Category Archives: Miscellaneous

How to Be a Customer of Choice?

CPO Agenda recently ran an article on “how to be a customer of choice” that merits some thought. If supply is limited, or a supplier innovation could shift the balance of power in the marketplace, you want to make sure that your organization is first in line to get it. And, since the size of your wallet, while still a hugely important element, may not in isolation be sufficient to guarantee your company receives preferential access to scarce resources, latest innovations or the best people, your organization wants to be a customer of choice. So how do you do that?

Becoming a customer-of-choice may not be as easy as one thinks because Key Account Management (KAM) is much more widely established and practiced than SRM, which means that, in terms of account management, your suppliers have a leg up on you. Plus, you can bet the average sales organization puts a lot more effort and investment into account management than a supply management organization does today.

According to the article, which quotes KAM experts Malcolm McDonald and Diana Woodburn, there are three (3) main elements that companies use to select key accounts (customers of choice):

  • Financial Outcomes
    past, present, and potential future income streams as well as “wallet share” (on the basis it can cost up to five times more to capture a new customer than grow a relationship with the existing one) over the next three years
  • Customer Needs
    and how well the supplier’s visions and objectives are aligned with their needs
  • Customer Attributes
    factors and behaviours that signal to the supplier whether “trusted partner” status is a reality

However, in some cases, key account status, which should be reserved for only a handful of accounts (15-35 is considered optimal by some), does not, by itself, guarantee preferential treatment. In practice, only a third of key accounts, on average, are given access to cost and productivity improvement resources, access to reliable sources of critical materials/services, and breakthrough innovation ideas.

Based on this, the authors proposes the following definition for customer of choice:

a company that, through its practices and behaviours, consistently positions itself to receive preferential access to resources, ideas and innovations from its key suppliers that give it a competitive advantage

And the best way to become one, according to the author, is to see things from the supplier’s perspective. The typical pain points of a supplier are:

  1. Willingness to Engage
    suppliers want a customer open to external ideas and willing to listen to what they say
  2. Information Sharing & Communications
    lack of openness makes a supplier worried about customer commitment and affects allocation of resources
  3. Getting Things Done
    suppliers want a customer that will make decisions and implement them
  4. Approach to Business
    is the supplier treated fair and respectfully by the customer and can it expect to be treated so in the future
  5. Paying the Bills
    customers do not like late payments or unfair payment processes

And these are all good points. In fact, as far as I can tell, all that is missing is the following:

6. Long Term Commitment
All of the above is a good start, but what a supplier really wants from a customer of choice is a long term relationship that is likely to be profitable.

Halloween Sponsorship Special

The rest of 2011 FREE for any new sponsor who signs up for all of 2012 (at published rates) until all slots are full. If you’re interested, and have the authority to contract on behalf on behalf of your organization, send an e-mail to us in the next 48 hours. (By 1:00 pm CT on Wednesday, Nov 2.)

For sponsorship details, click the Sponsorship Information link. (And no, the doctor is not making a PowerPoint available. He refuses to submit to the enemy that is PowerPoint.)

As always, sponsorships are first come, first serve.

 

* You do not have to sign within 48 hours, just express interest. You will be granted extra time to get the paperwork done.

Change, Unchained


Change, nothin’ stays the same
Unchained, and ya hit the ground runnin’
Change, ain’t nothin’ stays the same
Unchained, yeah ya hit the ground runnin’

Unchained, Van Halen, 1981

Change. The age old * on organizations everywhere. Conjuring up images of the bottomless black pit, nothing causes more job stress for the average employee. And as noted in this recent SIG article in “The Art of the Change”, “Change” is now ever present. So how should you go about implementing change to minimize the stress and fear and maximize success?

The author starts by quoting Stanislao and Stanislao who defined four criteria to consider before implementing a change:

  1. What Should Be Changed?
  2. What Type of Change Needs to Be Made?
  3. Who Will Be Affected By The Change?
  4. Who Will Be The Change Agents?

These are good criteria, but what about
0. Why Do We Need A Change?
5. What Is The Goal Of The Change?
6. What Are The Expected Results?

Let’s face it, if something ain’t broke, you shouldn’t fix it. If there is no why, there is no what. If there is no end goal, then how do you know if the change is appropriate? And if you can’t define the expected results, it’s probably not the right change.

The author then notes that workers who have no real input into a change repel it for several reasons, including surprise, unknown workload, unknown job security (if a task is being automated), etc. As a result, the author recommends that you should:

  • Give Employees Advance Notice.
  • Give Employees Information About the Change.
  • Give Employees Training to Cope With the Change.

And these are musts. But the author misses the most important thing you should do if you want a change to be successful. That is:

  • Explain The Rewards (To The Employee) Associated With the Change.

Let’s face it, the first thing an employee wants to know is what’s in it for them if you expect them to work hard to prepare for and implement a change — especially when they believe the same ol’, same ol’ is good enough. Will it make their jobs easier? Will it improve profitability and their potential bonus? Will it, in hard times, simply ensure that the corporation will be operating lean enough to allow them to keep their jobs? Enquiring minds want to know!

In addition, as the author notes, you should be aware of the very fundamental reasons that humans resist change, which, according to Gilley, Godek, and Gilley include:

  1. Fear of losing one’s position in the hierarchy.
  2. Not being aware of the company’s vision and/or purpose.
  3. Fear of losing one’s job entirely.
  4. Growing apprehensions about taking on additional roles and responsibilities.
  5. Working longer hours so that personal life becomes severely affected.

And make sure that the information and training communicated to the employees addresses each of these concerns. If you do that, engage your employees, and make them part of, and, when possible, leaders of, the process, you are much more likely to be on your way to a successful change initiative.