Winning with Customers E-Book

D. Keith Pigues

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 678

Veröffentlichungsjahr: 2010

Beschreibung

Do Your Customers Make More Money Doing Business With You? Knowing the answer can help you build measurable and valuable customer relationships, outperform the competition, and unlock profitable growth. Companies are blind to opportunities for profitable customer relationships without a deep understanding of how they create customer value relative to competitors. With a rigorous and measurable understanding of how customers make more money today and in the future with you, combined with supporting plans and tools to align the entire organization for success, a company can win and win big. Winning with Customers offers a step-by-step playbook to help companies develop this capability for themselves, act on it, build a culture around it and sustain it over time. The playbook includes case studies, interviews, and tools from leading B2B companies who have demonstrated success. Written by recognized business thought leaders and practitioners, this book will guide you to profitable growth. The book also serves as a launch point into a community of like-minded executives that includes a companion website which offers exercises, access to thought leaders, and other tools help you win with customers.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Dedication

Foreword

Preface

How Is the Book Organized?

Case Study

Web Site and Community

Acknowledgments

D. Keith Pigues

Jerry Alderman

Introduction

Chapter 1 - Why We Lose

Six Reasons Why We Lose

Is This Book for You?

Why This Book Is Important

What Will You Learn?

Is Now the Time?

Summary

Chapter 2 - Define Winning

The Big 6

Where Does This Book Fit in the World of Profit Growth Solutions?

Building the Foundation: Does Your Customer Make More Money by Doing Business ...

Revenue, Cost, and Profits

Summary

Chapter 3 - The Playbook

Defining the Playbook

Play 1: Discover

Play 2: Analyze

Play 3: Execute

Play 4: Measure

Play 5: Certify

Play 6: CVC Management System

Key Philosophies

The Role of Technology

The Maturity Model

Summary

Chapter 4 - Winning Metrics

The History of Our Metrics

Developing the Metrics

The Winning with Customer Metric

Exploring Differential Value Attributes

Exploring the DVP%

Using DVP% on an Aggregated Business Level

Summary

Chapter 5 - What Does Your Customer Think?

Get on the Field

The Discover Play

Do My Customers Care . . . Will They Talk?

The Discover Process: Prepare

Let’s Prepare

Who Should You Interview?

Who Conducts the Interview?

The Discover Process: Conduct the Interview

The Discover Process: Capture Data

The Discover Process: Customer Follow-Up

The Discover Process: Quick Wins

You Will Go Broke Doing What the Customer Says

Summary

Chapter 6 - Informing Decisions

What Is Analyze?

What You Get

Generating Actionable Insights

Interpret One Interview

Assemble the Data

Determining Scope

Identify and Assign Analysts

Understanding Your Current Differential Value Proposition

Turning Customer Needs into Potential Projects

What Are the Top 10 Investments to Make?

How Can Customers Be Segmented According to Their Needs?

Turning Initiatives into Investment Decisions

Setting Value Creation Goals

Estimating Investment Required

Setting Value Capture Goals

Initiatives to Investment Portfolio

Insights to Decisions

Connecting Insights to Process Organizations

Encourage Ad Hoc Analysis

Empower Resources to Become Analysts

Benefits of Technology

Summary

Chapter 7 - Executing Value Creation and Value Capture

What Is Execute?

A Quick Recap and Chapter Setup

Building a Plan for Your Customer

Plan Value Capture

Gain Customer Alignment

Providing a Technology Assist

The Vault

Summary

Chapter 8 - The Scoreboard

Finding Our Place on the Field

The Process

Collecting the Scorecard Data

Building the Basic Scoreboard

Advanced Scoreboard Topics

Measuring CVC Activity for the Scoreboard

Continuous Improvement

How Technology Helps

Summary

Chapter 9 - Getting Started

Kickoff

Fielding a Team

Enrolling the Team: It Is How You Do Business

Without the Customer There Is No Team

Start Small and Grow

The First Project

Summary

Chapter 10 - Sustaining and Scaling

The Hurdles We Faced

Sticking to It: Maturity Model

Sustaining and Scaling

Summary

Afterword

About the Authors

About the Contributors

Index

Appendix A - Our Approach to Certification and Building Capability

Appendix B - A Little More Background on Outside-In

More Praise forWinning with Customers

From Business Leaders . . .

“The CVC Management System is a game-changing approach to developing a business growth strategy. Our work with Alderman and Pigues resulted in a deeper understanding of our customers. Winning with Customers is an impressive ‘how to’ guide for business leaders to move the concept into action. This is a must-read.”

