3.6 Buy-Sell Hierarchy MTPRO

MTPRO inevitably needs to make valuable contributions to the selected key account’s total cost of ownership as well their operating profitability in order to become a strategic supplier for them. Before we devise a strategy to obtain preferred supplier status we need to understand where our market organisations currently stand with the individual accounts. It is the aim to assess the gap between the position today and the position we strive to achieve with selected key accounts. This assessment is illustrated by the concept of the Buy-Sell Hierarchy, developed by Miller Heiman (The new successful Large Account Management)

Figure 10 below shows the five levels of the Buy-Sell Hierarchy and its implications.

Account <a href=">Management)" class="wp-image-9080 size-full" height="333" src="https://sgbs.ch/wp-content/uploads/Figure-10-Buy-Sell-Hierarchy-MTPRO.png" width="637"> Figure 10: Buy-Sell Hierarchy MTPRO (Source : Miller Heiman, The New Successful Large Account Management)

From my experiences the position of most MTPRO market organisations can mostly be assessed at level two. MTPRO customers view us as the supplier of superior products and services. Such products incorporate leading-edge technology, which is one of the key strengths of MTPRO. However, this position is not good enough to gain the targeted increases in share of wallet with many of the key accounts. The aim is to move from level two up to level four. The ultimate aim is to move up to level five after about four years.

There is a summary of the five levels described by Miller Heiman, The New Successful Large Account Management. The description is linked to the MTPRO business model.

Level 1: The Commodity Corner

As stated under chapter “2.2.2 Reduction of suppliers” many purchasing managers are about to narrow the supplier base. The implication is that they attempt to push the short list of suppliers into the commodity status. If all suppliers only meet standard specifications the only differentiator is availability and most important price. MTPRO as a price premium supplier can not successfully compete in this highly competitive commodity game.

Level 2: Providing “Good” products

On the second lowest level of the hierarchy, MTPRO customers view us as the supplier of superior products and services. Such products incorporate leadingedge technology, or meet more than the standard specification. Since MTPRO is able to deliver superior performance on many of our products there is an inclination that our sales engineer’s focus is on technical features. These circumstances might keep them away from placing emphasis on talking to management level about TCO and operating profitability.

Level 3: Delivering “Good” products

It means not only being a provider of superior products but also being a company that makes extraordinary efforts on the customer behalf. Examples could be the delivery of products that are tailored to some customer applications or services like a user training program to accommodate specific customer’s skill sets.

Level 4; Contribute to Business issues

Price sensitivity and importance of features change significantly if MTPRO manages to make the leap to the fourth level. This leap is major. The focus is not just to customer’s day-to-day operational requirements but their ongoing concerns about things like total cost of ownership, productivity increase, production efficiency and operating profitability. It means to start to sell up to value, not down to price. It requires various analyses before value-added sales proposal can be submitted. Another prerequisite is the ability to communicatewith senior management. In chapter 5, Strategy and chapter 6, Solutions a detailed KAM concept provides guidance on how to move to this level.

Level 5; Contribute to organisational issues

According to Miller Heiman it is a fine line between level four and five. It also focuses on improving the customer’s results in terms of costs and productivity increase. It might take a few years to become a trusted advisor who provides expert consultation. The Key Account Manager’s of MTPRO first need to prove the profitable installation of MTPRO instrumentation over a certain period of time before they will obtain this trusted advisor status.