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by Larry Wilson & Hersch Wilson
Ask yourself this question: At your last meeting with a client, who was your employer,
the client
firm or your firm? Is the answer easy? Not if the two firms are partners. Partnerships uproot all
of
the assumptions of the traditional seller/buyer relationship.
What exactly is a partnership? Let's start at the beginning.
Remember the old traveling salesman with his sample case, knocking on door after door,
hoping for
a chnace to start his well-rehearsed, mind entangling sales pitch? If enough doors were opened,
enough pitches launched, he'd be able to notch a few sales.
Then came the "customer-focused" revolution, which in broad terms was based
on a simple idea:
selling the customers something they NEED. The rules changed a bit. Finding out what
customers needed could be complex. But the basic game remained the same: selling goods and
services.
Partnership is a whole new game. While customer-focused sales center around transaction
(the
sale), partnership centers around the relationship, a relationship in which you'll be asked to share
risks and rewards, and gains and losses, with customers. Sounds lofty but unrealistic? This
summary will show you in detail how it's done. You'll learn how to:
- Stop
selling. You'll stop thinking of your customers as simply the purchasers of your
product.
- Build
and lead teams. Cross-functional, cross-organizational team are the linchpins of
any
partnership.
- Break
down the walls in your own company. The entire organization is involves in the
relationship.
- Take
a major role in helping customers reach their business goals. This is a key change
in perspective; you work with customers to help them make money, save money, and meet
their customers' expectations.
Partner companies share business goals, teams of employees, and competitive tools.
So which
firm do you work for?
About the Author
Consultant Larry Wilson founded the Pecos River Learning Center. Hersch Wilson is
the lead
facilitator at the center.
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Death of a Traditional Sales Force
"Selling is a dying art."
Global competition has changed all the rules of competition. Loyal customers, lower
prices, and
product innovations are no longer keys to making a sale. With the luxury of choice, customers are
fickle and demanding -- and knowledgeable enough to make their own decisions between
competing products. And competitors can quickly match lower prices or product innovations.
As global competition brings new challenges, technology brings new solutions. Telephones,
faxes,
and computers connect companies to customers and potential customers at a fraction of the cost
(and time!) of the salesperson in the car or plane. Telesales are replacing direct sales.
The traditional sales force is dying. the function and methods of the salesperson
have been made
obsolete by technology, competition, and the customers.
And yet in the new competitve market, finding and keeping customers are more vital
than ever to
survival of the business. Organizations realize that sales are the essence of business. Chief
executives are realizing that their jobs are not to grow shareholder value or finance acquisitions,
but
to sell their products to customers. Without sales there is no business.
The model of the traditional salesperson is dying not because sales are less important
today, but
because sales are so important that they can no longer be the responsbility of one person or one
unit in the company. One salesperson cannot fulfill the expectations and requirements of his or her
customers. The entire organization must be involved. No longer a transaction between
salesperson and customer, sales have become a full partnership between the seller's and the
buyer's organizations. Establishing partnerships, not selling products or services, is the new
function of sales.
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Product as Commodity
Think of products in three broad categories.
- The innovative product:
no competition, flexible pricing strategies, locked-in customers.
- The competitive product:
differentiated from competitors, unique specifications and thus higher
prices, relatively locked-in customers.
- The commodity product:
identical to competitor's product, lower price only differentiation,
disloyal fickle customers.
In today's highly competitive world, all products are quickly commodities. Partnerships,
not
innovative products, will help you keep customers.
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Forget the Bad Old Ways
In the old days, sales were battles, battles with competing salespeople, but also
battles with
customers. It's not that salespeople were trying to hurt their customers' interests. They just didn't
care. Their goal was to sell their products, so the customers' interests were a non-factor in the
equation. Salespeople won the battles with their ability to motivate, cajole, and influence
customers, pushing them to buy the product.
More recently, a new tactic has appeared: the problem- solving method. "I'm
here to help," the
salesperson says. "You've got a problem, I'll solve it." Sounds good, and in many cases the
salesperson is sincere. But the end goal is still the same: selling the product. Solve a problem,
get a commission; solve more problems, get more commissions. Volume is still the key. And
where volume drives the relationship, there's no partnership. It's just the bad old ways done up
nicely.
