acceptance, and possible growth potential, are less frequently attained, according to the results generated here. Yet the benefits described here are not attainable by all industrial marketers. This, and previous articles, suggest that careful attention to both buyer and seller chlaracteristics is necessary if national account marketing is to be implemented successfully. REFERENCES Pegram, Roger M. ) Selling and Servicing the National Account. The ConferenceBoard, New York, 1972. Stevenson, Thomas H., Classifying a Customer as a National Account, Lsdustrial Marketing Management 8, 1~3- 136 ( 1980). Stevenson, Thomas H., and Albert I.,. Page, The Adoption of National Account Marketingby IndustrialFirms, The Industrial Marketing Mannlgemeru8, 94- 100 (1979).
anage
Thomas H. Stevenson
Recent articles [Stevenson and Page, Industrial Marketing Management8,94-!&J (1979) and Stevenson, Industrial Marketing Management, 9, 133 -136 (i 980)] discussed how industrial marketers determine if their firms can use national account marketing, and how industrial marketers determine which customers should be classified as national accounts. This article focuses on the advantages that an industrial marketer can achieve through thp use of national account marketing. The information presented here is based on afield stud)! of national account marketing,
large sellers. The membership roster Account Marketing Association lists co Union Carbide, American C~I, Clrlin, house, Celanese, aad others among membership of 250. Yet, although wide1 been little research to help industrial marketers the value of national account. marketing in environments. This article deejcriks the fi empirical study of national account rn~~t lyzed the advantages accruing to marketers that procedure.
NATIONAL ACCOUNT MARKETING USER ADVANTAGES National account marketing is widely used by industrial marketers. Basically, it means that very large and/or important customers are afforded special Weatment and special status by the national account marketer. Once designated as a national account, the customer will generally be called on by a special sales force, and may receive inventory concessions, better prices,, and special service arrangements, for example. Users of national account marketing are generally Stevenson. Associate Professorof of North Caroliinaat Charlotte.
Industrial Mwkcting Mmrrgenrent 10, I 1%I24 ( 1981)
@ Elsevier North Holland. Inc., 1981 52 VanderbiltAve., New York, New York 10017
Four hypotheses, regardi industrial marketers from u ing, are discussed here. T came primarily from an earlier tional account marketing (I 1. Th users of national account m velop closer working relati6 to improve internal coo&n garding major customers, to ae sales at and services to major plish more productive call tunities. hll of this would
and profits with customers cl;t.&ied as national accounts. Thus, the following hypothesis were examined to refine previous suggested payoffs resulting from the use of national account marketing. Furthe:, they were designed to provide quantitative data which could be examined through! statistical hypothesis testing. The hypotheses considered are the following: Hypothesis 1. The introduction of national account marketing results in an increased share of sales at national accounts. Dollar profits increase from accounts Hypothesis 2. designated as national accounts. Hypothesis 3. Two-way communication between the seller and the buyer is improved by the national account system. Hypothesis 4. Internal communication of the seller regarding national accounts is improved in comparison with nonnational accounts. MElliODOLOGY The data base for this study/ came from personal interviews with 34 upper level marketing executives at 33 large industrial firms. Of the 34 interviews conducted, 23 were conducted at companies presently using national account marketing, 4 were conducted at companies that had previously used national account marketing and had stopped using it, and 7 were conducted at compmies that had never used the procedure but were familiar with it. In order to provide homogeneity within the sample, users and nonusers of na”cionalaccount marketing were matched by size and S .I.C number where feasible. However, since the bulk of the data regarding advantages of national account marketing came from the users, the hypotheses discussed here were tested via information gained from the 23 users of national account marketing. Further, the organizational level and experience of the respondents make their insights particularly relevant, even though the sample size is relatively small.
THOMAS H. STEVENSON is Asslociate Professor of Business Administration at the University of North Carolina at Charlotte. He received his academic training at Syracuse University (B.S. and M.B.A.) and Case Western Reserve University (Ph.D.). Dr. Stevenson is the author of severall articles and cases in the area of industrial marke!ing. -~---~~~-_~____---~_-__-_ ___---____-_-_-__-____ --c_ -- -____
120
TABLE 1 peroeiw Mvantages to the Selling Company in Using Account Marketing (N = 23)
Advantage Mentioned -1. 2. 3. 4. 5. 6. 7. 8. 9.