Sue Sears, Vice President, Global Market Development, Kimberly-Clark Professional

“Keith is one of the people I turn to when I need to learn something about smart marketing! Keith and Jerry’s book, Winning with Customers, is picture perfect!!!”

Jeffrey Hayzlett, CMO, Kodak

“Winning with Customers and the CVC Value Management system directly address the CEO’s #1 priority, which is to drive profitable growth. CEOs are looking for pragmatic solutions based on real-world best practice exper ience—this is exactly what Pigues and Alderman deliver in this research work. This book is a must-read.”

David Frigstad, Chairman, Frost & Sullivan

“Utilizing the approach outlined in Winning with Customers will move your business from one that is based on the ‘best deal’ or ‘lowest price’ to one that is fully aligned, metrics based, with mutual creation of value for both you and your customer.”

Randy Marcuson, CEO (Retired), Embrex

“Winning with Customers cuts through all the fog and shows you how to deliver and then measure your value to the customer. Winning with Customers is a road map for creating indestructible customer loyalty and increasing sales.”

David Pitts, President and Founder, Classic Graphics

“Pigues and Alderman have really struck dead center. In business today, B2B strategies often end up being developed like consumer market strategies, taking the focus off the true need of the business customer—their profits. This ‘play book’ will help develop customer relationships, where you are as knowledgeable about what drives your customer’s growth and profit as you are about your own—a sure recipe for growth.”

Steve Brozovich, PHD, Business Strategy Advisor, Snap On Incorporated

“In too many business texts, the idea of customer focus simply doesn’t extend beyond platitudes. Winning with Customers teaches a rigorous methodology around which the entire organization can align, making its approach real, practical, and quantifiable.”

Donald M. DeLauder, Executive Director, Corporate Innovation, MEDRAD, Inc.

“CVC is a comprehensive approach that lays out a measurable plan to maximize customer value and build a sustainable advantage in any B2B market you serve. The approach Pigues and Alderman have laid out is fresh, practical, relevant, and actionable . . . and will be a part of every strategy I implement in the future!”

Blair Schrum, Co-founder, ZC Sterling Corporation

“Winning with Customers is a powerful, refreshing reminder to all that it’s not about what you have to sell but rather who you are selling it to and the metrics to validate the value they’re getting from it.”

Cos Malozzi, CEO, Gibbs & Soell

“The authors’ breakthrough contribution to the field of Management is an exciting new method (‘CVC’) that enables companies to impact customer value with rigorous, scientific precision.”

Steven Fabry, CEO and Founder, Compendia Exchange

From Business Education and Media . . .

“In this powerful and practical work, built on the work of two recognized and proven thought leaders, marketers will find a trove of new ideas, powerful tools, and new answers they need to grow profitably in the markets of the coming decade.”

Ralph A. Oliva, Executive Director, Institute for the Study of Business Markets

“A refreshing, new way for evaluating business success: How are our ‘customers’ doing? Unfortunately, few organizations take this vital measurement. Pigues and Alderman provide a thorough and clear game plan for creating a truly customer-centric company.”

Ellis Booker, Editor, BtoB Magazine

“Strategic Sales Managers should spend more time understanding their customer metrics: procurement managers are receptive to productivity solutions vs. just price provided they are given clearly quantified economic gains. This book shows you how.”

Bernard Quancard, CEO, Strategic Account Management Association

“With this ground-breaking book and the CVC Management System, Pigues and Alderman provide a playbook to articulate, quantify, and certify the impact of differentiated value on sales—relevant for CEOs and their customers. A must-have!”

Navdeep Sodhi, Managing Director, Six Sigma Pricing, Author of Six Sigma Pricing

“Winning with Customers and the CVC Management System represent the most significant breakthrough in managing profitable customer relationships in decades. It is a must for every B2B business to consider.”

Patrick Farrey, Executive Director, Business Marketing Association

“Winning with Customers provides a clear pathway for sustainable profitable growth for B2B businesses. The CVC Management System will help management teams align and focus their energy and resources toward creating greater customer value and thereby increasing the value of the B2B business”

Mark L. Frigo, Director, DePaul University Center for Strategy, Execution and Valuation, Author of DRIVEN: Business Strategy, Human Actions and theCreation of Wealth

“Winning with Customers stands out above the clutter. Pigues and Alderman’s insights on understanding your customers’ perspectives and showing what’s possible through specific examples and quantitative results helps you move from lip service about winning with your customers to measurable success. A must-read.”

Pete Krainik, Founder and CEO, The CMO CLUB

“Pigues and Alderman have developed a transformational pathway to sustained profit growth. Their Playbook is a must-have tool for all businesses small and large.”

