INGENUITY
suppliers are easy to replace : PARTNERS ARE HARD TO DISPLACE
Ian Laverty , Managing Director , Ingenuity
e all have key customers . Whether your customers follow Pareto Law
W( that ’ s the 80 / 20 rule to you and I ) or your distribution is broader ( or narrower ), your businesstobusiness sales will almost certainly depend on a number of key customers .
These are the customers that are painful to lose sometimes business critical and our own company ’ s future prospects is bound by a reliance on this small number of customers to buy significant volumes from us .
How secure are your key customers ? How close are you to them ? How strong is your relationship with them ? Would you classify your relationship as a buyer / supplier relationship or that of a Key Account relationship ?
Does your relationship with your key customers sound like this ? We know who our customer ’ s buyers and management team are . Our sales people have excellent relationships with their buyers and management team . We know who our competitors are . We know our customers see our product / service as being good value for money . We are competitive in our market and our customers know it . We regularly sit down with our customers and discuss new products / services that we ’ re bringing to market . Does your relationship with your key customers measure up to all of that ? Excellent . That makes you as strong as most of your competitors . You have a strong buyer / supplier relationship .
That might not be enough .
Prices can be undercut . Deals can be done . Trials can be introduced . Sweeteners can be offered . New products can be introduced that better meet the customer ’ s needs . We can ’ t be complacent when it comes to our key customers .
Let ’ s face it , at some point we ’ ve all won a customer and taken their business from one of our competitors . We did a great sales job . But we ’ re not the only good sales people out there and if our relationships are buyer / supplier relationships we are vulnerable to somebody doing a great sales job on our key customers . You can easily be replaced .
Partners are much harder to displace . Full collaborative commercial partnership status with your most important customers has to
48 www . businessfirstonline . co . uk be the aim . Whether it ’ s your top 20 per cent , or your ‘ gold ’ ( or ‘ platinum ’) customers or your Key Accounts , the relationship has to be much deeper than even the strongest of buyer / supplier relationships unless you ’ re the only company around that can supply your products / services – which isn ’ t going to be a longterm situation .
To be difficult to displace your relationship with your Key Accounts should at least include the following : There are strong networks of multiple relationships between our senior management and our customer ’ s senior management teams . Our customers know our business plan for the next five years and they know how they fit into it . We know our customer ’ s business plan for the next five years and we know how we fit into it ( not the same as ‘ we think we know ….). Our customer knows how important they are to our business and what proportion of our turnover they represent . You have targets for / with them that you have agreed together ( as opposed to imposed on them ). Our business ’ strategies are aligned and have been developed collaboratively . We work collaboratively on product / service development with our customers , developing new initiatives to meet specific requirements . We work with our customers to provide marketing support for our products / services . We regularly provide training on our
products / services to appropriate personnel in our customer ’ s organisation . We not only understand the needs of our key customers but also our customer ’ s customers and our product / service is developed accordingly . Our customers don ’ t buy from us because we offer them the best deal .
The Key Account Manager needs to be proficient in business planning and strategy , relationship management , commercial acumen , negotiation and assertiveness . Anything less and you ’ re simply a good salesperson .
Ask yourself how many of your customers buy from you because you offer them the best deal ?
The answer to that is usually the same as the answer to how many of your customers are vulnerable to poaching ? Be a partner , not a supplier .