Irtcrtxfsedsales increased profits Increasedmarketshare Improvedcusfomer communication Improvedcustomercoordination Improvednew pmduct acceptance Improvedforecasting Better position with growth company Maintainposition
Nationat
Percent of Respondents Frequency _-____x-_-__-__ 21 19 17 17 7 7 4 4 2
91 83 74 74 30 30 17 17 9
FINDINGS Table 1 shows the responses of the users of national account marketing regarding the advantages to be obtained through use of the procedure. The data were generated by asking, “Why did your company adopt national account marketing ? ” After the respondent replied, additional reasons (mentioned by other respondents) were suggested to determine if they were appropriate for the company in question. All 23 respondents indicated that a key reason for using national account marketing was the advantages that would accrue to their companies if they did so. Table 1 indicates that companies gain other advantages in using national account marketing beyond those hypothesized here, i.e., increased sales share, improved profitability, improved two-way buyer-seller communication, and improved seller communications regarding national accounts. These additional reasons will be examined after a review of the originally proposed hypotheses. Hypothesis 0: Increased Share of Sales Seventeen of the 23 users of national account marketing indicated that they haJ experienced an increase in share of sales once they began to designate and treat key accounts as national accounts, i.e., once they began to use national account marketing. This response rate (74%), when compared to a chance rate of SO%, was found to be significant at the 0.01 level using a one sample test of proportions. Thus, the null hypothesis is rejected and it is concluded that share of sales tends to increase at accounts designated as national accounts. An additional consideration suggested by this hypothesis is the idea that sales will increase in an absolute sense, as a result of classifying an account as a
national account. Of the 23 respondents, 21, or 91%, indicated that a sales increase did in fact result Th!t; response is significant at the 0.0001 level, which strongly indicates that sales do increase at accounts designated as national accounts. Of two companies that did not indicate sales growth as an advantage in using national account marketing, one indicated that sales maintenance was the advantage, the other suggested share rather than sales was the factor of benefit. I3oth respondents participate in the automotive ‘ ‘after’ ’ market. Hypothesis 2: increased Profits Of the 23 companies responding, 19 (or approximately 83%) indicated that profits increased from accounts designated as national accounts, based on a comparison of profits before and after such designation. When compared with a chance rate of 50%, 83% is significant at the 0.01 level using a one-sample test of proportions. Therefore, the null hypothesis is rejected. and the alternative hypothesis, that sales increase at accounts designated as national accounts, is accepted. In the four cases where profit increase was not mentioned, the indication was that this may or may not be a factor, depending on the actions of price and competitors at the accounts. Hypothesis 3: Improved Two-Way Communication When comparing communication at national accounts with nonnational accounts, 17 of the 23 respondents (74%) indicated improved two-way communication with the national accounts. When compared with a chance rate of SO%, 74% is significant at the 0.01 level using a one-sample test of proportions. Thus, the alternative hypothesis, that two-way communication between the seller and the buyer is improved by the national account system, is accepted, Table 2 cross classifies ‘ ‘improved two-way communication with number of customer accounts. Although chi-square and contingency coefficients cannot be used due to small sample sizes (and low expected cell fiequenties), Table 2 would seem to indicate that where large total numbers of accounts are involve& noticeable improvement can be seen in communication with accounts classified as national accounts. In a similar manner, Table 3 shows that two-way communication improvement is more pronounced where sales forces are large (over 150). Thus, where there are many accounts and many salespeople needed to handle them, required two-way communications tend to improve through the use of national account marketing.
TABLE 2 Improvement in Two-Way Communication Classified by Total Number of Accounts Two-Way Commumcatlon Number of Accounts 10,000 and under
Improved 8
Total
.._
1’oW _
5 (38%)
13
I (12%)
8
@=6) 15
6
21”
(62%) 7
Over 10,000
Not lmprovad ____---_
“Totals to less than 23 because 2 companiesdid not indicate total nom of accounts.