Tony Rome, President and CEO, Maven Strategies

“Pigues and Alderman have delivered a ground-breaking piece of work that Chief Marketing Officers and the other members of the C-suite will find of value as they chart the course for profitable top-line growth. Best of all, their guidance on implementation results in a valuable ‘how to’ manual for companies to win.”

William L. Koleszar, Editor,The Chief Marketing Officer Journal

“The book’s cover says it all—do your customers make more money doing business with you? If you cannot answer in the affirmative, or simply don’t know, what are you waiting for? The authors lay out a practical and very accessible game plan to help you and your customers ‘win’ and achieve profitable and sustainable growth in the B2B marketplace.”

Richard Ettenson, Ph.D., Associate Professor & Thelma H. Kieckhefer Fellow Thunderbird School of Global Management

“As an academic/business consultant who has toiled in the B2B marketing field for 30+ years, it is unusual to find a no-nonsense, practical guide to winning with customers. Their guide to create value for customers will benefit both the novice and experienced manager develop and execute marketing programs that meet customer needs, make money for both them and their customers, and will result in a stickier relationship with their customer base. This book should be on every marketing executive’s must-read list.”

Robert Spekman, Ph.D., Tayloe Murphy Professor of Business Administration University of Virginia - Darden School

“Pigues and Alderman offer an extremely insightful and practical book that shares valuable real company experiences, while providing proven integrated frameworks for creating and capturing value. This is a must for executives who want to create competitive advantage by building stronger more profitable customer relationships.”

David Hopkins, Managing Director, Carlson School of Management University of Minnesota

From the Investment Community . . .

“Pigues and Alderman have developed a jewel. Winning with Customers and the CVC concept is a powerful approach to differentiate yourself in a highly competitive marketplace. This is a valuable tool that will help us as investors in the middle market.”

Jeffrey A. Dombcik, Managing Director, Triangle Capital Corporation

“As a B2B bank, we are always looking for ways to differentiate ourselves from the competition. The CVC approach to winning with customers shows us how to do just that. The authors brilliantly lay out a unique management system that is rigorous, quantitative, and easily implementable, while affordable—allowing businesses like ours to build this critical capability in-house, without a team of consultants.”

Eddie Blount, Executive Vice President, KeySource Commercial Bank

“Our life is built upon and made richer by the depth and sincerity of our relationships. So are our businesses. Yet, our customer relationships are often transactional and tactical versus strategic and collaborative. Pigues and Alderman make the case, in Winning with Customers, that if we are deliberate, thoughtful, and quantitative in our customer dialogue then our customers can make more money and we can too—and have deeper, more sustainable relationships to show for it. This book won’t make it to my bookshelf; it will stay within arm’s reach where other worn reference materials reside.”

H. Beecher Hicks III, Partner, Red Clay Capital Holdings, LLC

“Winning with Customers puts the focus on the single most important value to any business . . . the customer. This concept reminds us that the reason any company is in business is to successfully serve the customer. The ability to leverage outside-in-thinking consistently keeps the focus on the customer, which translates into sales, profits, and increased customer value. The opportunity to systematically leverage the analysis of customer input is a transforming idea that today’s leaders need to take advantage of.”

Richard E. Stewart, President of Investment Banking, Galen Capital Corporation

“As a private equity investor, I am always looking for ways to grow and enhance prof- itable customer relationships with our respective portfolio companies. Winning withCustomers will be a great tool to use as a value creator for each company we acquire. Understanding ‘why we win’ provides a guide to learn how to create meaningful and profitable relationships with vendors and customers alike. Pigues and Alderman’s real-world experience provides the context that distinguishes this book from the typical ‘academic’ marketing/customer relationship book.”

Kelvin Walker, Partner, 21st Century Group, LLC

Copyright © 2010 by Jerry Alderman and D. Keith Pigues. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

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Library of Congress Cataloging-in-Publication Data

Pigues, D. Keith.

Winning with customers : a playbook for B2B / D. Keith Pigues, Jerry Alderman. p. cm.

Includes index.

ISBN 978-0-470-54799-1 (cloth); ISBN 978-0-470-76849-5 (ebk); ISBN 978-0-470-76850-1 (ebk); ISBN 978-0-470-76851-8 (ebk)

1. Customer relations—Management. 2. Consumer satisfaction. 3. Customer services—Management. I. Alderman, Jerry D. II. Title.

HF5415.5.P544 2010

658.8’04—dc22

2010005942

To Monica: You are the love of my life and my biggest inspiration. Thanks for your never-ending encouragement and unconditional love.

