Winning key account management strategies for the eGrocery era

The most successful KAMs operating in CPG today have one thing in common: They’re taking ownership of eCommerce.

After 18 months of explosive growth and with online predicted to account for 21.5% of US grocery sales by 2025, we are well past the days when key account managers could ignore eCommerce just because it’s small. 

Sure, your own online sales may only account for 5-10% of your business right now, but your retail customers are laser-focused on winning in eGrocery. With large accounts contributing 40-80% of revenue for branded suppliers, pushing eCommerce to the periphery could prove a costly mistake. 

The smarter CPGs are already moving to an end-to-end strategy, where digital isn’t siloed but integrated into the wider business, and high-performing KAMs within those organizations are actively thinking about and planning for eCommerce strategy. They understand if they’re serious about owning the business relationship, they must get serious about eCommerce.

So, how should KAMs look to evolve their strategies to win in eGrocery? And what are the pitfalls to avoid?

DPSM still matters, but the practicalities are different

Traditionally, KAMs have focused on four priorities: distribution, pricing, shelving, and merchandising.

These priorities remain just as relevant in an online context, but they play out differently. Take shelving. In a store, a retailer resets its shelves once or twice a year. As a KAM, you know any shelf space you’ve secured is pretty much guaranteed for six months to a year. If you happen to go out of stock, the worst thing that happens is there’s a hole on the shelf.

Online, the dynamic is totally different. eCommerce shelf space is never guaranteed. It’s always changing based on a variety of factors including promotions, margins, and search. If you go out of stock online, your shelf space is gone.

This means KAMs must be much more agile in how they manage eGrocery accounts. When you move from brick-and-mortar to eCommerce, the rhythm of your relationship with key retail customers changes. There’s less reliance on big set-piece events such as range resets and more of an expectation that you’ll be managing performance on an ongoing basis. 

Pay extra close attention to promotions, as they are easy to get wrong online. Because eCommerce shelf space isn’t guaranteed, inventory management becomes critical when running promotions. I regularly see CPGs run into trouble on promotions because they don’t have enough inventory online, go out of stock, lose their shelf space, and actually end up driving sales of competitor brands with their promotions.

As with category managers, KAMs also have a tendency to spread themselves too thin. It’s much harder to gain momentum and cut-through in eCommerce, so sometimes you’re better off putting all your efforts behind a couple of power SKUs instead of trying to push the entire portfolio. The stakes are higher around getting the fundamentals right when working online, so KAMs must be smart about where to focus their efforts and pay real attention to detail. 

At the same time, KAMs have to get their head around different personnel, different departments, and rapidly evolving structures at different retailers. Walmart, for example, recently decided to bring together its eCommerce and brick-and-mortar businesses into a single, integrated operation. Other retailers continue to operate online and stores separately. All this is raising the bar on complexity for KAMs.

Raise your game on digital skills 

And the complexities don’t end there. Compared with brick-and-mortar, the factors driving sales on the digital shelf are more varied. It’s not as simple as saying, ‘I reduced the price, and so my sales shot up’. To get an accurate picture, KAMs need to marry up a wide range of data sources, including from the digital shelf, inventory, availability, and promotions strategy, and layer all of those into the equation to determine what’s really driving sales.

Understanding your performance in search, both organic and paid, is also critical. 

That’s not to say KAMs need to become all-singing, all-dancing eComm experts. Let digital shelf experts and analysts do the heavy lifting for you but understand the bar on technical expertise has been raised. To hold your own in negotiations with retailers, consider upskilling on business analytics, statistics, and modeling tools such as PowerBI. The better KAMs today are not only great at selling, they’re also really smart about analytics.

Look beyond relationship-based selling

A solid grasp of the numbers is important for other reasons, too. As you move to online, the traditional, relationship-based approach to selling is simply less effective.

To put it bluntly, nobody is making money in eCommerce, so you can’t win with a relationship only. The old approach of, ‘Let’s go out for lunch, play nine holes of golf, and make a deal’ won’t get you very far online because the math has to work. No amount of slick sales patter will result in a deal if the margins, the sales, and the economics don’t all stack up.

The coronavirus pandemic has further accelerated the shift away from relationship-based selling. Over the past 18 months, KAMs’ ability to go and see their buyer has changed dramatically. As we emerge from Covid-19, face-to-face contact will become more regular again, but hybrid working is likely to make it less common than it was before the pandemic. 

In some cases, regular face-to-face contact will be driven by a higher, strategic relationship, but not all brands can have a top-to-top relationship. This means KAMs need to be realistic: eCommerce is more transactional than brick-and-mortar, so you must learn to win in an environment where algorithms can be as influential as personal contacts.

All of this may sound daunting, but it also creates new opportunities. Increased reliance on analytics can mean increased transparency. What’s more, the shift we’re seeing could make traditional sales roles attractive to a more diverse group of people and bring new talent into CPG organizations.

As ever in eGrocery, the winning brands are those that stay on their toes, keep experimenting, and constantly reinvent themselves. KAMs who embrace this new way of working, get smart about analytics, and evolve their strategies can develop a real advantage over rivals who are stuck in the old brick-and-mortar mindset.