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True Partnerships Are Like Marriages
Traditional customer relationships won't survive the pressures of today's competitive
world. Only
partnerships with your customers will keep them happy and loyal. But what do partnerships look
like?
Good ones are like marriages, long-term, strategic, value- based, and interdependant.
Are you married to your customers? Ask yourself these questions:
- Is your
partnership strategic? - To make a partnership strateci, try to understand the
customers' business, their strategy. And then think about how you can help your customers
make money, save money, or add value to their customers.
- Do you
share the core values of your customers? - You can't learn about the business
and strategies of customers if they don't trust you. What vlaues are important to them and how
do they compare with yours? Are there unmanageable conflicts?
- Has
the relationship shifted from adverserial to interdependant? - Just being friendly
with your customers isn't enough. Marriage means interdependance, a commitment from both
seller and customer. In an interdependant relationship, suppliers have offices in the customers'
headquarters and customers sit on supplier teams. You and your customers must focus on
the same goals, the same tasks.
- Is your
entire organization involved in the relationship? - Partnerships depend on
multifunctional interchanges between both organizations. If they don't exist already, establish
multiple connection points between your organization and those of your buyers. That may
mean creating multifunctional teams to work on problems. Think beyond your "contact."
How
can you get the full organization working on the problems and goals of the customer's
organization?
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A Partnership Is Born
Wal-Mart was Procter & Gamble's biggest customer. Twelve P&G divisions called
on Wal-Mart
regularly -- in a totally uncoordinated effort. And no top manager from on company had ever dealt
with a top manager of the other company.
Till Lou Pritchett, P&G's Vice President for Worldwide Sales, stepped in. He
called Wal-Mart
founder Sam Walton directly. Walton said he didn't do business very well in his office and invited
Pritchett on a now- legendary canoe trip down Arkansas's South Fork River.
On the river, the two high-powered executives decided to break away from twenty years
of short-
term adverserial confrontation and move toward a partnership built on trust and a shared vision.
They started by creating Wal- Mart/P&G teams focused on one goal: driving cost out of the
relationship. Today the companies are so "married" that seventy-five P&G employees work
permanently in Wal-Mart's Bentonville, Arkansas headquarters.
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Put Customers Before the Boss
Remember the old catch phrase, "the customer is king?" That's hardly true
in the traditional
company. The trust is, the boss is king.
The traditional company is a control-oriented military type of ogranization with layers
of bosses --
each controlling subordinates. Fear drives the employees, fear of losing their jobs or upsetting their
bosses. The ultimate customer for most employees is not the outside client, but the man or
woman who can make or break them: the boss.
In this kind of company, how can you focus on customers?
The customer-keeping company shakes up the military model by organizing around customers,
not
around the hierarchy. For the entire organization, the most important individuals aren't the bosses,
they're the customers.
Customer-keeping companies:
- Value
customers. Every organization teaches that customers are important. We're not
talking about employee manual directives, but about the heartfelt, sincere belief that the
customers are the most important people in the organization. Everyone in the company knows
it is customers and not the CEO who makes it all possible.
- Are
organized around customers. The customer- keeping organization has flattened the
hierarchy- happy organizational chart and broken down the thick walls between departments.
It emphasizes instead cross-functional teams concerned with serving customers. It doesn't
matter how high or how deep you are inside the organization; customers are still your concern.
- Are
hardwired to serve customers. Hardwiring is the compensation and rewards system.
A customer- keeping company's hardwiring will reinforce attitudes and behavior that place the
customer first. But if pleasing the boss is what is rewarded, then talk about customer focus is
just that: talk.
- Have
leaders that point the way. Leaders provide three critical elements to change:
permission to experiement, try new ways, to fail; protection from organizational immune
systems that kill anything new; and tools to help people create solutions.
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Be Creative and Courageous
Skills, knowledge, and experience have always been key ingredients to succeeding in
business.