To Christian, Caleb, Levi, and Chloe: I love you. You are incredible gifts from God. Pursue your dreams and serve God with excellence along your exciting life journey with Him.

To my brothers: Cottrell, Joseph, Kevin, Wyndon, and Terrance. Continue the legacy we were left by the greatest business person of all time, our dad, Alonzo Pigues. He left us a great gift.

To my Mom and Dad: Thank you and I love you.

—D. Keith Pigues

To Tracy, Kirbey, Carlie, Kelli, and McKenzie: You are special people in this world, especially to me. Never let anyone make you think your goals are out of reach. Be happy!

And to my Mom and Dad: I love you.

—Jerry Alderman

Foreword

Karel Czanderna, Group President, Building Materials, Owens Corning

Jerry, Keith, and the team have created one of the first systems I have found that truly allows us to learn what our customer values and use that information in the daily operation of the business, from investments to sales planning, and execution. The logic of what they have done is flawless and brilliant. What is even more powerful is that it is all based on an approach that creates tools and capability that will generate benefits for our customers and our company for years to come.

We have come a long way in our almost three years with Valkre, and we still have a long way to go. Maybe the single biggest compliment one could make about the power and potential of this approach is that we are still excited after three years, and the momentum continues to build. That is quite a testimony, considering the challenging building markets over the past couple years. We are focused on initiatives that are adding value to our customer and our shareholders . . . and this is guiding both.

I started my career in research, product development, and manufacturing, and I did not meet a customer for 10 years until I led a team servicing office copiers in the field. When I finally did, it changed my career. It was then that I recognized the challenge of people and just how hard it is to move an organization of thousands of employees to pursue and deliver what matters to the customer. It is no easy task because it permeates every function in the organization, from marketing to innovative product development to logistics to capital and operational planning to selling and so much more. And you know what? My experiences at three great brand companies showed that not all of the customers value everything you do in the same way or even at the same level. In the end, the journey of understanding what is valuable to each customer through to creating a sustainable competitive advantage for your company does not happen by accident. It takes diligent management and requires the organization to build a competency for doing so. The book you are about to read will go a long way to helping you develop or expand your competency. I wish Jerry, Keith, and team had developed this holistic system sooner, as I sure could have used it throughout my tenure in business.

Right now is absolutely the time to be working harder than ever to understand what will persuade customers to buy from you. The competency of understanding and executing against what creates value for customers relative to your competition is not a “nice to have”; it is a “must have.” Waiting to develop this competency is akin to waiting to be successful, and success most often occurs from acting, not waiting. So read on, and proactively build your own Playbook.

Preface

This book has many pages. We are not sure yet why it has so many and who the heck wrote them all! We recognize that some of you will read every page, others will read selective portions of the book, and many (hopefully) will use the book as a reference or guide on your journey to “win with customers.” We thought a quick road map up front might help you to navigate the material and use it best to meet your needs.

How Is the Book Organized?

There are 10 chapters and an afterword in the book. The first three chapters are:

1. “Why We Lose”

2. “Define Winning”

3. “The Playbook”

These chapters provide an executive overview of our formula for winning with customers. In these chapters you find the Six Big Ideas that help your organization accelerate profitable growth. We also discuss the four breakthroughs contained within our winning formula, which we believe sets our approach apart from others. And we share the real experiences from real companies that have delivered significant results using our approach. We talk about those companies and share their business cases in depth.

The next five chapters are:

4. “Winning Metrics”

5. “What Does Your Customer Think?”

6. “Informing Decisions”

7. “Executing Value Creation and Value Capture”

8. “The Scoreboard”

These are the “winning plays,” as we like to call them. These chapters are filled with lots of practical information to help you put the winning formula into practice in your organization. This is where practitioners can learn with reasonable detail how to do the work of winning with customers and understand if your customers make more money by doing business with you relative to competitors. The next chapters are:

9. “Getting Started”

10. “Sustaining and Scaling: The Maturity Model” “Afterword”

These chapters help you get on the path to action within your organization. They also cover some of the pitfalls we have experienced along the way—providing helpful advice whether you are undertaking a small project or one that involves an organization with 10,000 employees. We must admit that we have not discovered the unifying theory on the subject of change management. It is still a lot of hard work. We do share some insights from years of work with many companies that will help you successfully implement this approach in your business. And then we conclude with a summary of the book, which our English teachers suggested we always include. Here we capture the key highlights and takeaways from the book.

More detail on each chapter follows.

Chapter 1: “Why We Lose.” This chapter was designed to describe the problem we are focused on, give you some insights as to why we are writing the book, let you know who we are writing it for, and discuss what we hope you will learn.

