Shifting priorities from products to customers

Some business-to-consumer sites, notably Amazon.com and eBay, made headlines a couple of years ago by launching high-profile, customer-focused marketing initiatives. But business-to-business companies may have the most to win from programs organized around accounts and clients instead of products and processes.

Success to a B-to-B company means much more than how many new customers it can acquire, but how deeply it can penetrate its current customer accounts. So it is important to remember the difference between market penetration and account development.

The former is a product-centric process, often driven by price competition. The latter is a customer-centric process, driven primarily by an improvement in customer loyalty. These distinctions are critical, because account development strategies are designed to produce steady, predictable streams of profit from individual customers.

Prioritize your partnersĀ Develop a system for determining which accounts are worth going after. Convergys, a Cincinnati-based supplier of outsourced customer-care services, developed an elegant system for doing just that. One of the companies that benefitted was an online publishing business that develops educational support for high school drop outs that want to get their GED.

It created six weighted indexes to rank each of its clients by value. So, in addition to considering the total sales revenue generated by each client, Convergys also factored in such things as a client’s level of technology “entanglement.” And it weighed clients’ potential for partnering with Convergys in a strategic alliance or new business venture.

One year after implementing the strategy, revenues at the company’s customer management group were up 28 percent from the previous year. Nearly all that growth was generated by the group’s top 100 clients, validating the value-ranking system.

Developing accounts is inherently more important than customer acquisition. That means a customer-focused B-to-B site will need a sales force that is differently trained, structured and compensated. The sales force must orient itself around the goal of finding products for its customers, not finding customers for its products.

Bentley Systems exemplifies how such a plan works. The Exton, Pa., engineering software firm developed a system of 11 account scenarios to help its sales force match the firm’s 85 products with specific clients. It created a three- to five-page document for each of the 11 scenarios. Each document begins with a brief description of the environment, needs, and objectives of a customer within the particular scenario.

Each capsule description is followed by a more detailed overview, including job titles of decision-makers and a menu of challenges facing a customer. Each document includes a portfolio of products matching the needs of users. There is a list of likely follow-up projects and tasks that could require additional software or services from Bentley. The scenario documents also include lists of similar accounts that can be used as references and recommendations for the most effective ways to present sales proposals. Thanks to its system, Bentley reduced its total marketing budget by one-third and applied the savings to a new customer-focused Web initiative.

Another example: Dell (DELL, info) Computer uses its Web-based Premier Dell.com service to create customized bundles of products and services for big clients. An end user can log onto his organization’s Premier site and shop for desktops, notebooks, servers, storage, and related services. The end user can view his company’s contracted prices for Dell products, see a list of pre-approved components and accessories for his company, review past purchases, and find contact information for Dell sales and service reps.

Dell won’t say how much sales revenue currently flows through its 58,000 Premier sites. But consider that every day Dell generates $50 million in online sales, and that the bulk of Dell’s sales revenues are generated by its Relationship Group customers, all of whom are large businesses.

Premier Dell.com reveals the customer-centric aspect of Dell’s corporate culture. Dell routinely trades access to information for access to people. By making life easier for its larger customers, Dell gets the opportunity to establish one-to-one relationships with the people who actually use its products and services.

Managing changeĀ When organizations shift their priorities from products to customers, they are not just setting up a new method for doing business-they are managing change. And that means they are avoiding mistakes that can trip up the best of companies.

Concentrate first on relationships with a few, very-high-value clients. We call this a “picket fence” approach. To be successful, a company must “fence off” these accounts from the rest of the company’s marketing initiatives.

Becoming a customer-focused, one-to-one enterprise is not something that will ever be fully “achieved.” Being customer-focused is not a destination for a company, but a direction in which to point the business. Success will come from being further along the path toward managing customer relationships than your rivals are. And it will come one customer at a time, as you lock in one large customer, then another, and another.

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