But in today's shifting environment, when the rules of the sales game are constantly changing,
these attributes aren't enough. You're trying to build new and strong, partnering relationships while
dealing with the challenges thrown at you by demanding, sophisticated customers.
You can't survive without courage and creativity, which together constitute the ability
to "play to
win." Playing to win means being an advenurous and innovative thinkier, somone willing to take
risks.
How do you play to win? First by not "playing not to lose."
Playing Not to Lose
Playing not to lose is a life strategy centered around not taking risks and not being
uncomfortable.
Playing not to lose is an avoidance strategy, driven by four basic fears:
- The
fear of being wrong. You avoid any situation in which you don't have all the answers,
and you never admit you are wrong.
- The
fear of failure. You pick only winnable battles, you never stretch, you never push your
limits, but you always succeed.
- The
fear of rejection. You avoid any risk that may lead to ostracization, so you'll do what
others wnat you to do.
- The
fear of emotional discomfort. You don't want to try anything new because it might be a
little uncomfortable, or you might look foolish.
Go As Far As You Can
Playing to win doesn't refer to winning in the conventional sense. If you win, someone
doesn't have
to lose. Playing to win means going as far as you can with all that you've got. It means choosing
to take risks, to seek challenges, to endure emotional discomfort if it's necessary.
Playing not to lose may be more comfortable in the short term, but you won't be learning
anything,
you won't be growing or advancing. In the long run you lose, because it is the creative and
courageous players who will find the new solutions, who will discover the new opportuntities. And
who will have answers to bring to their customers.
What Do You Stand For?
To play to win you have to decide what you stand for and what you want out of life.
Ask yourself
these questions:
- What are your values? For what principles
will you not compromise?
- What are you talents?
- What is your life purpose?
- What is your personal vision for
your life?
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Lessons of the Pole
At the Pecos River Learning Center in rural New Mexico, Larry Wilson combines classroom
experiences with rugged outdoor activities to help individuals and organizations face challenges and
change.
In an activity called the Pole, participants -- safely secured in harnesses attached
to three safety
ropes held by teammates -- are asked to climb a twenty five foot telephone pole to the to, jump off,
and let themselves be lowered to the ground by their teammates. It sounds simply, but
participants come away with key lessons about themselves, and others.
- 1
- Challenges excite and compel us to try new things. At first, most participants are
extremely reticent about trying the activity. You want me to do what?! But in 99 percent
of the
cases, participants decide to start the climb.
- 2
- Most often, walls of fear are based on subjective, irrational fears, not objective
reality. One by one, the participants are secured in their harnesses and start climbing
the
pole. At some point, they hit a wall of fear and freeze -- although they are safely hardessed
and cannot fall.
- 3
- We can do more and have more perseverence, creativity, and courage under pressure
than we think we do. Most people, after a few minutes of reflection, decide to push through
their fear and climb higher.
- 4
- In the right circumstances, we are naturally supportive, empathetic, and helpful to
others. During someone's struggle on the pole, everyone on the ground is cheering and
shouting encouragement, completely focused on helping the climber up.
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The End of the Lone Rangers
"To me, it is folly to think that one sales rep and one buyer can represent
the total complex
system. No individual is equipped to do that, no matter what kind of superstar he or she might
be."
-- Lou Princhett, former VP Sales, Procter & Gamble
The true partnership relationship between customer and seller organization is too
complex and in-
depth to be handled by one salesperson working with one contact in the client organization.
Partnership means working with teams that cut across both companies and across differenct
functions within each company.
Instead of being "Lone Rangers," today's best salespeople are team builders
- experts at bringing
together people from all over organizations, with different opinions, ideas, backgrounds, and
motivations.
In a radical change from traditional working relationships, these team members will
have to learn
the sacrifices and rewards of working together rather than competing.
To Compete and Collaborate
Our culture emphasizes and rewards competition to the extent that it has become the
natural reflex
for many of us. Divide a group of people into two teams and, even it they are working on similar
tasks, the two teams immediately enter into a competitive battle. Rarely will one team ask the
other for help, or even try to learn from observing the other team's solutions. (In school that's called
cheating.)