Hypothesis 4: Improved Internal Communication Improvement in seller internal communication, however, was found to occur in only 7, or 30%, of the cases, which is clearly not significant. Even if this figure is combined with the response of improved ability to forecast due to national account marketing (perhaps another way to interpret improved internal coordination), the total is increased to only 10 companies (43 responses (one respondent indicated that both fomas!’ ability and internal coordination had improved) or sli Even with the inclusion of improved forecasting. 48% is not significarlt when compared to a chance rate of 5OQ using a one-sample test of proportions.Thus it cannol~ concluded that an a&a&age of national account m&eting is improved internal seller coordination at natianal accounts. DISCUSSION is clear from the discussion of these hy there tends to be a strong relationship between tion of national account marketingand improv sales, market share, profits, and commu tween buyer and seller. With regard to improvewmtsntin It
TABLE 3 Improvement in Two-Way Communication Clad Sales Force
by S
sales, a seeming dispartity in the data ocsurswhencompacing sales increases (21 of 23 respondents) to share of sales increases (17 of 23 responses). Since shateof sales refers to sales at the specific national account, it was expected that a sales increase would result in a share increase. However, this implies a static market. A more realistic situation would suggest a growth situation where overall sales increased to all suppliers and, thus, the relative shares remained constant. This could indicate that classifying the customer as a national account enabled the seller to participate in sales growth and to maintain his position, rather than to lose it to other suppliers. The data indicate that in three of the four instances where sales increased but share did not, the respondents mentioned that the customers had requested classification as national accounts. Without such classification, sales and share might have declined. The fact that internal communication regarding national accounts is not improved in comparison with nonnational accounts is not surprising. Normatively speaking, a reason for adopting a national account system is to improve internal coordination of key accounts. However, such improvement is usually not accomplished rapidly. Those companies that indicated improved communication, therefore, seemed to have either had a fairly long acquaintance with national account marketing or applied it to a relatively homogeneous group of products in their company. Others that adopted national account market-
account, and improved new product acceptance. The responses of maintaining position and participating in growth were elicited from six different companies. The common denominator among them (in five of the six cases) is the fact that customers had requested treatment as national accounts. Thus the threat of loss of business or the reward of a growth in sales may have been used as leverage by the customer to attain national account classification. ; New product acceptance was not found to be faster when using national account marketing, perhaps for two reasons. First, some companies indicated that they purposely chose smaller nonnational accounts for new product introduction in order to avoid embarrassment or undue conflict at critical accounts. A second reason for slower introduction at national accounts was their generally larger size and internal complexity, which tended to make product introduction there more time consuming than at smaller, nonnational accounts. REASONS FOR AVOIDING NATIONAL ACCOUNT MARKETING Given the number of advantages that seem to be associated with the use of national account marketing, one might reasonably ask why $ome companies elect not to use the procedure or have used it and dropped it. Table 4 shows reasons for not using national account marketing
a threshold level necessary to support national account -marketing ing may not have felt any severe communications problems prior to its use or, due to the general complexity of the business, may not be able to see much improvement, either‘ due to other confounding factors or to the small percentage of accounts handled on a national account basis (the modal percentage of accounts handled on a na.tional account basis as a percentage of all company accounts is less than 1%). The three remaining advantages shown in Table 1 that were not specifically addressed in the hypothesis section were the advantage of maintaining position at the account, participating in presumed growth at the national 122
given by firms in this study. Although small sample size precludes generalizations to all industry, some interesting insights can be gleaned from the table. Most of the reasons displayed in Table 4 are selfexplanatory and do not require elaboration. In and of themselves, none is statistically significant, nor does there appear to be any particular industry-wide pattern evident. What is important here, however, is the support that this information provides for those considering the use of national account marketing. For example, the concept of a threshold level necessary to support national account marketing, and referred to in earlier articles 12, 31, is
