Becoming a Customer Driven Organization

Why Customer Intimacy?

Customer intimacy is the largest source of your growth, sustainable competitive advantage, and profit. Everyone in our organization should practice it. Customer-intimate companies bring an entirely fresh perspective. They discover unsuspected problems, detect unrealized potential, and create a dynamic synergy with customers. They often merge their operations with those of their customers. In the integration of their operations, suppliers become more than merely useful. They become indispensable. One of the biggest challenges for companies that are transitioning from product driven to customer-driven organization culture is creating a common and consistent culture that reflects the customer value to the enterprise.

Today's business environment is the result of a number of trends that have been playing themselves out during the past 20 years. The globalization of markets and an ever-increasing amount of products and information available on the internet have resulted in high levels of uncertainty, low prices, and tough competition in many industries.

The net result of these trends has been a fundamental shift in the balance of power from the companies which make and sell products to those who purchase and use them. Semiconductor companies are challenged by the increasing power of their customers. Whether you choose to accept it or not, your customers are now in control.

As a result, it's a whole new ball game in terms of how you need to compete in our business. Those who continue to practice the "four Ps" that have defined the field of marketing since 1957 are doomed to the frustration of under performance and declining profitability.

For example, Price is no longer determined by the selling party based on cost plus, but by customers who determine what they are willing to pay based on perceived value.

Fewer and fewer Products are being made by internal assumptions and pushed into the market. Rather, more and more are being made based on what customers and the market actually want.

Typical Product focused Organization schematic representation

The Organization/Customer Gap is reduced through product design assumed to satisfy the customers and through market analysis to adapt to each markets. The rationale is that the organization “knows/believes” best what its customers need/want.

Rather, more and more are being made based on what customers and the market actually want.

A Knowledge-driven and customer focused Organization simplified schematic representation

A Knowledge-driven Organization sees its customers at the top of the pyramid with the whole Organization at their service. The goal is to co-create with the knowledgeable customers valuable and personalized experiences. In other words, such an Organization does not sell only products and services anymore but sells experiences.

The Promotional monologue of advertising at the supplier's convenience has given way to dialogue at the customer's convenience

And the market Place has evolved into the market space of the Internet where customers have the opportunity to benchmark any suppliers of choice.

Customers have become more informed, savvy, demanding, cynical, price-conscious, and empowered. Semiconductors who fail to recognize and respond to this reality are in for rough times. The first step toward success in the customer driven economy is to determine who your customers are and how they define value. While this may seem overly simple, many Semiconductors do not really know who their customers are.

Customers generate demand for products and services produced by business and their demand stimulates the production and delivery of the products and services. The Bottom line --- no customers = no jobs

An 80:20 rule can be applied to customers.

80% of your business comes from 20% of your customer base
80% of your problems comes from 20% of your customer base
80% of your profit comes from 20% of your customer base

You need to know where your customers fit in!

However, during the past 20 years as more and more choices became available, customers in virtually every industry segment have revolted against the suppliers who previously held them captive. Customers have abandoned suppliers they had long been loyal to and embraced new competitors, and anyone else who paid attention to them or offered them a better deal.

In the customer driven economy, knowing who you customer is and how they define value isn't an option, it is a requisite for survival. The Spotlight must be on the customer.

Spotlight on … Customers

The good news is that customers are eager to share their opinions and concerns with their suppliers. They realize that an informed supplier can do a better job of delivering the combination of products and services that best meets their needs. You just need to ask them. And we need to engage with all Customer levels.

Customer Engagement Model

In the competitive business environment of today customer facing functions ought to be interconnected with many functions and with different decision makers.

The shown customer engagement model highlights the importance that all layers of management and function must contribute in conjunction with a defined and approved account strategy.

A customer driven organization that centers its interests and activities on value creation with all customer levels and not just focused to maximize revenues will create a long-lasting business footprint with the customer.

When executed well, it will not only allow to get access to more business, product and service data but it will also allow to differentiate between relevant and unimportant data and to draw the correct conclusion from the information given.

Businesses that know how to engage their customers by providing them with real value will benefit with more revenues and higher profits and will be granted with new business opportunities.

Summary:

Good companies are customer-focused. Great companies are customer-driven. What's the difference? Great companies don't just focus on the customer. Great companies develop a relationship with their customers. They listen. They commit to making their customers happy. Every decision they make is driven by giving their customers what they say they want, not what the companies THINK they want. To become truly successful, a company needs to acknowledge and honor the relationship it has with its customers. And this commitment should be reflected in everything the company does--from creating a mission statement, to treating customers like partners, to doing the kind of business that guarantees customer satisfaction.

Final Thoughts:

Listen to your customers; Develop practices and processes that ensure that you maintain an accurate understanding of what the needs of your customers are; respond rapidly to those needs. In all of your dealings with others, remember that the primary function of business is to attract and maintain customers.
To become a truly great, enduring company you must make a total commitment to being a customer driven company
In the words of Winston Churchill: Success is never final!
Klaus Mueller

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