Chapter 9.1 - Relationships portfolio and Key Account Management

Question 1

What is a client portfolio?

Answer 1

Is a matrix in which the marketers can put the customers based on some characteristics, so that it is possible for them to manage each client in the proper way.

Question 2

Which are the strategic options to manage relationships with clients?

Answer 2

1. Build
2. Maintain
3. Harvest
4. Reduce

Question 3

What does “Build” mean?

Answer 3

To build a solid, long-term relationship and invest in these companies

Question 4

What does “Maintain” mean?

Answer 4

To maintain the state of relationship as it is

Question 5

What does “Harvest” mean?

Answer 5

It happens when, in studying the value of a particular relationship with a client, you may notice that this relationship is particularly costly. The idea is to exploit the client’s value while trying to keep costs as low as possible

Question 6

What does “Reduce” mean?

Answer 6

With those relationships that is better to cut

Question 7

The 9 areas matrix has two variables, that are:

Answer 7

1. Attractiveness of the client
2. Competitive positioning in the relationship

Question 8

How to measure the competitive positioning?

Answer 8

1. Being leader/one the many/minor supplier
2. Aggressive/soft competitors
3. Level of market share in the customer
4. Being highly differentiated
5. Being unique
6. Time horizon of relationship

Question 9

How to measure the attractiveness of the client?

Answer 9

There are:
1. More easily observable variables
2. Less easily observable variables

Question 10

Which are the more easily observable criteria?

Answer 10

1. Profits
2. Sales
3. Cost saving customers
4. Relationship age
5. Buying behavior
6. Cash

Question 11

Which are the less easily observable criteria?

Answer 11

1. Replaceability of the customer
2. Products are strategic for the client
3. Shared vision of the future
4. Supplier share on customer’s purchase
5. Source of learning for the supplier
6. Power position

Question 12

Explain Profit criterion

Answer 12

We can build a two variables graph:

1. Revenue from the client
2. Cost to serve the client

And divide in 4 areas:

1. Clients to maintain in transactional mode
2. Clients to promote
3. Clients to maintain with great attention
4. Clients to cut

We can distinguish as well in:

1. Today’s profit
2. Yesterday’s profit
3. Old men
4. Tomorrow’s profit

Question 13

Explain Sales criterion

Answer 13

1. Cash cows (a lot of order)
2. Minor relationships (transactional approach)

Question 14

Explain Source of learning criterion

Answer 14

How much is it possibile to learn from the client?

1. Source of technological learning
2. Source of commercial requirements
3. Fall guys

Question 15

Explain Buying behavior criterion

Answer 15

1. Spot customers
2. Long-term customers

Question 16

Explain Cash criterion

Answer 16

1. Generators - pay without hesitation
2. Absorbers - delay the payments
3. No sleeps - would like to pay but they can’t

Question 17

Explain Profits in the time horizon criterion

Answer 17

Is it possibile to build a matrix with two variables:

1. Potential profitability
2. Projected loyalty

These two variables create 4 areas:

1. True friends
2. Butterflies
3. Strangers
4. Barnacles

Question 18

Explain power dependencies position criterion

Answer 18

Is it possibile to build a matrix with two variables:

1. Client’s dependency on the seller
2. Seller’s dependency on the buyer

These two variables create 4 areas:

1. Client depending on supplier but not vice versa – supplier is powerful.
2. Supplier depending on client but non vice versa – client is powerful.
3. Nobody depends – isolated transaction.
4. Both depend on each other – base for a long-term relationship.

Question 19

Explain shared objectives criterion

Answer 19

How much do the companies share in terms of common interest? Is it possible to build a matrix based on:

1. Interest commonality
2. Relationship value

These two variables create 4 areas:

1. Friends – they share values, but the relationship is not valuable. Today is not worth it but maybe tomorrow yes.
2. Partners – share interest and there are common values.
3. Occasionals – both low.
4. Rivals – can be rivals because the client may fight with these clients.

Question 20

What is the relationship cycle?

Answer 20

It’s similar to the product life cycle and it’s a schema that explain the moment of a relationship

Question 21

How is it composed a relationship cycle?

Answer 21

0. Pre-relationship stage
1. Early stage - the moment in which the profits starts to increased, the loyalty is not so strong but there conditions
2. Development stage - when the parties discover that the relationship is valuable for both
3. Long term stage - for some relationships there is no final stage because they are long- lasting, they don’t end
4. Final stage - some relationships could stop for many different reasons

Question 22

Which are the relationship cycle variables?

Answer 22

1. Distance – decreases in time.
2. Uncertainty – decreases in time.
3. Adaptation – increases in time.
4. Commitment – increases in time.
5. Experience – increases in time.