We've all heard the excuse "we were beaten on price" and probably the phrase "that old chestnut" comes to mind. Considering the over-use of this mantra, it is obvious that neither resellers nor dealers can afford to view customer relationships from a purely product sales approach.
A lot is said, perhaps by way of lip service, about understanding "customer needs", but all too often would-be buyers report a glaring absence of method.
Account management tools such as customer relationship management (CRM) and value-chain analysis are occasionally mentioned, but without an understanding of what they are, or how they can be used. Refer to CRM and everybody talks about a software program. Dare to mention value chain and you can get your coat.
If getting to grips with what the customer needs is the name of the game, the question is: how useful are such tools? In a customer-supplier relationship, is "understanding what the customer needs" too often confined to an examination of what sells more, improves efficiency or reduces costs for the enterprise?
And is there anything else on their minds?
According to Neil Robertson, chief executive of 30/30 Vision, which delivers eCRM to SMEs, needs analysis is too dependent on the skills of the salesperson carrying out the process.
"While every business likes to think its salespeople are professionals, experience shows that the sales approach is often based on 'I've got one of these to sell, who can I get to buy it?' rather than 'What is the customer trying to achieve, and how can we help?'"
Roberston thinks failure to remedy this situation will result in businesses suffering because of salespeople who want to sell something, but are not interested in helping customers to resolve their business needs. And that does not take into account the needs dictated by non-work-related factors.
Using the concept of value chain in CRM produces some weird conversations. In classic business-school style, many advocates of value-chain analysis examine a series of elements within the customer's organisation.
These underpin the functions that lead to the satisfaction of the customer's customer. They focus on primary activities that bring products and materials into the company and transform them into service solutions.
They also provide the support activities that underpin the primary activities with the inputs they require.
The idea is that each element can be a source of competitive advantage. Strangely, some commentators admit to focusing on their own company's value chain first and foremost. How this will establish what the customer wants is anybody's guess.
Worse still, some people think value-chain management is another program for the PC, like database management. So is value-chain management an IT function or simply an account management process?
"Customers can be internal and external, and value can be given and received," says Ross Kirkwood, head of strategic consulting at IT services company Atos Origin UK.
"Initially, the value chain should be examined, detailing the 'as is' situation and understanding where improvements can be made. This then allows the 'to be' or 'could be' to be defined. It is only then that potential solutions should be considered. Otherwise the tail is wagging the dog."
A simpler approach to value-chain analysis lies in this definition: "The elements of the value chain can be found in anything tangible or intangible that affect a company's bottom line."
This broadens the debate considerably. The process can now operate at a corporate, interdepartmental and personal level. Is this what the company needs? Is this what the department needs? Is this what the customer's manager, Mrs Bloggs, needs when she is three years away from retirement with two kids at university?
This reminds me of my days as an inexperienced account manager, when I was involved in the bid for a network at a major London hospital. Not heeding the man who signed the cheques at the hospital, who said his biggest concern was that the cleaning contractor had gone bust, I sat and waited for the "yes" decision, based on the fact that the company was longer-established, the solution cheaper and so on.
Meanwhile, a rival company went a bit further around the proverbial block, persuading colleagues, free of charge, to carry out the cleaning functions in the hospital.
Needless to say, that company won the business. Never mind. Journalism is a good career.
If you accept that the customer's value chain is as strong as its weakest link, then Mrs. Bloggs's needs may be pivotal in relationships with suppliers.
Value-chain analysis is most effective when relationships between departments, including individuals employed therein, are scrutinised in tandem with relationships with all customers and suppliers of those departments. What is the impact of Mrs Bloggs's decisions outside the business environment, on her family or her need for a holiday?
It is not unknown for firms to head-hunt individuals who stand in the way of a large order. What is the cost of a salary and some training against a multimillion-pound contract?
According to Stan Maklan at business and technology consultancy Sapient: "When selling to an organisation, it is vital you understand the impact your solution will have on those responsible for buying, and on the overall business and individual groups within that organisation. Managing the complexities of the buying organisation is an established theme of industrial marketing literature."
Tim Powell, sales director at training organisation Sales Academy, says: "It's a question of finding out what's in it for the director or functional manager, as much as what's in it for the company. The salesperson must demonstrate the value of the wider factors he can bring to the table."
Patrick Murphy, UK/northern Europe managing director of Point Information Systems, agrees.
"Depending on the type of product being supplied, such extended relationships are extremely important and can, if not properly managed, derail the prime relationship," he says.
All CRM-tooled up
At this point the argument for the use of CRM tools in this process gathers pace. David Beard, pre-sales manager at eWare, a broadbase CRM vendor that specialises in wireless technology says:
"Core to any CRM implementation is the commitment from all stakeholders in a business, be they direct company employees across differing pre- and post-sale departments, third-party players [resellers, suppliers, and so on] or customers.
"All information and interaction about and for customers must be held in one place. Delivering the message that 'we know about customers from one source' ensures that all stakeholders appreciate the power of the system," he says.
Would the subtle nuances of a relationship between two individuals not be lost in the process of storage?
"There is a role for personal relationships in relationship management. I don't think technology will eliminate personal relationships. If properly implemented, it should free up time to permit higher-quality personal contact, spending time, and on creative, business-building ideas for the future," says Maklan.
Kirkwood claims that all relationships are valuable and should be treated as such.