Competition is indeed a driving force behind business success and one way of motivating
people
and solving problems. The danger is in believing it is the only way.
Today, collaboration is the key tool that leads, ultimately, to competitive advantage.
'The Difference a Team Can Make'
Boston University Hospital used to have the traditional seller vs. customer battles
when dealing
with their suppliers. "Suppliers would try to sell something at the highest possible price, and
we
would try to get the lowest possible price," says Nancy Hallgren, BU Hospital's purchasing
manager.
Things changed when the hospital established a partnership with Baxter Healthcare,
the $8 billion
hospital and medical equipment supplier. Baxter has been a pioneer in building team-based
relationships with its customers.
Baxter and BU Hospital created a team with members from both companies as well as
from the
hospital's customers. The team meets weekly at the hospital.
"Now Baxter and our hospital staff are working closely together to solve a whole
range of problems
that we have," Hallgren says. "The meetings are casual, off the cuff, and focused on solving
problems and developing solutions."
One problem occurred when the hospital replaced the hall carpeting with tiles. Baxter
carts that
the hospital was using to deliver solutions immediately tore up the tiles. The hospital brought the
problem to the team. The Baxter team members decided to buy new carts for the hospital at their
own expense because they wanted to solve the problem.
"In the past, it would have been our problem, we would have had to figure it
out," says Hallgren.
"Now we can work it out together with more ideas and resources. That's the difference a team can
make."
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Team Zebra's Success
Kodak's Team Zebra (members were from the company's black-and-white film division)
cut the
customer order-to- delivery time from forty-one to thirteen days.
The key to its success:
- The team was concerned with an important
problem directly affecting competitive advantage
(competitor Fuji's time was half that of Kodak's).
- The team set a clear and precise
goal, which was to significantly decrease order-to-delivery
time. The goal was not to "Beat Fuji" a directive too broad to provide focus and direction.
- The team was cross-functional. It
involved all five departments directly affected by the team's
efforts.
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Three Keys to High Performance Teams
High-performance teams have three critical characteristics:
- Clear
and elevating goals. The teams have well- defined objectives and the teammates know
their task is of vital importance to the organization. Important problems galvanize team efforts.
- Complete
trust among team members. If the goals are important, the risks and pressures are
high. Individuals must respond to each other in a positive and constructive manner -- especially
when mistakes, risks, or telling unpopular truths are involved.
- Team
members accept high standards and expectations. In response to a teammate's
support, individuals are encouraged to set high standards and be accountable without the fear
of appearing foolish or making mistakes. Good teams push members to perform at their
highest levels.
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Work on Partnerships Everyday
Long-term relationships
are dynamic, not static. They are constantly changing, constantly getting
stronger or weaker. If you let a relationship stagnate, it will grow weaker and eventually die.
Partnerships need "routine
maintainance"; they need daily attention and work. The routine
maintainance of partnership involves a belief, a mind-set, and three strategies. Here is a checklist
of things to do every day to keep partnerships growing.
Always remember
to keep your customer's best interest at heart. This is the basic belief that
drives all partnerships. Whenever a problem arises, whenever a decision must be made, ask
yourself: What is in the best interest of the customer?
Always try
to continuously prove the partnership. This is the mind-set ingrained in successful
partnerships. Never be satisified with the current state of a partnership. Improve continuously.
(The japanese call this kaizen, and it is one of the keys to their history of competitive advantage.)
Every day, reevaluate your
performance in the partnership. How can we improve our service?
What can we do better? How can we be easier to deal with? How can we drive out unnecessary
costs? What have we learned? What can we improve?
Always understand
and respond to the expectations of the customer. Every time customers
come into contact with your organization -- what Scandinavian Airlines boss Jan Carlzon calls the
"moments of truth" -- they have specific expectations. Be aware of those expecations
and how
they are being met.
Always try
to exceed the expectations of the customer. Don't simply "meet" customers needs,
go beyond their expectations. In this way you will be adding value to the relationship constantly.
Ad- hoc added-value systems (rewarding restuarant employees who offer good service by making
"employee-of-the-month", for example) have limited value. True added-value must be built
into the
relationships. All employees should be offering top service all the time.
