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DEVELOPING CUSTOMER STRATEGIES
 
How does a company develop unique, sustainable and coherent customer strategies?
 

REFINED CUSTOMER STRATEGIES 

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Only those companies that work with elaborate customer strategies will fulfill the requirements of true customer excellence.
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Particularly in the B2B environment, the development of forward-looking customer strategies requires that three customer worlds need to be addressed at the same time. Our research, however, has shown that only very few companies adhere to this logic.

Based on three brief company examples we would like to show the central strategic implications for the development of unique, sustainable and coherent customer strategies.


THE PRESERVER

whose customers are not growing sufficiently




The customer portfolio of the "preserver" illustrates the very critical situation in which these types of companies find themselves. Situations like these are frequent in today’s markets. This case is about a company that managed to use its unique competence to create outstanding performance from the perspective of its customers. The company has a longstanding and stable customer base with high levels of loyalty. Regular surveys on customer satisfaction show a very high level of satisfaction among existing clientele. It is the result of years of extensive effort to consistently tailor the overall business model to the needs of customers in a certain target group – from positioning and added value logic to a complete package of services.

Due to successful growth among these customers in the past, little focus was placed on winning over new customer segments or capitalizing on new market segments. The change in the strategic quality of customers, however, was not systematically observed. As a result, management overlooked the fact that the market life cycle of most of these customers developed increasingly toward stagnation and even decline.

The interpretation of the results of the SCM analysis clearly shows, in this case, that the key to future growth should lie in identifying and winning over new customers that are in a different market phase. Simply continuing the successful practice of concentrating on existing customers can result in a mid- to long-term existence-threatening situation in this type of market environment.


 THE BLENDER,
whose success story was bought with too little competence 





This is a totally different situation than the first example. In this case, the company banks on attractive customers with high potential for growth. This time, however, the company only managed to build competence in one certain segment that would provide unique benefit to the customer. This means that the company’s customers would be expected to grow due to their high strategic value, but it is doubtful whether the company itself can profit from its own insufficient performance. On the contrary: The risk of losing customers en masse to the competition and therefore massively threaten one's own business foundation is immense. The company must therefore put all of its effort into increasingly tailoring its business model to the needs of its customers and building up the necessary core competencies to do so.


THE STRATEGIST
with the “perfect” customer portfolio




Our third example shows a company that has spent extensive amounts of time and effort building a sustainable customer portfolio. The majority of its customers possess high levels of strategic value. At the same time, the company is able to use its unique expertise to provide its customer segment with special benefit. The result is high levels of loyalty among customers who are also strategically well positioned.

This position allows for stable and strong growth in the future. Due to the fact, however, that over the long term a part of customer group two would move toward quadrant four because of prevailing market dynamics, the company concentrates part of its activities and resources on customer group one. In this case it is a group of customers active in a newly emerging market. The growth potential – as well as the danger – that not all customers in the market can claim is very high. That makes the strategic value of customer group one rather small. However, the risk of this example company is accepted to a certain degree due to the fact that above-average growth is expected from this customer segment.

Customer group three is in a difficult market, which is coming to the end of its life cycle. In this group, value chain excellence is the key to success. The objective is to maximize profit potential for as long as possible and with the most efficiency and standards of performance. It is very difficult to capitalize on innovation and new developments in this marketplace – if at all. The mechanisms of HYPER COMPETITION are in effect here. The market expects continual improvements without having to pay more for it.


IMP worked with Franz Rotter (board of directors at voestalpine AG) to develop the STRATEGIC CUSTOMER MANAGEMENT MODEL, which is intended to help management

  1. gain fully new perspectives when evaluating its own customer portfolios
    apply valuable logic for assessing, selecting and winning over attractive new customers
  2. and raise the quality level when developing unique, sustainable and coherent customer strategies.
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THE PRESERVER, THE BLENDER AND THE STRATEGIST: Companies that are able to build a well-balanced customer portfolio along the life cycle curve can be deemed strategists.

When was the last time you analyzed your customer profile?

 

 

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