Chapter 9.1 - Relationships portfolio and Key Account Management Flashcards
What is a client portfolio?
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.
Which are the strategic options to manage relationships with clients?
- Build
- Maintain
- Harvest
- Reduce
What does “Build” mean?
To build a solid, long-term relationship and invest in these companies
What does “Maintain” mean?
To maintain the state of relationship as it is
What does “Harvest” mean?
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
What does “Reduce” mean?
With those relationships that is better to cut
The 9 areas matrix has two variables, that are:
- Attractiveness of the client
- Competitive positioning in the relationship
How to measure the competitive positioning?
- Being leader/one the many/minor supplier
- Aggressive/soft competitors
- Level of market share in the customer
- Being highly differentiated
- Being unique
- Time horizon of relationship
How to measure the attractiveness of the client?
There are:
1. More easily observable variables
2. Less easily observable variables
Which are the more easily observable criteria?
- Profits
- Sales
- Cost saving customers
- Relationship age
- Buying behavior
- Cash
Which are the less easily observable criteria?
- Replaceability of the customer
- Products are strategic for the client
- Shared vision of the future
- Supplier share on customer’s purchase
- Source of learning for the supplier
- Power position
Explain Profit criterion
We can build a two variables graph:
- Revenue from the client
- Cost to serve the client
And divide in 4 areas:
- Clients to maintain in transactional mode
- Clients to promote
- Clients to maintain with great attention
- Clients to cut
We can distinguish as well in:
- Today’s profit
- Yesterday’s profit
- Old men
- Tomorrow’s profit
Explain Sales criterion
- Cash cows (a lot of order)
- Minor relationships (transactional approach)
Explain Source of learning criterion
How much is it possibile to learn from the client?
- Source of technological learning
- Source of commercial requirements
- Fall guys
Explain Buying behavior criterion
- Spot customers
- Long-term customers
Explain Cash criterion
- Generators - pay without hesitation
- Absorbers - delay the payments
- No sleeps - would like to pay but they can’t
Explain Profits in the time horizon criterion
Is it possibile to build a matrix with two variables:
- Potential profitability
- Projected loyalty
These two variables create 4 areas:
- True friends
- Butterflies
- Strangers
- Barnacles
Explain power dependencies position criterion
Is it possibile to build a matrix with two variables:
- Client’s dependency on the seller
- Seller’s dependency on the buyer
These two variables create 4 areas:
- Client depending on supplier but not vice versa – supplier is powerful.
- Supplier depending on client but non vice versa – client is powerful.
- Nobody depends – isolated transaction.
- Both depend on each other – base for a long-term relationship.
Explain shared objectives criterion
How much do the companies share in terms of common interest? Is it possible to build a matrix based on:
- Interest commonality
- Relationship value
These two variables create 4 areas:
- Friends – they share values, but the relationship is not valuable. Today is not worth it but maybe tomorrow yes.
- Partners – share interest and there are common values.
- Occasionals – both low.
- Rivals – can be rivals because the client may fight with these clients.
What is the relationship cycle?
It’s similar to the product life cycle and it’s a schema that explain the moment of a relationship
How is it composed a relationship cycle?
- Pre-relationship stage
- Early stage - the moment in which the profits starts to increased, the loyalty is not so strong but there conditions
- Development stage - when the parties discover that the relationship is valuable for both
- Long term stage - for some relationships there is no final stage because they are long- lasting, they don’t end
- Final stage - some relationships could stop for many different reasons
Which are the relationship cycle variables?
- Distance – decreases in time.
- Uncertainty – decreases in time.
- Adaptation – increases in time.
- Commitment – increases in time.
- Experience – increases in time.
