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.