THE INDONESIAN JOURNAL OF BUSINESS ADMINISTRATION Vol. X, No.X, 20XX: XX-XX Manuscript Length: 10-15 pages ANALYSIS ON EFFECTIVENESS OF KEY ACCOUNT MANAGEMENT PRACTICES IN PT PLN (PERSERO) WEST JAVA DISTRIBUTION UNIT 1 Ridho Agung Nugraha and Herry Hudryansyah School of Business and Management Institut Teknologi Bandung, Indonesia [email protected], [email protected] Abstract. One of the implications of the enactment of Law No. 30 of 2009 concerning Electricity, it is possible for new players in the electricity sector who will be PLN's competitors to participate in providing electricity for the public interest. Base on that, PLN does not monopolize the market again to sell electricity for the public. To protect their own business, PLN must improve their services to compete with another company or substitution of PLN’s electricity that can threaten the sustainability of the future business. In 2017-2018, PLN West Java Distribution Unit faces three business issues: 1) High Dependency Revenue from Industrial Customer, 2) Decrease of Customer Satisfaction from Industrial Customerand 3) Establishment of Key Account Marketing Team. One of strategy to face that issues are the implementation of Key Account Management Practices. The objective of this research is to examine the effectiveness of key account management practices especially related to three effectiveness outcomes, there are Relationship Improvement, Customer Satisfaction, and Advocacy. With a mixed method analysis (qualitative and quantitative). The results show that all of key account management practices in PLN West Java Distribution Unit give a positive contribution to the achievement of effectiveness outcome that tries to examine through this research, there is Relationship improvement (86,7%), Customer Satisfaction (85,6%) and Advocacy (83,5%). Keywords: key account management, business to business marketing, relationship marketing, electricity, customer satisfaction Introduction One of the significant changes in electricity management in Indonesia and in the long history of PT PLN (Persero) 's journey was the issuance of Law No.30 of 2009. In this new regulation, the government opens opportunities for BUMNs outside PLN, the private sector, cooperatives, even non-governmental organizations to provide electricity for the public interest. Thus, since then PLN is no longer a PKUK as a Holder of Electricity Supply Business Permit (Izin Usaha Penyediaan Tenaga Listrik-IUPTL) for the public interest. PLN is now developing as one of the largest asset companies in the world. Until the end of 2017, the total capacity of the power plants owned by PLN had developed to 39,651.80 MW (2016: 39,785.06 MW). PLN West Java Distribution Unit in a long time grow as the largest business unit that give around 20% on a revenue contribution to PLN as corporate. In 2017-2018 PLN West Java Distribution Unit face several business issues; 1) High Dependency Revenue from Industrial Customer, 2) Decrease of Customer Satisfaction from Industrial Customer and 3) Establishment of Key Account Marketing Team. Purpose of the research: 1) Examine the effectiveness of existing key account management practice to increase Relationship Improvement with key account, 2) Examine the effectiveness of existing key account management practice to increase Greater Customer Satisfaction of key account, 3) Examine the effectiveness of existing key account management practice to increase Improve Advocacy from key account. X Author1 and author2 / The Indonesian Journal of Business Administration, Vol.X, No.X, 20XX: XX-XX Research Questions : 1. How effective are implemented key account management practices to increase Relationship Improvement with key account? 2. How effective are implemented key account management practices to increase Greater Customer Satisfaction of key account? 3. How effective are implemented key account management practices to improve Advocacy from key account? Methods The objective of the research is to identify the effectiveness of existing key account management practice that implement in PLN West Java Distribution Unit to increase three non-financial outcomes. This research study based on mix method between the qualitative method and quantitative method. Qualitative through semi structured in depth interview among key person that involved in key account management process directly not only for managerial position but also account executive that involve interaction with key account directly. Besides that, the observation from among secondary data around the implementation of key account management is needed to complete the insight from in depth semi structured interview. About this research methodology writers have much influence from the research from Davies and Ryals (2014)1: “The Effectiveness of Key Account Management Practices”. This paper investigates the extent to which Key Account Management (KAM) programs are achieving a range of financial and nonfinancial measures of effectiveness for implementing companies. It investigates a wide range of KAM practices as well as comparing the predictive power of these practices on nine desirable effectiveness measures. The results suggest that the extent to which KAM practices are embedded within the company is strongly related to all nine effectiveness measures. However it is outcomes which favor the customer which are most realizable such as increased customer satisfaction, relational improvement and joint investment, with a significant time lag and lower predictability for supplier benefits such as increased revenue, increased profit margins or cost efficiencies. This research focus on key account management activities in PT PLN (Persero) Distribution Unit Jawa Barat that have about 5.200-5.400 industrial customers/key account that as high voltage and priority customer in period 2017-2018. The way to examine that activities on this research with explain the existing key account management activities to increase customer satisfaction, relationship and advocacy with their key account. To know the effectiveness of Key Account Management, this research conducted by mixed method of the research, qualitative and quantitative. For quantitative, survey held by 110 respondents from 11 business area in PLN West Java Distribution Unit that had implemented Key Account Marketing approach to their industrial