TABLE 4 Reeaons for Not Using Netional Account Marketing Previously Never Used Used Total National Account Marketing -
Reason
Lack of qualified people to act as national account sales personnel. Use of decentralizedorganizationalsetup made national account marketing unworkable. No need for nptional account marketing-local users are decision makers (accountcoordination not needed). 4. National account system would merely duplicate local person’s excellent knowledge and rapport. 5. Small sales force did not requireoverall nationalaccount marketingto improvecoordination. 6. Use of dealers almost exclusively-fear that national account marketingcould upset this arrangement. 7. Customersdo not repeatedlybuy in large quantities. 8. Customersuse centralized decision making, branchesare not important(accountcoordination not needed). 9 Seemed to contributeto general problem of price attrition(customers lump dissimilar purchases). 10. Company not large enough to supply a significant share of buyer requirements. 11, Failed to correctly identify nationalaccounts \ and key contacts in those accounts. 12 All customers treated virtually alike, no price or service distinctiotls due to volume. 13 Droppedbecause it seemed synonymous with the concept of trade relations. 14 Productline of seller too nmow
reinforced here. Responses such as “product line of seller too narrow, ” “customers don’t repeatedly buy in large quantities, ” “small sales force, ” and “selling company not large enough to supply significant share of buyer requirements, ” all point to and support the “threshold” concept. Again, for national account marketing to be successful, a particular threshold level of buyer and/or seller operations must be achieved. The question of centralized versus decentralized operations as an appropriate organiiational climate for account marketing is brought out in Table 4, in reasons 2, 3, and 8. The centralization of buyer purchasing decisions was previously discussed as an important factor in classifying a customer as a national account [2]. Decentralization in the seller’s organization might make it difficult to use national account marketing if each product line and/or market had its own sales force. Generalizations beyond this are difficult without more data.
0
4
4
2
2
4
0
2
2
0
2
2
2
0
2
0
2
2
0
2
2
1
1
1
1
0
I
0
1
I
1
0
I
0
!
I
I 0
0 I
I 1
Perhaps the key reason, noted in Table 4, for not using national account marketing is the lack of qualified people ‘to act as national account sales personnel. Of those that indicated that their staffs were deficient in this regard, half also indicated tha,t they -gere actively working to correct this defect by either hiring people of the desired caliber or developing such people internally in order to move into a national account strategy. Not only did this indicated continued in.terestamong the business community regarding national account marketing, but it also indicated their understanding of the degree of sophistication and expertise required to successfully imp such a program. This is entirely consistent with the information reportedby the Conference Board study [ 1j in noting that companies using national account marketing ‘%ok for persons wiithexceptional experience and demonstrated abilities. ’ ’ Comments, in that study, from actual users of national account marketing support this 123
opinion, and describe national accounts peoples as “star salespeople, ’ ’ ‘ ‘hard-hitting and “fast moving, ” “heavyweights, knowledgeable in all areas of operations. . I ” [l]. Many similar statements were gleaned during interviews for the present study. Thus a key reason for not being a national account marketer is the a recognition that personnel are not qualified to institute such a program. SUMMARY AND CONCLUSIONS In summary, the key benefits to be derived from use of national account marketing are increased share of buyer’s purchases, increased sales, increased profits, and improved communication at national accounts. Other benefits, such as improved internal coordination of key ac-
counts, improved new pmduct acceptance, and possible growth potential, are less frequently attained, according to the results generated here. Yet the benefits described here are not attainable by all industrial marketers. This, and previous articles, suggest that careful attention to both buyer and seller chlaracteristics is necessary if national account marketing is to be implemented successfully. REFERENCES Pegram, Roger M. ) Selling and Servicing the National Account. The ConferenceBoard, New York, 1972. Stevenson, Thomas H., Classifying a Customer as a National Account, Lsdustrial Marketing Management 8, 1~3- 136 ( 1980). Stevenson, Thomas H., and Albert I.,. Page, The Adoption of National Account Marketingby IndustrialFirms, The Industrial Marketing Mannlgemeru8, 94- 100 (1979).