Monday, December 22, 2008

Creating a Customer Culture with Key Account Management and Strategic Customer Relationship Management. Service Management Excellence.

Creating a customer culture

Internal and cultural changes required in an organisation to support a focus on customers leading to an environment that puts customers first.

Learn about the factors you can influence that make customers satisfied:
 Your impact on your environment extends at least as far as the people you work with and your internal customers.
 The factors you can influence include, vision, attitudes, training in marketing and customers, understanding customers, hiring employees and employee rewards.

Evaluate your understanding of your own and your customers’ values
 Companies are radically rethinking the way they ‘promote’ their images. They are looking at new ways of appealing to customers through values.
 The values that your organisation and your customers share are the most powerful ones.

Understand the importance of key account and customer relationship management
 Key account and customer relationship management are founded on improving your knowledge of your customers.
 Targeting and segmentation of customers will become more accurate and longer term relationships with customers are facilitated.

Assess relationships between customers and suppliers within partnerships
 Partnerships are set up to support long term relationships and offer benefits to both suppliers and customers.
 Partnerships demand more than just logistical fit. They are supported and made successful by shared cultural and behavioural values.

Key account management and customer relationship management

Key account management is a business process with three main elements that allow an organisation to explore and capitalise on their valued customers. The three elements are:
 an approach to customer segmentation
 the basis for customer retention
 a strategy for growth and development.

A) Customer segmentation
The starting point for key account management is to understand the values espoused by the target market at a minute level. Whether key accounts are individuals or corporate buyers, the foundation for customer focus is to know their characteristics.

Do you know:
 what elements of your service your customers value?
 what elements of your products/ service cause most difficulty for your customers?
 how much each of your key customers spends with your company?
 what proportion this is of their total spends for this product or service?
 how financially healthy are your key customers?
 what are their strategic plans?
 what processes your customers use to purchase, sell, manufacture or use products or services?
 what else your customers buy?
 what they buy from your competitors?
 how they rate your services/products?
 how much it costs to look after key accounts?
 the profitability of key accounts?
 how much it costs and what period it takes to replace a major new account?

B) Customer retention – supplier and customer relationships
The principles of key account management are based on meeting the needs of special customers more precisely. Recognising the value of key accounts and identifying the high costs associated with replacing key accounts will help to direct efforts towards retaining customers for longer and with a higher value.

Customer retention is achieved from the seller’s point of view through the development of loyalty and customer satisfaction. It will involve tailored strategies for constructing and developing individual and corporate relationships.
Practical ways of retaining customers include loyalty cards, financial benefits, membership privileges and preferential treatment in terms of access to services or special offers. Many organisations email promotions and information, which serves to keep their brand at the top of a purchasers mind. It is easy to over reach with this kind of promotion, handled sensitively customers may see it as an important source of information.

Structural ties are another way to retain customers. The intention is to provide a range of services associated with the purchase that mean it would be more difficult for a customer to move to a competitor. Facilitating payment arrangements, legal agreements, use of protected patents and intellectual property are some examples. Offering groups of products which make the offer relatively unique can create a structural tie that a customer may not be inclined to break.

Reinforcing the purchasing decision and getting customers to understand the value of the service or product they have brought may also discourage defection. Customers may well feel a ‘buyers remorse’ or cognitive dissonance having made a large capital purchase. They need to realise the benefits of the purchase or the relationship quickly with after-sales attention. Recognition in the wider community of the good purchase decision is also a powerful force in overcoming cognitive dissonance. So, whatever positive messages an organisation can get out into the community around the time of a large sale will be appreciated by the purchaser and contribute to a long term relationship.

C) Growing and developing customers

Understanding the potential for growing key accounts and retaining their custom is central to key account management. This demands, in some instances, some fairly complex customer and market analysis.
The dimensions that are commonly explored in customer analysis as:
 who constitutes the market?
 what does the market buy?
 why does the market buy?
 who participates in the buying?
 how does the market buy?
 where does the market buy?

This analysis provides some detailed information about the types and range of consumer buying behaviour likely to be encountered. It may include habitual purchases, impulse buying, limited decisionmaking and complex buying decisions.

The process then needs to focus in on particular customers across the continuum from high value, high volume to lower value, lower volume customers. The kind of information required at this stage includes:
 actual current value of sales
 profitability of current sales
 cost of provision – services and distribution
 external factors such as overall market profitability, trends and developments, competitor developments and activities
 customer developments and capital growth areas
 predicted future demands
 predicted future demands can be assessed using a number of tools such as:
– surveys of buyers’ intentions
– market research
– sales force opinion
– expert opinion
– analysing past data.

Growth predictions need to take into account any diversifications in business or operations, new product developments, technology changes and demographics. There are so many variables that absolute accuracy should not be attempted. The principle aim is to grow and develop customers without expanding the organisation’s cost base so significantly that the strategy becomes infeasible.

Customer relationship management is a technological system to support the management of relationships with customers or a business philosophy that supports the development of long-term, sustainable and valued relationships with customers. This concept moves on from the transactional sales model adopted for shortterm gain.

The generally accepted purpose of Customer Relationship Management (CRM) is to enable organisations to manage their customers through the introduction of reliable systems, processes and procedures for interacting with those customers. CRM is normally envisioned as a set of technology tools.

A wider definition includes relationship marketing that brings in attitudinal and behavioural aspects of the relationship and forms part of the culture of the organisation. Relationship marketing focuses on improving feedback mechanisms with the customer and developing customer loyalty through knowledge and long-term contacts. Relationship marketing and CRM work well when operating together.

Develop Service Management Excellence and Build a Customer Culture with Key Account Management and Strategic Customer Relationship Management.

For more Information:
Account Management and Customer Relationship Management
Build Better Relationships with Your Customers, Customer Care Excellence, Successful Global Account Management, Managing Strategic Accounts



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