customer. Then for qualitative method, we used open ended interview with 4 key informants that actively involve about policy and managerial of key account marketing activities to probing another insight about the implementation or the practices of Key Account Management in PLN West Java Distribution Unit. 1 Iain A. Davies and Lynette J. Ryals, “The Effectiveness of Key Account Management Practices,” Industrial Marketing Management 43, no. 7 (October 2014): 1182–94, https://doi.org/10.1016/j.indmarman.2014.06.007. X Author1 and author2 / The Indonesian Journal of Business Administration, Vol.X, No.X, 20XX: XX-XX This research try to investigates multiple dependent variables and the predictive ability of KAM practices in achieving them, rather than looking specifically at the practices independently. To investigate the overall effectiveness of KAM programs on a range of effectiveness measures we analyse data using hierarchical multiple regression. Our rationale for taking this approach, rather than grouping the KAM practices through the development of formative indices, is that if we were to develop formative indices this would have to be based on theoretical grounds (see Diamantopoulos & Winklhofer, 2001), because there are no statistical techniques for doing data reduction with formative indicators. Figure 1.1 Conceptual Framework X Author1 and author2 / The Indonesian Journal of Business Administration, Vol.X, No.X, 20XX: XX-XX Results and Discussion Tabel 1.1 Summary of Regression F-Test (Aggregate) In the table above, it can be concluded that in all three models, all the independent variables significantly influence each of the dependent variables because they have a significance value of 0.000 (less than 5%). In the first model with the dependent variable Relationship Improvement, it was found that the RSquare value was 86.7%, which means that 86.7% of the variance of the dependent variable can be explained by its independent variables, and the remaining 13.3% is explained by other variables that do not enter in research. In the second model, we can see the value of R-square for variable “Customer Satisfaction” was 85.6%, which means that 85.6% of the variance of the dependent variable can be explained by its independent variables, and remaining 14.4% is explain by other variables that do not enter in this research. Third model, the value of R-Square for variable “Advocacy” was 83.5%, which means that 83,5% the variance of dependent variable can be explained by its independent variables, and remaining 16.5% is explained by other variables that do not enter in this research. T-Test (Partial) In addition to the overall test, there is also a partial test to determine the significance of each independent variable on the dependent variable. In the first model, it can be seen that only the "A Special Approach with Potential Key Account" variable has a significance value below 5%, meaning that the variable significantly influences the Relationship Improvement. Then for the second model, variable dependent, the Customer Satisfaction, it can be seen that there are 3 variable that showed significant on test there are; a) Constant Variable, the condition when the value of all independent variables giving zero points, the value of variable Customer Satisfaction have value 0.645 from their constants, b) A Special Approach with Potential Key Account, c) Differentiated and higher service level for key account. That are 3 independent variables become significant from Customer Satisfaction Variables. The third model we just find one independent variable that significant for their dependent variable (value <5%), there is Everyone in Organization Educated to understand KAM. That variable looks significant for Advocacy variable. X Author1 and author2 / The Indonesian Journal of Business Administration, Vol.X, No.X, 20XX: XX-XX Conclusions Research Questions 1 : How effective are implemented key account management practices to increase Relationship Improvement with key account? In the first model with the dependent variable Relationship Improvement, it was found that the R-Square value was 86.7%, which means that 86.7% of the variance of the dependent variable can be explained by its independent variables, and the remaining 13.3% is explained by other variables that do not enter in research. In the first model, it can be seen that only the "A Special Approach with Potential Key Account" variable has a significance value below 5%, meaning that the variable significantly influences the Relationship Improvement. Research Questions 2 : How effective are implemented key account management practices to increase Greater Customer Satisfaction of key account? In the second model, we can see the value of R-square for variable “Customer Satisfaction” was 85.6%, which means that 85.6% of the variance of the dependent variable can be explained by its independent variables, and remaining 14.4% is explain by other variables that do not enter in this research. Then for the second model, variable dependent, the Customer Satisfaction, it can be seen that there are 3 variable that showed significant on test there are; a) Constant Variable, the condition when the value of all independent variables giving zero points, the value of variable Customer Satisfaction have value 0.645 from their constants, b) A Special Approach with Potential Key Account, c) Differentiated and higher service level for key account. That are 3 independent variables become significant from Customer Satisfaction Variables. Research Questions 3 : How effective are implemented key account management practices to improve Advocacy from key account? Third model, the value of R-Square for variable “Advocacy” was 83.5%, which means that 83,5% the variance of dependent variable can be explained by its independent variables, and remaining 16.5% is explained by other variables that do not enter in this research. The third model we just find one independent variable that significant for their dependent variable (value <5%), there is Everyone in Organization Educated to understand KAM. That variable looks significant for Advocacy variable. References Davies, Iain A., and Lynette J. Ryals. “The Effectiveness of Key Account Management Practices.” Industrial Marketing Management 43, no. 7 (October 2014): 1182–94. https://doi.org/10.1016/j.indmarman.2014.06.007. X
