Page 16 - MetalForming January 2011

The Business of Metalforming By Michael Bleau
New Year’s Resolution: Pick the Right Customers
With the New Year and a renewed economy come fresh opportunities and a perfect time for some reflection. Typically, we spend so much time meas- uring how well we’re serving customers that we can some- times forget to measure how well our customers are serving us. This is a critical part of ongoing success, especially now as our climb out of the recession accelerates. Where you spend resources is particularly important as you now may have less competitors and more opportunity to chase. Pick- ing the right places to focus makes a big difference.
Quick Customer Litmus Test
Some customers might seem like they’re worth a Her- culean effort, and they might be, but it’s hard to quantify this until you take a hard look at all of your customers and prospective customers. Here’s a simplistic way to start the process of building a customer strategy for spending more or less resources on certain customers. To start, bring together key individuals who can provide an opinion based on direct experience as well as be able to support it with data when the time comes to dig deeper. You can quickly facilitate this by projecting an Excel spreadsheet on a conference room wall. Collective participation is neces- sary, so ensure that everyone has a voice. Depending on how you break up your business, you may need to meas- ure customers within sets based on market or product groups.
1 List your customers and new prospects; include how long you’ve been serving existing customers, the rev- enue earned and a summary of costs for each. Keep
it simple, since this is meant to be a quick exercise, not a deep dive.
2 Next, list what your customers’ collectively expect from your company and what role you play in meet- ing their business goals. Objectively rate how well
you serve these needs and assign an overall score for each customer.
Michael Bleau has served manufacturing and con- sumer-related industries since 1986. Prior to forming Industry Scope, a strategic b2b and b2c sales and marketing consultancy, in 2002, he held executive positions for several automation and press manufac- turers. Michael regularly consults with manufacturing companies on strategic planning, sales and market- ing, brand and product development, PR and sales- channel development.
Industry Scope
tel. 810/397-1429 mbleau@industry-scope.com www.industry-scope.com
14 MetalForming/January 2011
3 Now,listexpectationsthatyouhavefromcustomers. Identify what you need from them in order to meet your business goals. Include intangibles such as ‘good
chemistry’ and ‘aggravation factors’. Now, rate how well each of your customers delivers on meeting your needs and assign an overall score for each.
4 Review the initial results to see how compatible you are with each customer and what the total ‘cost’ is of doing business with them. Now, identify
which customers are good, moderate or poor matches with you.
Identify and list the short and long term opportuni- 5 ties that exist with each customer and decide where you feel they fall into one of the following lifecycle categories: a growth potential for your future; in mainte- nance mode to keep revenue flowing; or ripe for being
replaced.
6 Lastly, for each lifecycle category, order customers
from top/down and pick the top 5 to 10, then deter-
mine if they’re moving from their current position to another, (ie. from growth to maintenance). You’re now at a point to be able to dig deeper into financials and supporting data as you generate strategies and assign support resources to nurture those customers and prospects representing growth opportunities. Move towards replacing nonper- formers, while ensuring that you protect and maintain those in the middle. Having a strategy in mind for each customer lets you better assign resources to ensure that you’re opti- mizing the effort of each individual in your employment. Keep in mind that,in many cases, eliminating customers can take time and should be approached without burning bridges. However, sometimes, as in the sidebar example, moving away quickly is appropriate.
We all are in business to meet a set of goals intended to have beneficial outcomes that we feel are worth spending our days, careers and life’s work pursuing. Let’s refine this effort and simply refer to it as our dream. Customer rela- tionships are costly to foster, expensive to maintain and draw resources from every part of our business and lives, but these same relationships fuel our dreams. Any time we waste focusing on bad customer matches is time away from opportunities and customers who may offer greater poten- tial reward. Without regularly checking how our customers are serving us, we can get caught up pursuing the dreams of some less deserving customers and lose focus of what best contributes to our success. So in 2011, whose dream are you working on?
See sidebar example on next page. MF www.metalformingmagazine.com