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Why The Golden Rule Tarnishes Your Relationships With Key Customers Everyone knows the Golden Rule which states that "do unto others what you want them to do to you". While this is a great philosophy in life, it is not necessarily a good business practice. This rule, along with the belief that you treat all customers equally, cause companies to be inefficient by poorly allocating limited and valued resources to marginal customers while ignoring large accounts' requirements for additional service and support. In the b2b world, there is almost always an 80/20 rule, 20% of the customers make up 80% of the revenue. If one of these customers defects, you have major revenue shortfall problems. The goal is to make these customers delighted and be brand ambassadors rather than brand assassins.A different version of the "Golden Rule", is "he who has the gold rules." What this really means in practice is that the customers who spend the most money, receive the best service and support. Companies need to allocate and prioritize their resources to make the large customers "Raving Fans" as stated by the author, Ken Blanchard. These mega customers should be treated the way they want to be treated, not the way you would want to be treated.Let's review a few of the ways you can provide differentiated service levels to these critical customers.Order Entry: Your prime customers may wish to use EDI (Electronic Data Interchange) or use Extranet portals to place orders. They may wish to use VMI (Vendor Managed Inventory) where the vendor is the responsible party to monitor stock levels and place orders. They may wish to "peek" into your production scheduling via ERP (Enterprise Resource Planning like SAP) to determine when the product will be available.Product Availability: When there is a shortage or tightness of products being available, the standard way to work your way through this is to have an allocation system, where everyone gets something. While this sounds logical, the better option is to prioritize product availability to your larger customers.Delivery: Large customers may have unique delivery needs. These can range from just in time shipments, configuration of products delivered, LTL (less than truckload), to trucks being scheduled at the loading dock at a certain time for unloading.Account Management: A large account may have plants scattered across the country or even several countries. For communication and coordination efforts, they usually want an assigned Strategic Key Account Global Rep who is responsible for delivering his or her team's performance in delivering expectations across the customer's locations and departments.Customer Service: The norm is to have a pooled customer service department with a bank of phones. The first available rep answers the call and tries to resolve the situation. While this is no doubt efficient, it is not effective. Large customers frequently complain that a lot of time is wasted waiting for the next rep and explaining again the situation. Assigning a dedicated customer service rep helps because the rep already knows the situation, and there is an opportunity to build up a relationship over time. It might make sense to assign the larger customers a different customer service telephone number.Make It Easy To Do Business With: We have seen numerous client examples of taking months to resolve credit issues. We had one client who took 4 months to resolve issues and issue credit. Responsiveness is another key component. When someone calls asking a question, the goal should be to call back in a day and tell them you are working on the situation, while giving them frequent updates. Everything being equal, a customer would prefer to work with someone who is hassle free. Employees are doing more on the job, and time is a precious commodity. You don't want to be the supplier that the organization spends 25% of its time tracking you down to resolve an issue.Technical Support: Be willing to offer these accounts a higher level of technical support. If you are a bottling company, the technical support people could resolve bottling line issues as well as improve the efficiency of the line, making the bottler more efficient and more profitable. If you are a boiler chemical company, you could offer technical support to prolong the life of the boilers and increase the efficiency of the process. The key is to understand the hot buttons and the initiatives the customer is working on.Account Servicing and Support: Large accounts are too critical to leave solely in the hands of the rep. The bond needs to be between two organizations, not between the sales rep and the purchasing agent. One suggestion would be to layer your senior and cross functional teams to meet with the client, maybe every quarter to review problems, progress on initiatives, opportunities etc. Agendas should be established, results on progress from the last meeting, and possibly a report card system to indicate what needs to be worked on. Senior management should try to develop a strong relationship with the senior management of the customer. When Lou Gerstner became CEO of IBM during its difficult times, he gave out his personal telephone number to his top customers. "Call anytime you have a problem." When problems occur, customers are more forgiving when there is a strong relationship bond.New Products: Assuming trust has been established along with the NDA (Non Disclosure Agreement), you might allow the customer to look at what you have in the pipeline as well as view what is in the customer's NPD pipeline. This allows for more effective and efficient planning.Provide Market Insights: Present information on market trends which would be relevant to your customer. This can be obtained through secondary research, articles, association meetings, as well as primary research.Go Downstream: Work with the key customers of your customer. Besides getting a handle on the trends in the market, it makes you a smarter and more formidable company than your competition.Quantify the Benefits: When it comes to contract renegotiation/bidding, it is important to quantify the benefits. An example might be we increased your productivity $52,000 by suggestions our technical support team made which were implemented by your organization. Otherwise purchasing may forget the value you are adding and try to only look at cost, treating your product like a commodity.Develop An Account Dashboard: This is more than net sales revenue less Cost of Goods sold. It should include sales rep's allocated time as well as costs of providing service like technical support. A powerful tool is to have the Key Performance Indicators on a dashboard available for review by the account team as well as senior management.Identify Progress and the Gaps: Use voice of the customer research to determine how customers value you as a supplier. Are you a supplier or are you a partner? What do you need to implement to provide more value. What is your competition (or other suppliers) doing that you should emulate? How difficult are you to work with?Are there things you are doing the customer does not value? An example we had was a client who did a six color brochure that cost $250,000 for design and printing. What the client's customers wanted was access to an engineer 24 hours a day since they had three shifts going on. Keeping the shift running was much more important than having a glossy brochure.Once you have delivered on the revised Golden Rule, you should see increased sales and wallet share, higher satisfaction and loyalty, and possibly higher margins as they might be less price sensitive. If your costs go up, you may have to look at issues like product rationalization (eliminating unprofitable products), identify more efficient processes, and as well as stop selling to smaller and unprofitable accounts.If you would like to chat on this or other b2b marketing issues, please feel free to contact the author at: alan.hale@ or 847.800.1685. ................
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