Creating Customers – plan the relationship
Creating Customers – plan the relationship
So what is a customer? Remember, that unless they see something sufficiently special to add you to their list of “preferred” suppliers, then they are probably just a casual user. By preferred, I do not necessarily mean the formal “preferred suppliers list” used by many large companies but simply that they see you as a company that can cure problems for them and that they can trust you to deliver. So, they will want to use you and will have reasons to keep you informed of future needs that you can help to satisfy.
Perhaps the most important key performance indicator for any business is its ability to produce a predictable and consistent flow of new and repeat business. Predictability cannot be achieved where the basis of your commercial transactions is ad hoc and reactive – this is just a user, not a customer. To create meaningful mutually beneficial relationships requires time, effort and commitment from both sides. However, the relationship creation process needs to be driven by the supplier, involving the creation of well designed plans, which are then implemented and executed by experienced sales people.
Each sales person will own a number of account plans which combine to represent their personal territory plan - the plan for them to achieve their total annual sales target. In turn the aggregated territory plans represent the complete sales plan for your company. This will help you to reliably forecast future revenue, margin and profit plus the associated demand for support and delivery resources. Good account plans will also give you access to trustworthy leading indicators of future business performance.
Account planning:
As you build a picture of your prospective customer it needs to be recorded in an account plan that includes an organisation chart structured around what you need to know about an account. This does not have to be a complicated document but it must provide a format which encourages the collection and collation of the necessary data. It will make sure the sales people ask those important tough questions and it will provide a plan for how you will campaign that particular customer. Once the data has been collected brainstorm techniques can be used to turn it into information and eventually knowledge about what will be required to win business with the individual customer. Such brainstorms will include a range of people from you organisation and this will vary in line with your type of business but typically could include; technical specialists, delivery staff, the financial manager, legal expertise, the quality manager, HR recruitment and resourcing specialists. The objective is to produce a real plan of action with steps, goals timescales, targeted revenue and responsibilities for all involved in executing the plan – it must state how much you will sell, to whom, by when and by what means.
It may seem a little cold and possibly harsh but you must rank different customers based on their potential value to you. Value is partly about the actual revenue potential but it should also include some other “softer” measure as well. For example, there are bound to be certain customers who are worth having for their prestige value, or they may pay quickly, or they may be a great reference site. Decide your own criteria and build them into your qualification process then apply this when reviewing individual account plans.
Account networking:
As you get to know different people inside the customer, you are building a network of contacts. Regardless of their job roles, they will also fall into certain categories in terms of their potential relationship with suppliers in general and you in particular. The key roles to be aware of are; gate keeper, influencer, information provider, coach, buyer, decision maker, user and budget holder. I imagine that most of these are self-explanatory and you will probably recognize at least some of these roles inside your good customers. It is quite possible that one person could be in several categories and may be in different categories at different times.
It is most important that you create a network plan, based on the roles outlined above, and that you use this to guide you as you develop the customer relationship and later as you pursue specific opportunities. The network plan should include customer contacts at all levels – you need to be engaged at the senior level from the outset so that you do not need to ask your contacts “permission” to talk to the people at the top when you are looking for a decision.
Strategic Accounts
You will use the customer relationship that you have created as the foundation and launching pad for bids for actual pieces of work. The network of contacts that you have built up will enable you to have some influence over how the customer will work with you as a supplier and this will give you competitive advantage.
As you bid for and win successive pieces of work, the relationship will get progressively stronger, but it is very important that you never lose sight of the fact that the customer relationship needs time, effort and commitment, separate from the time spent closing deals and managing the delivery. Recognise that there are three different things to be managed; the account relationship, individual sales negotiations and the delivery of your solution.
Handled properly, this attention to detail will enable you to build some customers into strategic accounts where the relationship becomes symbiotic – this is a million miles from transactional user based relationships and it helps to give you some influence and control over your customers buying habits and timetable. Without this sort of control over individual customers, you do not have real control of your business as a whole as you have no idea where the next order is coming from.
Tips:
* Create your qualification criteria and use them as the basis of external research activities to identify your initial list of suspects – companies with the external appearance of having potential to become customers. This minimises the effort and therefore the cost of creating a focused list.
* Give the focused list to the sales people who will continue the process of qualification to identify those companies most likely to have the potential to become customers within a sensible period, say 12 months out. You now know where the next 12 months business could come from and these companies need account plans.
* When developing the account plan make sure the sales person takes a realistic view of the financial potential from each account based on things such as spending history, previous deal sizes, current supplier base and their budgets & plans relevant to what you sell.
* Review account plans regularly and be harsh if you think the sale person is over optimistic. Involve relevant specialists from your company in the review process.
* Use the combined forecast of all account plans to judge how much revenue you will gain from known sources over the next 12 months. This needs to be more than your annual targets, as you always need to plan for losing some deals.
* Create a means of estimating probabilities that does not depend on “gut feel”.
* Once you have a picture of the known potential, weighted by probability, you know what you have to do and by when to make up any shortfall.
GOOD HUNTING AND GOOD LUCK.
Copyright © Performative plc 2001-2006. All rights reserved.
Creating Customers plan the relationship - To learn more about this author, visit Phil Shipperlee's Website.