"If interdependencies are understood, then you can start to understand where synergies exist and where you can match up customers for mutual benefits. The information you gather is important from a personal point of view, but how you use it is key.
"For example, your relationship could be enhanced by wishing a customer a happy birthday, or congratulating them on the success of their football team," he says.
Finding the weakest link
Despite this, relationships with customers regularly degenerate to the level of merely having a conversation about the details of a tender. Very often, even the customer does not recognise the crucial nature of certain relationships or functions, or where they sit in a hierarchy of priorities.
Uncovering the weak links can put would-be vendors in a very favourable position, something that is unlikely to occur if mere assumptions about product and need are to the fore. For many, however, accruing more than just the opinion of a few individuals in the IT department can be a conundrum.
The opportunity exists for the account manager to use his company's wider resources to build a bigger picture of the customer's organisation.
"The virtual team is perfectly placed for information gathering. They can spread an agreed team message and tailor the tone of the message according to the position of the contact in the customer's organisation," says Powell.
"Specialist and account managers have different learning skills. They should all be used as references to check from different 'thinking profiles'.
"Account managers are activists, for example, while systems engineers tend to be more reflective and theoretical. You can temper one with the other."
There is nothing to stop a supplier's finance manager discussing the euro with the customer's finance department, or dispatch departments discussing issues of mutual interest. But is the role of the wider account team more "helpful" than "significant"?
"It's invaluable," Kirkwood responds. "Customers should feel an organisation knows them intimately and has knowledge of all contact that has been made with them.
"All contact should be co-ordinated and stored so the customer sees a seamless, single contact with your entity."
Reinventing the wheel?
Again, CRM tools come into play. Some older members of the sales community believe that concepts such as CRM and value chain are just products of business schools, a reinvention of the account management wheel, and a mechanisation of an age-old process.
Beard says: "The fundamental point about CRM is that it has the potential to enable closer relationships with everyone who has come into contact with the business. However, it can't operate as a 'bolt-on'.
"You have to work out how your customers want to do business, and then educate your people to facilitate that.
"There's an expression 'putting lipstick on a pig' and, odd as it sounds, it's a good analogy. Just bolting on a front-end and allowing it to run isn't going to get you anywhere."
The basic element in any relationship is the interaction of at least two people.
"Proactive account management should give the supplier a clearer picture of who the stakeholders are and where they fit in the organisation," says Murphy.
"Any relationship management technology implemented should be able to track all touch-points with these stakeholders. The supplier should also have an ongoing 'TLC' campaign that raises their profile by appropriate communication with these stakeholders."
But is this not just an extension of an account manager effectively using a Filofax?
"Good old-fashioned account management techniques will always be important. But increasingly they are the key source of information for feeding into IT solutions, which can do all the clever analysis of the relationship," says Simon Scarrot, director of marketing and business development at Peregrine Systems.
Scarrot also highlights a division of labour between man and mechanism.
"IT solutions can enhance this relationship but not replace it. You always need a human face within these relationships.
"Good old-fashioned account management techniques that are client-facing allow an opportunity to build up a level of trust with external partners, and also gather a substantial amount of knowledge," he says.
This would not be so easy if these relationships were totally automated.
Although it may be a way of finding further sales leads, a company would go out of business if it relied solely on these systems for selling. Ultimately, CRM can provide understanding of the requirements of the organisation and the needs of their external customers, through analysis of gathered data.
Old ones are the best
Even if CRM and value-chain analysis are reinventions of an old concept, there is nothing wrong with a fresh approach to an old idea: the one that says businesses are run by people with varied lives.
Business schools develop tools by observing and researching best practice in industry. By putting them into frameworks, managers can use best practice for themselves.
The danger comes in being constrained by the tools when they can always be tweaked for your own needs.
Some say such tools are an inevitable extension of becoming customer-obsessed. But are such tools the differentiator that repentant box-shifters are seeking Probably not. It is unlikely that box-shifters would use tools such as value chain to create any other differentiation than reduced cost and price.
By getting closer to customers through relationship management, a company can manage the complexity of its working environments and more effectively apply expertise to its business. Anyone can reply to a kit list, but not everyone can take a requirement and create an effective design, implement the solution and then support and manage it.
Demonstrating to your customer that you really care is not an easy task, and it is probably why so many discussions revert to price.
- All too often, customer-supplier relationships are product-based.
- An understanding of a buyer's wider set of concerns may be beneficial: What is the significance of the buyer's relationship with this department or that individual? More to the point, what external factors (family, health and so on) are affecting his or her decision?
- Often a sale can be affected, not by the products or prices on offer, but by other factors the salesperson brings to the table. What can you offer to make the buyer's life easier?
- Despite attempts to mechanise, the process of managing customer-supplier relationships remains dependent on the skills of the account manager in a face-to-face situation.
- Gathering information about the extended value chain (extended to include any element whose activities directly or indirectly affect the conduct of business) is facilitated by the actions of the wider virtual team: engineers, for example.
Appearing in this article
:Unique Solutions: 01207 299 945 www.uniquesolutions.co.uk
Peregrine Systems: 0118 988 2992
??????Sales Academy: 020 7927 8330 www.salesacademy.co.uk
Herald Communications: 020 7340 6300
30/30 Vision: 01932 578 800 www.3030vision.co.uk
Point Information Systems: 01753 748 034
Sapient: 020 7841 5468 www.sapient.com
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