Always run
toward problems. Just handling problems as they occur is not enough. Every day:
- Try to anticipate problems.
What can go wrong? What irritates my customers and could
escalate into bigger problems? What are the warning signs of upcoming problems?
- Find solutions with the best interests
of the customer at heart. What's the best solution for
the customer? What is the "win- win" solution?
- Be creative. Is there a different
way at the problem?
Six Questions
to a Better Partnership
The Pecos River Learning
Center uses a method called the Stratefic Partnering Process to help
customers and suppliers improve their partnerships. This process is built around six questions:
- Where
are we now? Ask your customer to make a detailed list of what it expects from you
and how it judges your performance. Improve your weaknesses in areas that are important to
the customer and, if appropriate, reevaluate your efforts in areas that the customer views as
unimportant.
- What's
important to the buyer and us? Working with your customer, uncover three to five
critical issues (any more would become unwieldy) on which you and your organization can
have an impact. Understand the implications related to these critical issues: What happens
if nothing changes?
- What's
possible? Ask your customer to imagine a future perfect scenario in which the
partnership handles all of the critical issues dicussed above. The goal: gaining a consensus
on the ideal future.
- What
do we neeed to do? Time for action. First develop the strategies, the broad inititiaves
needed to work toward the ideal future.
- Who,
what, when, and how? Next translate those inititiaves into specific tasks for
individuals and teams.
- How
will we know when we're there? Set some quantifiable and obtainable goals, for
example, so that the team can measure its success.
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In Greek, the word strategy means the "art of the general."
The Greeks believed that generals had
an overview of the entire battle, while the rank and file had a limited perspective. Sound familiar?
Think Long-Term & Strategically
In the traditional transactions relationship between seller and buyer, the salesperson
was simply a
supplier of goods or services. You establish new customer relationships when you move beyond
the traditional role of supplier to take on a role of driving business results.
Value-adding is not providing a superior product or service -- today this is expected.
You add value
by helping customers reach their business goals.
The difference is in thinking strategically. Before only three players counted:
you, your customer,
and your competitor. Now you must take the perspective of the customer: You must include the
customer's customers and the customer's competitor in the picture. With this larger perspective,
you can then become the ally of the customer and help develop the strategies to achieve its goals.
Understand Your Customer's Business
The learn and understand the business environment of your customer, to gain its perspective
on its
business, you have to do your homework. That means reading anything you can about your
customer and its business. Even more important, find the right people and ask them the right
questions. Get them to talk. Take them out to lunch and let them tell you stories about the
business. Cover the spectrum, from management to salesperson, from inside the company and out
(non-competing suppliers, for example). Soon you'll have gathered enough information to answer
the key business questions: What business is your customer really in? Who are its competitors?
How does your customer make money? How does it lose money? What are its major cost areas?
Who are your customers customers and what do they expect? What keeps your customer up at
night?
The Strategic Conversation
Once you know the answers to all these questions, you
will know your customer's business as
well as the customer. The next step is to enter into a strategic conversation with your customer.
A strategic conversation is centered around two questions. Where are you now? Where do you
want to go? These conversations will often involve high-level customer executives.
Once you've reached this point, the customer will no longer
see you as just a representative of a
product or supplier organization. You have become a resource, a consultant, an expert in its
business. And since you can match an expert understanding of its business with an expert
understanding of your own, new opportunities that were never before visible come to light.
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Learn the Language
You can't solve the customer's business problem's, and you can't think strategically
about the
customer's business if you can't speak the financial language.
At this level of interaction, you need to understand not only the terms but the impact
of financial
indicators. What causes pre-tax profitability to go up or down? This is what your customer
wants
to talk about.
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Make Money, Save Money, or Add Value
Don't lose sight of the ultimate purpose of any customer's business: economic benefit.
This goal
can be broken down into three initiatives: making mone for your customer, saving it money, and
adding value to the customer's customer.
After learning everything you can about your customer's business, find out which of
these three
initiatives, or combinations of them, you and your organization can affect most effectively.