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Over 50 years ago, Peter Drucker said; "There is only one valid definition of business purpose: to create a customer".
So what is a customer? Remember, that unless they see something sufficiently special to add you to their list of “preferred” suppliers, then they are probably just a casual user. By preferred, I do not necessarily mean the formal “preferred suppliers list” used by many large companies but simply that they see you as a company that can cure problems for them and that they can trust you to deliver. So, they will want to use you and will have reasons to keep you informed of future needs that you can help to satisfy.
Perhaps the most important key performance indicator for any business is its ability to produce a predictable and consistent flow of new and repeat business. Predictability cannot be achieved where the basis of your commercial transactions is ad hoc and reactive – this is just a user, not a customer. To create meaningful mutually beneficial relationships requires time, effort and commitment from both sides. However, the relationship creation process needs to be driven by the supplier, involving the creation of well designed plans, which are then implemented and executed by experienced sales people.
Each sales person will own a number of account plans which combine to represent their personal territory plan - the plan for them to achieve their total annual sales target. In turn the aggregated territory plans represent the complete sales plan for your company. This will help you to reliably forecast future revenue, margin and profit plus the associated demand for support and delivery resources. Good account plans will also give you access to trustworthy leading indicators of future business performance.
Account planning:
As you build a picture of your prospective customer it needs to be recorded in an account plan that includes an organisation chart structured around what you need to know about an account. This does not have to be a complicated document but it must provide a format which encourages the collection and collation of the necessary data. It will make sure the sales people ask those important tough questions and it will provide a plan for how you will campaign that particular customer. Once the data has been collected brainstorm techniques can be used to turn it into information and eventually knowledge about what will be required to win business with the individual customer. Such brainstorms will include a range of people from you organisation and this will vary in line with your type of business but typically could include; technical specialists, delivery staff, the financial manager, legal expertise, the quality manager, HR recruitment and resourcing specialists. The objective is to produce a real plan of action with steps, goals timescales, targeted revenue and responsibilities for all involved in executing the plan – it must state how much you will sell, to whom, by when and by what means.
It may seem a little cold and possibly harsh but you must rank different customers based on their potential value to you. Value is partly about the actual revenue potential but it should also include some other “softer” measure as well. For example, there are bound to be certain customers who are worth having for their prestige value, or they may pay quickly, or they may be a great reference site. Decide your own criteria and build them into your qualification process then apply this when reviewing individual account plans.
Account networking:
As you get to know different people inside the customer, you are building a network of contacts. Regardless of their job roles, they will also fall into certain categories in terms of their potential relationship with suppliers in general and you in particular. The key roles to be aware of are; gate keeper, influencer, information provider, coach, buyer, decision maker, user and budget holder. I imagine that most of these are self-explanatory and you will probably recognize at least some of these roles inside your good customers. It is quite possible that one person could be in several categories and may be in different categories at different times.
It is most important that you create a network plan, based on the roles outlined above, and that you use this to guide you as you develop the customer relationship and later as you pursue specific opportunities. The network plan should include customer contacts at all levels – you need to be engaged at the senior level from the outset so that you do not need to ask your contacts “permission” to talk to the people at the top when you are looking for a decision.
Strategic Accounts
You will use the customer relationship that you have created as the foundation and launching pad for bids for actual pieces of work. The network of contacts that you have built up will enable you to have some influence over how the customer will work with you as a supplier and this will give you competitive advantage.
As you bid for and win successive pieces of work, the relationship will get progressively stronger, but it is very important that you never lose sight of the fact that the customer relationship needs time, effort and commitment, separate from the time spent closing deals and managing the delivery. Recognise that there are three different things to be managed; the account relationship, individual sales negotiations and the delivery of your solution.
Handled properly, this attention to detail will enable you to build some customers into strategic accounts where the relationship becomes symbiotic – this is a million miles from transactional user based relationships and it helps to give you some influence and control over your customers buying habits and timetable. Without this sort of control over individual customers, you do not have real control of your business as a whole as you have no idea where the next order is coming from.
Tips:
* Create your qualification criteria and use them as the basis of external research activities to identify your initial list of suspects – companies with the external appearance of having potential to become customers. This minimises the effort and therefore the cost of creating a focused list.
* Give the focused list to the sales people who will continue the process of qualification to identify those companies most likely to have the potential to become customers within a sensible period, say 12 months out. You now know where the next 12 months business could come from and these companies need account plans.
* When developing the account plan make sure the sales person takes a realistic view of the financial potential from each account based on things such as spending history, previous deal sizes, current supplier base and their budgets & plans relevant to what you sell.
* Review account plans regularly and be harsh if you think the sale person is over optimistic. Involve relevant specialists from your company in the review process.
* Use the combined forecast of all account plans to judge how much revenue you will gain from known sources over the next 12 months. This needs to be more than your annual targets, as you always need to plan for losing some deals.
* Create a means of estimating probabilities that does not depend on “gut feel”.
* Once you have a picture of the known potential, weighted by probability, you know what you have to do and by when to make up any shortfall.
GOOD HUNTING AND GOOD LUCK.
Copyright © Performative plc 2001-2006. All rights reserved.
Creating Customers plan the relationship - To learn more about this author, visit Phil Shipperlee's Website.
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