Chapter 3

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How much do you really know about your customers?

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Chapter 3

  1. 1. Chapter # 3 KKB, Chapter #3 How much do you really know about your customers?
  2. 2. Who is a Key Customer? <ul><li>Customer that contributes or has a potential to contribute a lot a bigger amount of revenue. </li></ul>KKB, Chapter #3
  3. 3. To exact control over customer base KKB, Chapter #3
  4. 4. KKB, Chapter #3
  5. 5. Demographics <ul><li>Physical characteristics of the buying/ selling environment. </li></ul><ul><li>It is strongly influenced by potential for sales growth & profit. </li></ul>KKB, Chapter #3
  6. 6. Psychographics <ul><li>Values & Attitude shared by the buyer or supplier. </li></ul><ul><li>Includes – negotiation style, co-operation problem, helpfulness, response speed etc. </li></ul>KKB, Chapter #3
  7. 7. On the Basis of Psychographic factors KKB, Chapter #3
  8. 8. Customer Attractiveness KKB, Chapter #3
  9. 9. Attractiveness Judgment KKB, Chapter #3
  10. 10. Other implications…….. <ul><li>Market share </li></ul><ul><li>Product life cycle </li></ul>KKB, Chapter #3
  11. 11. Important criterions for market share: KKB, Chapter #3
  12. 12. Life cycles <ul><li>Introduction stage </li></ul><ul><li>Growth stage </li></ul><ul><li>Maturity stage </li></ul><ul><li>Decline stage </li></ul>KKB, Chapter #3
  13. 13. Implication for suppliers <ul><li>Introduction stage : decide on the probability of success. </li></ul><ul><li>Growth stage: capacity commitment and extension. </li></ul><ul><li>Maturity stage: indispensability of the supplier’s product to the customer. </li></ul><ul><li>Decline stage: traded off against the prospect of further collaborations on new products. </li></ul>KKB, Chapter #3
  14. 14. Measuring the current relationship status with key customers <ul><li>Current share of the customer’s business </li></ul><ul><li>Share relevant to main competitor’s share </li></ul><ul><li>Trend in share over the last three years </li></ul><ul><li>The extent to which customers are locked into organization’s offerings </li></ul><ul><li>Customer’s perception of technical strength </li></ul><ul><li>Customer’s perception of company’s service </li></ul><ul><li>Customer’s perception of price competitiveness </li></ul><ul><li>Duration of the relationship </li></ul><ul><li>Breadth of the contact base </li></ul><ul><li>Customer’s attitude to the company </li></ul>KKB, Chapter #3
  15. 15. CALCULATING ATTRACTIVENESS AND RELATIONSHIP STATUS SCORES <ul><li>Step 1: agree two list of criteria - Measure attractiveness </li></ul><ul><ul><li>Measure current relationship status. </li></ul></ul><ul><li>Step 2: Weight the criteria according to the degree of importance. </li></ul><ul><li>Step 3: each individual customer is rated against the weighted criteria. </li></ul><ul><ul><li>Usually 0-4 rating scale is used </li></ul></ul><ul><ul><li>A rating of 4 indicates ideal requirements. </li></ul></ul><ul><li>Step 4: multiply the rating for each factor by its weighting to produce a weighted score for that factor </li></ul>KKB, Chapter #3
  16. 16. ATTRACTIVENESS OF CUSTOMER KKB, Chapter #3
  17. 17. Relationship status with customer KKB, Chapter #3
  18. 18. The Nine-Cell Customer Strategy Grid KKB, Chapter #3
  19. 19. Development strategies to increase key customer business <ul><li>Four generic strategies: </li></ul><ul><ul><li>target for development </li></ul></ul><ul><ul><li>defend against competition </li></ul></ul><ul><ul><li>maintain with minimum resource </li></ul></ul><ul><ul><li>withdraw </li></ul></ul>KKB, Chapter #3
  20. 20. Positive tasks to develop key customer relationship <ul><li>the task of the key customer manager is to steer the relationship sensitively through the early stages </li></ul><ul><li>the state of each customer relationship must be monitored </li></ul><ul><li>plans should be made to develop to the next stage of commitment. </li></ul><ul><li>manager should protect the current position. </li></ul>KKB, Chapter #3
  21. 21. Cont….. Weak Average Strong Low Medium High Relationship status of suppliers KKB, Chapter #3 Maintain selectively Develop Develop Defend Maintain minimally Defend Maintain Develop Withdraw Maintain minimally Develop selectively
  22. 22. Relationship Bonding KKB, Chapter #3
  23. 23. The End KKB, Chapter #3

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