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Sustainable Growth:

Service-Profit Chain

Customer Partnership

Involving Customers in the Creation and Refinement of Products and Services

by Vadim Kotelnikov, Founder, Ten3 Business e-Coach for Innovative Leaders, 1000ventures.com

"Think of the company-client relationship as a partnership rather than two "ships" passing in the night."  - Arthur Andersen

 

Rules for Creating Customer Partnerships1

  1. Make customer partnership everybody's job: Don't leave partnering with customers to isolated departments like marketing or customer service. Your organization exists to serve its customers, and this recognition should permeate every process, department, and job role. Everybody in your organization, from front-line employees to the Board Chairperson, must find ways to connect with customers.

  2. Partner with potential customers: Potential customers represent a tremendous opportunity - you need to understand why they aren't buying your product or services. Uncover this information through market research surveys or focus groups or special incentive offers or thorough postmortems on the lost sales.

  3. Partner with lost customers: Interview disenchanted customers, empathize with their decision and find out why they are leaving - not all of these customers will return, but the lessons learned in the process can prevent future losses.

  4. Increase "wallet share": Generate more revenue from your existing customers through discovering untapped needs that open up exciting market opportunities and offering new or augmented products or services.

  5. Let go of "poor fit" customers: Use the 80/20 principle - defection of unprofitable customers should not concern you much. If some customers need services that you cannot or should not offer in the spirit of your mission and values, let them go elsewhere, or otherwise you may lose the competitive advantage of your integrity.

Related Chapters of the Business e-Coach:

Customer Retention

Customer Satisfaction

New Product / Service Design and Development

Customer Partnership Defined

"Customer partnership is a shared journey to create a future for both parties that is better than either could have developed alone."1 The customer influences every aspect of your business and is the foundation of your organization's success. In today's turbulent times of rapid and chaotic change, "no force is more grounding and stabilizing than a partnership with customers."1 The term 'customer partnership' we take not so much in its legal definition of co-ownership but rather in its sense of  sharing in benefits, profits and losses of your company.

Customer partnership is more than "putting customers first", or  finding mutually satisfactory solutions to shared problems, or  a dedication to excellence in every sale or service encounter. It also requires commitment to forging long-term relationships that create synergies of knowledge, security, and adaptability for both parties.

Why Customer Partnership?

Fierce competition today forces companies to become much more creative and flexible in their dealings with customers to give them exactly what they want - faster. Creating a partnership with customers will help your organizations maintain the focus you need to make good decisions and harness the power and commitment you need to weather volatile times. Partnering with customers represents your firm's "capacity to anticipate what customers need even before they know they need it."2

Case in Point: Nike

When Nike partnered with their running customers, they discovered that, apart from running shoes and apparel, they also needed sport watches, MP3 players, and heart monitors. Nike developed these offerings and their equipment business boasted sales in excess of US$400 million within few years.

Case in Point: BMW

In partnership with its customers and external innovators, BMW is constantly seeking to discover new technologies and design features to put into future cars. To harvest the insights of creative minds outside the BMW Group, the firm's Virtual Innovation Agency (VIA) is the point of contact for all external innovators who do not as yet have contacts within the firm. VIA makes it easy for car fans to communicate their ideas through its web-site, with additional online discussions that solicit ideas from enthusiasts around the world...More

Case in Point: Dell Computer Corporation

Dell start their innovation process with asking their customers, "What would you really want this thing to do? Is there a different way to accomplish that?" Then they meet with their suppliers and ask, "Can we do this in a different way?" Then they try to come up with a totally different approach that exceeds the original objectives.

To continually bring information from the outside world into Dell, with an eye toward staying as competitive as they can, Chairman and CEO of the Dell Computer Corporation uses a variety of innovative approaches. He says, "I also enjoy roaming around outside the company to see what people think of us. On the Web, nobody knows I'm a CEO. I'll hang out in chatrooms where actual users commonly chat about Dell and our competitors. I listen to their conversations as they discuss their purchases and their likes and dislikes. It's a tremendous learning opportunity."1...More

 

Bibliography:

  1. "Leading on the Edge of Chaos", Emmett C. Murphy and Mark A. Murphy, 2003

  2. "Results-Based Leadership", Dave Ulrich, Jack Zenger, and Norm Smallwood, 1999

  3. "Best Practices: Building Your Business with Customer-Focused Solutions", Arthur Andersen, 1998

Founder - Vadim Kotelnikov. © Copyright by Ten3 East-West.  | Copyright | Glossary | Links | Site Map |

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