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Analysis on Effectiveness of Key Account Management Practices

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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.
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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.
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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
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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.
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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
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