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The Word from the Pros
- "Over the past ten years, selling
has focused on customers' satisfaction... always in terms of
the customers' need for your product. Now we are having to look much more deeply into our
customers' world and needs. We are asking the questions, "What do our customers need to
be more competitive?" What do they need to satisfy their customers."
- "In the strategic mode, you're
looking for opportunities to bring more to the table than just a
sale. So you may be asking about a company's long-term growth plans, investment
strategies..."
- "Partnering will require the
salesperson to become much more of a resource manager than a
salesperson. They will need to understand their customers' business environment and be able
to match their corporate capabilities against the needs of the customers."
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Who is Ready for Partnering?
Not all customers are looking for a partner in their supplier. Broadly speaking,
there are three
types of buyers:
- The
Best-Price Buyers. These buyers' motivation for buying is finding the lowest price.
They
don't want ot be locked into a contract with any one source. They know exactly what they're
looking for, and they want to be able to decide on a sale-by- sale basis.
- The
Solution Buyers. The relationship between the seller and solution buyers is more
complex than for the best-price buyers. These buyers are looking for a problem-solver. They
are spending more time, energy, and resources in acquiring your product or service. Switching
to another supplier is more problematic, so they are more loyal than the best-price buyers.
- The
Partners. More than one product or service is involved in the business relationship
between the buyer and seller. As a result, buyers are more committed to a long-term
relationship with the supplier. Interdependance between buyers and supplier is established.
Switching to another supplier is very costly.
Categorize Your Customers
To determine which customers
can be potential partners, try to place them in one of the three
categories above. To do this, ask youself the following five critical questions related to their
motivation for buying in general, and buying from you in particular. Compare the answers to the
description of the categories above.
- What
motivated the customer's buying decisions? Obviously the best-price buyers are just
looking for the lowest price. If instead the customer's main motivation is finding new ways to
meet its customers' expectations, you may have a potential partner.
- What
level of support does the customer require after a sale? Does the customer expect
little or no technical assistance or support? Or does it expect you to provide all technical
assistance and support? The expectations of a partner would fall in the middle, seeking
ongoing support in creating new options and ideas for expanding it's business.
- How
much of the customer's total business do you have compared with your
competitors? If you are constantly fighting for a piece of the business pie or even if
you are a
major supplier, but you're not the sole source, you have not established a partnership. You
want to be the sole supplier, with your individual product or service offering just the beginning
of the business relationship.
- How
difficult is it for your customer to switch to a competitor? If customers can switch
easily at low or even moderate cost, they are probably less likely to be interested in a locked-
in partnership.
- How
does you customer see you? Are you viewed as just another vendor? Are contract
negotiations adverserial events? In partnerships, contract negotiations would focus on how you
and the customer will share the gain from collaborative efforts, or on establishing structured
alliances.
Adjust Relationships with the Customer
It is important to reevaluate your relationships with all of your customers.
In some cases, you may
realize that some customres are not worth any of the time or money that you spend on them. In
this case, let go of those relationships and concentrate on more profitable partnerships.
Here are some suggestions in your reevaluations:
Downgrade a buyer relationship if your transactions with the customer
are low margin
considering the time and effort that you put into them, or if the relationship is difficult to manage
and not likely to lead to a closer partnership.
Maintain the relationship if the customer is a high-margin, high-
quality stable business with
steady revenue, and if the relationship is open, friendly, and has the potential to evolve into a
partnership.
Upgrade the relationship if your customer is strong, visible,
with a high and potentially growing
revenue, and if there are possible benefits from combining resources among your organizations.
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Match Your Resources To Your Customers
Are you allocating the
right amount of resources -- time, energy, and money -- to the right
customers?
Best-price buyers, for
example, are looking for price and convenience. Have you made the
transaction as convenient as possible? Perhaps fax and phone interactions are all that are
needed to fully satisfy these customers.
On the other hand, increasing
resources to solution buyers might turn them into partners. For
example, some solution-buyer relationships are very strong - but you are not the only vendor.
To
make these buyers partners, you need to convert them to a single source relationship. Perhaps
you can show them how in single- source relationships cross-organizational teams work together
to solve customer problems.
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