INTRODUCTION

WESCO started off as a distribution arm of Westinghouse in the year 1922.

They primarily distribute products like electrical equipment and supplies
(EES), MRO (maintenance, repair and operations) supplies, and supplies
for industrial OEMs. They have strong ties with over 150 suppliers like
Cutler-Hammer, Thomas & Betts, Philips and Leviton. They provided onestop solution for all its customer requirements since most of the suppliers
made only part of a customers total EES requirement, were not able to
deal with small volumes and were unable to add value at all stages of the
sales process. They had divided their customers into three segments:
Electrical Contractors
They install lighting and electrical systems for construction projects. More
preference was given to timely delivery of supplies. $17.9 billion total
business of which WESCO gained $465 million in 1996. It is primarily
referred to as bid-to-quote business.
Industrial Customers
WESCOs sales was $1 billion in 1996 from this segment and was
expected to grow. Their main requirements were in Maintenance, Repair
and Operations (MRO) activities. Their serving segments include utility,
manufactured structures, pulp and paper, lumber, petrochemical, mining
and metals and transportation. The nature of business was mostly
collaborative and they look for long-term contracts.
Commercial, Industrial and Govt. (CIG)
WESCOs sales was $147.5 million in this segment in 1996. It includes
hotels, motels, hospitals, universities and institutional customers.
With sales of $1.6 billion in 1996 in the US & 3% EBIT, WESCO was the 3rd
largest full line wholesale EES distributor. To attain $3 billion sales and 5%
EBIT by 1999, Ron Haley (CEO) decided to spend $12 million/year on
National Accounts(NA) program which mainly targeted large high potential
industrial customers. In the backdrop of these expected sales and profits,
Jim Piraino, VP marketing for WESCO distribution, has to make a decision
on whether to continue with the NA program. He also needs to take a
stance on supplier/distributor tiering and alliances. He also needs to
decide whether to proactively approach potential NA customers or react to
their demand.
PROBLEM STATEMENT
In what ways can Jim Piraino proceed with the existing National Accounts
(NA) Program at WESCO so that their target of reaching $3 billion sales
and 5% EBIT by 1999 could be achieved

The National Accounts (NA) Program:

There is significant savings for both customers and WESCO by

establishing long-term contracts
Customers would receive competitive, year-long, national pricing
regardless of volume
There were around 300 NA customers by 1997
Based on sales volume & commitment, customers were classified
into 3 groups Key, Focus and others
There were 18 National Account Managers (NAM) across the
country, each of whom complemented 10 to 15 customers plus 15
to 20 prospects

Reasons why NA program was not doing so well:

Customers treated these agreements as non-exclusive

Most of the customers corporate and local needs were not aligned
well
Cost of serving a customer was very high
The other contract clients were being neglected
The whole process was difficult to implement
There were unanticipated differences in procedures and purchases
NA agreement and local plants supply were not in agreement
They became competitor to electrical contractors traditional
business thus threatening their own business

ALTERNATIVES
Scrap the NA program: In this case $12 million would be straight away
added to the bottomline. But WESCO would have to find an alternative
way to achieve their target of annual growth in profitability from 12- 16
percent and sales from 6 to 8 percent, which is very difficult.
Proactively approach customers with the NA program: In this case
they had to define a good approach for this program, decide whether to
go for supplier/distributor tiering or supplier/distributor alliance, and how
to manage the traditional customer base during the period of change.
Be reactive and concentrate on interested customers only: It had
the advantage of attracting only the customers who were genuinely
interested in the program but there was a chance that they could start
losing potential key customers quickly.

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ANALYSIS OF NECESSARY KAM BEHAVIORS

Critical KAM Behavior
Categories as Identified
by BTS Research

Required KAM Behaviors

Understands the functional

priorities and metrics for each csuite contact

Customer Understanding
Demonstrating deep
knowledge of the
customers overall
business

Company Understanding
Demonstrating deep
knowledge of how their
own business makes
money and understanding
the key tradeoffs that
drive revenue growth and
profitability

Plan Preparing for

customer interactions
Portfolio Demonstrating
the range
of ways the company can
help customers

Understands the fluid

dynamics of strategic initiatives
and the impact on the
customers buying cycle
Understands the global
economic and political
landscape and the potential
impact on the customers
industry and business strategy
Understands the customers
success metrics
Understands their own
companys business priorities
and metrics that point to
success

Makes plans for each

customer interaction that
support the larger account
strategy
Knows the enterprises
product portfolio and how to
leverage the appropriate
products to directly impact the
customers business priorities
and results

Asks provocative questions

based on knowledge of the
customers business
environment

Asks about customers buying

process, stakeholders, and
buying criteria
Engage Demonstrating
value in a customer-

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Rate Your KAMs

High/Med/Low

Medium

Medium

Low

Medium

Low

Low

High

Medium

High

High

Medium

High

High

Medium

Medium

Medium

Medium

Medium

Medium

High

High

High

High

Medium

Understands drivers for

growth and profitability

Asking results-focused
questions to determine business
priorities
Discover Asking resultsfocused questions to
determine business
priorities

