Chapter # 3

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How much do you really know about your customers?

Who is a Key Customer?

Customer that contributes or has a potential to contribute a lot a bigger amount of revenue.

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To exact control over customer base

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Demographics

Physical characteristics of the buying/ selling environment.

It is strongly influenced by potential for sales growth & profit.

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Psychographics

Values & Attitude shared by the buyer or supplier.

Includes – negotiation style, co-operation problem, helpfulness, response speed etc.

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On the Basis of Psychographic factors

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Customer Attractiveness

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Attractiveness Judgment

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Other implications……..

Market share Product life cycle

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Important criterions for market share:

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Life cycles Introduction

stage Growth stage Maturity stage Decline stage

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Implication for suppliers

Introduction stage : decide on the probability of success.

Growth stage: capacity commitment and extension.

Maturity stage: indispensability of the supplier’s product to the customer.

Decline stage: traded off against the prospect of further collaborations on new products.

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Measuring the current relationship status with key customers Current share of the

customer’s business Share relevant to

main competitor’s share

Trend in share over the last three years

The extent to which customers are locked into organization’s offerings

Customer’s perception of technical strength

Customer’s perception of company’s service

Customer’s perception of price competitiveness

Duration of the relationship

Breadth of the contact base

Customer’s attitude to the company

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CALCULATING ATTRACTIVENESS AND RELATIONSHIP STATUS SCORES

Step 1: agree two list of criteria - Measure attractiveness Measure current relationship status.

Step 2: Weight the criteria according to the degree of importance.

Step 3: each individual customer is rated against the weighted criteria.Usually 0-4 rating scale is used A rating of 4 indicates ideal requirements.

Step 4: multiply the rating for each factor by its weighting to produce a weighted score for that factor

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ATTRACTIVENESS OF CUSTOMER

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Relationship status with customer

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The Nine-Cell Customer Strategy Grid

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Development strategies to increase key customer business Four generic strategies:

target for developmentdefend against competitionmaintain with minimum resource withdraw

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Positive tasks to develop key customer relationship the task of the key customer

manager is to steer the relationship sensitively through the early stages

the state of each customer relationship must be monitored

plans should be made to develop to the next stage of commitment.

manager should protect the current position.

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Cont…..

Weak Average Strong

Lo

w

M

ediu

m

H

igh

Relationship status of suppliers

Maintain selectively

Develop DevelopDefend

Maintain minimally

DefendMaintain

Develop

Withdraw Maintain minimally

Develop selectively

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Relationship Bonding

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The End

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