India CreatingValueforCustomers01!31!06

8/6/2019 India CreatingValueforCustomers01!31!06

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Creating Valuefor CustomersCreating Valuefor Customers

DR. JAGDISH N. SHETH

Charles H. Kellstadt Professor of Marketing

Emory University

[email protected]


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2006 Dr. Jagdish N. Sheth. All rights reserved.EIM/ Creating Value for Customers 01-31-06

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The Evolution of BusinessPractice and PhilosophyThe Evolution of BusinessPractice and Philosophy

Business Practice& Philosophy

TIME

COMPETITION

CENTRICPRACTICE

CUSTOMERCENTRICPRACTICE

PRODUCTCENTRICPRACTICE


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The Strategic Advantage ofCustomer Centric PracticeThe Strategic Advantage ofCustomer Centric Practice

UNIT/$ NONTRADITIONALCOMPETITION

CUSTOMER

TRANSACTIONMANAGEMENT CUSTOMEROUTSOURCINGMANAGEMENT

REVENUESCUSTOMERSBIGGEST SMALLEST

CUSTOMERRELATIONSHIPMANAGEMENT

COST


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vCustomer Service andSelling

Customer Service andSelling

SELFORDERING(Internet)

BROADCASTSELLING (DM/DR)

TELE-MARKETING

ACCOUNT

EXECUTIVE

TEAMSELLING

REVENUE/ACCOUNT

CO

ST/

ACCO

UNT

KEY ACCOUNTMANAGEMENT

AVERAGECOST


5/242006 Dr. Jagdish N. Sheth. All rights reserved.EIM/ Creating Value for Customers 01-31-06

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Who is a Customer?Who is a Customer?

A customer is a user, a payer and a buyer(selector). Each seeks different values.

Users want performance value; payers want pricevalue; and buyers want service value.

Therefore, if you offer a better product or service ata lower price in a customer friendly manner, you

create sustained customer loyalty. The three roles are usually separate and specialized

in Fortune 500 customers but are often blurred insmall to medium enterprises (SME).

Role separation and specialization occurs even inSME Accounts when the user is not a payer or a

buyer.



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e w n equ remen s oBecoming the CustomersChoice

e w n equ remen s oBecoming the CustomersChoice

-

-

+

+

CUSTOMER SERVICE(HOW)

PRODUCTOFFERING

(WHAT)

CUSTOMERSCHOICE



7

Customer Value SegmentsCustomer Value Segments

HIGHLOW

HIGH

PREMIUMVALUE

(15 to 25%)

PREMIUMVALUE

(15 to 25%)

BESTVALUE

(50 to65%)

BESTVALUE

(50 to65%)

RIP OFFVALUE

(



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Becoming the CustomersChoiceBecoming the CustomersChoice

1. Customer satisfaction is partly psychological and partlyreal. Expectations are psychological and experiencesare real.

2. Expectations have larger variance (diversity) than

experiences.

3. Customer expectations rise with customer satisfaction.

4. It is equally important to manage customerexpectations as meeting or exceeding them.

5. Meeting expectations of the most demanding customers

results in exceeding expectations of other customers.

You become the customers choice byexceeding customer expectations better thanthe competition.


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Creating Value forCustomersCreating Value forCustomers

VALUE ADDEDSERVICES

10

ONE STOPACCOUNTABILITY

8

FINANCING6

QUALITYOBSESSION

3

TARGET COSTING

4

MASSCUSTOMIZATION

5

DIFFERENTIATION

1

EASY TO DOBUSINESS WITH

7

INNOVATION

2

FRONTLINECOMPETENCE

9PERFORMANCE

VALUE

(USER)

SERVICE

VALUE(BUYER)

PRICEVALUE

(PAYER)


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PERFORMANCE VALUE (USER)1. Quality Obsession

Examples: Six Sigma Process

Motorola, GE

Japan, Inc.

2. DifferentiationExamples: Product Differentiation

Brand Differentiation

Distribution Differentiation

3. InnovationExamples: 3M CompanyIBM (On-Demand Computing)


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PRICE VALUE (PAYER)4. Target Costing

Examples: Japanese car makers

Intel

5. Mass Customization

Examples: Motorola

Leggs

6. FinancingExamples: Airbus

Infrastructure industries


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Creating Value forCustomersCreating Value forCustomersSERVICE VALUE (BUYER)

7. Easy to do Business WithExamples: Federal Express

Online Access and ResponseAirline Reservation Systems

8. One Stop AccountabilityExamples: Prime vs. Subcontracts

System Integration ServicesKey Account Managers

9. Frontline CompetenceExamples: Specialty Chemicals

SyscoAmerican Express

10. Value Added ServicesExamples: Service Contracts

Outsourcing ServicesManaged Facilities


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Value Creation is a ProcessValue Creation is a Process