Typical KAM
Capability
High/Medim/Low

Understands the customers

success metrics

 Establishes the necessary

credibility to get access to
multiple c-suite executives
Delivers insights that are
meaningful to customers based
on their experience and
expertise
Engages executive-level
customers in financial
conversations
centered manner

Presents business cases that

align with the strategic goals of
the customer, provides a clear
link between cause and effect,
and identifies the risks of
inaction
Measures results to document
value and drive future sales

Lead
Guiding the key account
team to its goals

Advance Helping the

customer move
to the next stage of their
buying process

Works from a set of values

that reflect the enterprises
capabilities and interests to
effectively respond to the needs
of key accounts
Develops a clear, compelling
vision for success for the
account, and is able to
effectively engage others in the
vision to achieve success
Helping the customer move to
the next stage of their buying
process
Helps the customer think
through difficult business
challenges or taking advantage
of unseen opportunities
Negotiates collaboratively
with the customer by exploring
interests and suggesting
options
Organizing team activities to
drive a single coordinated
approach to the account.

Orchestrate Organizing
team activities to drive a
single coordinated
approach to the account

Manage Creating and

executing account,
opportunity, and territory
plans

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Engages and manages key

stakeholder to execute against
the key account plans
Considers financial drivers,
market position, and other
internal/external factors to
guide customer and account
decisions
Identifies a broad set of
customer-specific success
metrics to measure results

Low

Low

Low

Low

Low

Low

Low

Low

Low

Medium

Medium

High

Low

Medium

High

Medium

Medium

Medium

High

High

Medium

High

Medium

Medium

Medium

Medium

Medium

Medium

 Engages the full account

team and key stakeholders from
across the business in the key
account strategic planning
process
Drives the account team to be
proactive in identifying new
opportunities by identifying
patterns and trends in what is
happening in the customer
organization
Articulates a business case to
key internal stakeholders in
order to drive customer-inspired
innovation
Applies a set of criteria to
effectively qualify and drive
opportunities through the
appropriate sales channels
Assesses the risks and
opportunities within the account
Applies an ownership mindset
when managing key accounts
by making decisions that serve
the interests of the customer,
while ensuring the partnership
advances the strategic and
financial objectives of their
salespersons own company

Execute Ensuring
successful achievement of
each element of the
account plan

Uses all available sources of

data and analytics to guide the
key account team to execute on
the account plan
Collaborates with the entire
global key account team to
manage a balanced pipeline of
opportunities to achieve the
account sales objectives

Collaborate Leveraging
internal resources on
behalf of the customer

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Considers profit
measurements when evaluating
opportunities or the overall
customer relationship
Networks extensively in their
own organization across
functions and levels, assembling
resources on behalf of the
customer

Medium

Medium

Low

Medium

Low

Low

Medium

Medium

Low

Medium

Medium

Low

Low

Low

Medium

Medium

Medium

Medium

High

Medium

RECOMMENDATIONS
If WESCO intends to achieve their target of annual growth in profitability
from 12 to 16 percent and sales from 6 to 8 percent, the best bet for them
would be to take a proactive stance when it comes to the NA program,
i.e., approach the customers on their own and try to get them onboard.
Although the current position was not conducive to continue the program
further, because the company was already at a loss of complete 2% in
their revenue as compared to the previous year, still looking towards a
long term prospective this program can gain higher margins if a planned
strategy and proper segmentation of customers is done by the
management.
Apart from high sales and growth rate that comes with this program, there
is also the security of a large contract and long term commitment from
industries. Given the amount of time spent by NAMs on each customers, it
makes sense to add more number of NAMs and designated a few of them
exclusively to the implementation process. But since recruiting NAMs from
outside is very tough, they can hire executive who could take over some
of the maintenance functions that the NAMs currently do. By cutting down
this time spent on maintenance, the NAMs would be freed up to do more
prospecting, which, given a better customer segmentation process, has
the potential to yield better results for WESCO. For Key Accounts, they
should continue to maintain the service levels set and implement
integrated system solutions to further satisfy the customer. For the
Focus Accounts they should try to make multi product agreements
with them across all sites. And for Other Accounts, they should try to
make them exclusive by showing them the value additions provided and
try to convert them through giving discounted trials.
To cater to the new trends of integrated solutions, WESCO should go for
tiering system rather than an alliance. This is because, forming alliances
involve learning about each others businesses which can involve lot of
investment in terms of time and money. This way they could also compete
with other alliance partners. Also, being proactive would enable WESCO to
be in the first tier and hence earn profits by marking up the prices
provided by second tier.
When it comes to their traditional customers, it is evident that they cannot
satisfy all of them. They could drop those customers who would demand
too many services and focus on the traditional standardized services. And
in the long run, they should develop key NA customers and gradually cut
down on the traditional customers

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