Value creation is process driven and notprogram driven

Value creation is a process obsession

Value creation is a continuous process

Value creation is a cross-functionalprocess

Process driven value creation is moredifficult to imitate

Value creation is a cross functionalcollaboration with customers


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Antecedents for Partneringwith CustomersAntecedents for Partneringwith Customers

CONTINUOUSBUSINESSPROCESSES

CUSTOMERCOMMITMEN

Customer CentricPractice

AD HOCBUSINESS

PROGRAMS(HOW)

CUSTOMERSATISFACTION

(WHAT)

Product CentricPractice


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Customer Centric CultureCustomer Centric Culture

RELATIONSHIPMANAGEMENT

SOLUTIONDRIVEN

Trusted Advisor

TRANSACTIONMANAGEMENT

SALESDRIVEN

Account

Executive

Relationship

Manager

Expert

Advisor


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Customer Centric ProcessesCustomer Centric Processes

SUPPLIER CUSTOMER

PRODUCT CENTRIC PROCESSESPRODUCT CENTRIC PROCESSES

CUSTOMERSUPPLIER

SALES

SERVICE

PURCHASING

USERS

INFORMATION

SYSTEMS

HUMAN RESOURCES

CASH FLOW

LOGISTICS

CONTRACTS

INVENTORY

SALES

MARKETING

SERVICE

INFORMATION

SYSTEMS

HUMAN RESOURCES

CASH FLOW

LOGISTICS

CONTRACTS

INVENTORY

SALES

MARKETING

SERVICE

CUSTOMER CENTRIC PROCESSESCUSTOMER CENTRIC PROCESSES

?


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Customer Centric Systems:Automation & IntegrationCustomer Centric Systems:Automation & Integration

ONLINE

INTEGRATEDORGANIZATION

ConnectedEnterprise

TIME SILOS

FUNCTIONALSILOS

TraditionalEnterprise

E f CRM dE f CRM d


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Emergence of CRM and e-BusinessEmergence of CRM and e-Business

Front LineAutomation

Back OfficeAutomation

ExternallyIntegrated

COLLABORATIVE COMMERCE

(e-BUSINESS)

SUPPLY CHAINAUTOMATION

(SCM)

CUSTOMERRELATIONSHI

P

AUTOMATION(CRM)

BUSINESSPROCESS

AUTOMATION

(ERP)

InternallyIntegrated

us omer en r cus omer en r c


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us omer en r cOrganization Requires DualP&L Organization

us omer en r cOrganization Requires DualP&L Organization

Create a Chief Customer Officer (CCO) position comparable to theChief Operating Officer (COO) position.

Business

Unit1

BusinessUnit

2

BusinessUnit

3

BusinessUnit

4

BusinessUnit

5

BusinessUnit

6

Operations

Operations

Operations

Operations

Operations

Operations

MarketingSales &Service (CCO)

(COO)

MarketingSales &Service





l h iB S l Ch i


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Demand driven supply chain (Cisco,Dell)

Requires partnering with suppliers

Requires partnering with channels Learning from services industries,

especially from airlines andbanking services

Becomes Supply ChainManagement

Becomes Supply ChainManagement


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Value of installed base fordownstream services revenues

Commoditization of coreproducts/services (razor vs. blades)

Annuity model of revenues (IT as utility)

Customer Centric OrganizationEncourages Service RevenuesCustomer Centric OrganizationEncourages Service Revenues

Customer Centric OrganizationCustomer Centric Organization


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Neglecting the customers (CAccounts) is worse thanoutsourcing the customers

Outsourcing unwanted customersis a win-win-win strategy

Outsourcing unwanted customersenables the company to grow thetotal market

Customer Centric OrganizationLeads to Outsourcing Non-Profitable Customers

Customer Centric OrganizationLeads to Outsourcing Non-Profitable Customers

Customer Centric OrganizationCustomer Centric Organization


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Customer Centric OrganizationDiscovers BusinessDevelopment

Customer Centric OrganizationDiscovers BusinessDevelopment

Business Development is a very differentskill set than traditional Sales & Marketing

It requires collaborative mindset even withcompetition (co-opetition)

It requires strong financial expertise,especially balance sheet oriented

It is a corporate function reporting directlyto Chief Customer Officer (CCO)

E i I C f tiE i I C f ti


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Emerging Issues ConfrontingCustomer Centric PracticeEmerging Issues ConfrontingCustomer Centric Practice

WHO OWNSTHE

RELATIONSHIP

GLOBALACCOUNTMANAGEMENT

HARDWIRINGTHE

CUSTOMER

MANAGINGPUBLICPOLICY

SUPPLIERPARTNERING

INTERNAL

MARKETING

PERFORMANCEMETRICS

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