Chapter 2: “Define Winning.” This book is focused on winning with customers. Here we define what winning with customers means and we introduce measures we have found to work. We also set up the playbook of winning plays to help you win.

Chapter 3: “The Playbook.” This chapter provides the overall construct of the system we have collectively used to lead companies in developing their own outside-in customer capability. For each of the plays, we provide some background on why they are in the playbook and how they help you succeed.

Chapter 4: “Winning Metrics.” This chapter describes in detail the metrics we use. We get to the bottom of understanding if your value proposition creates value for your customers—helping you move from anecdotes and gut feelings alone to sound metrics of success.

Chapter 5: “What Does Your Customer Think?” Here we discuss resources that you need to collect your customer’s perspective on the value you create for them. We point out why your customer loves the conversation and we review the pros and cons of getting the various members of your team involved in this portion of work.

Chapter 6: “Informing Decisions.” We show how you can generate a quantified (dollars of value to your customer) list of opportunities informed by your customers. We then discuss how this list is combined with your own internal ideas for improvement to generate a prioritized list of the most valuable ideas informed by you and your customers to improve the differential value you deliver to customers.

Chapter 7: “Executing Value Creation and Value Capture.” We also like to call this bridging the say-do gap. Meaning, we always say we listen and respond to customers but we seldom do so in a way that our customers see and understand. This chapter is all about translating the knowledge generated about what our customers value (from the list of opportunities) and developing customer plans that can be executed by the organization, understood by the sales force, and communicated effectively to customers.

Chapter 8: “The Scoreboard.” The scoreboard chapter discusses how we link value creation for the customer and value capture for ourselves. It also goes into how we can start to better predict our own profit improvements as a result of creating value for customers.

Chapter 9: “Getting Started.” This chapter particularly focuses on organizational dynamics. Who needs to be involved, and how you go through the steps of transitioning this kind of work from a project to a way of doing business. How long does it take? How much does it cost? What are the benefits?

Chapter 10: “Sustaining and Scaling.” This chapter is all about how to move from the initial implementation and learning within your organization to get the full value by ramping up the effort. This chapter addresses how to make it a way of doing business throughout the organization.

“Afterword”: This chapter provides a brief overview of what we discuss throughout the book. It highlights the key frameworks and summarizes why companies lose, and why they win. It provides a high-level review of how to get your company into action.

For each chapter we set out the objectives and provide a summary of those objectives at the end. Each chapter also has practical examples and cases embedded to provide you with as many real-life examples as possible.

Case Study

The book is driven by case studies—we provide examples of how others used this approach. We introduce the cases in Chapter 1 and carry them through the entire book, developing their stories and providing practical insights and outcomes directly from the people who have done this work in their organizations. Where possible, we carry examples from one chapter to the next so you can follow the logic as we develop the concepts. There are instances where this is not possible due to the confidential nature of the outcomes and insights. We’re sure you understand. When your successes are featured in the next version of the book or as cases on the companion web site (and we hope you will share), we will likewise ensure that your competitive insights are not disclosed.

Web Site and Community

We spent quite a bit of money building this web site so you better use it. Ha! . . . Just kidding! But seriously, we know that everything you need to win with customers cannot be contained within a book. The companion web site (www.winningwithcustomers.com) was designed to be used with the book. It provides online exercises, forums, and spreadsheets to help you begin implementation within your company. It also provides the outcome of your work to share with others in your organization by using formats that we have found to be effective.

Also on the web site we included two Appendixes. Appendix A: “Our Approach to Certification and Building Capability” provides more detail on the tools you can use to train your people and certify your organization to become proficient in using this approach to win with customers. Appendix B: “A Little More Background on Outside-In” is a carryover from our last book to help you better understand the opportunities and challenges of truly becoming an organization whose decisions are shaped by valuable outside-in customer data.

The web site also serves as a community for continued learning from peers and thought leaders, as well as additional reading and cases. You also find access to the CVC Institute, which is a destination for continued education on the topic of Customer Value Creation. There are blogs, discussion forums, and access to continuing education courses and conferences to help you learn and connect with other kindred spirits along your journey. You can also buy a book here as a gift for colleagues, family, and friends. Warning: We gave our kids a book as a gift and it did not turn out that well!

Acknowledgments

D. Keith Pigues

My contribution to this book would not be possible without the support and guidance of some very special people. My wife and children (the loves of my life) have been my fan club throughout the process of writing this book—when the words were flowing and during the countless hours of staring out of the window or at the keyboard waiting for the words to come. I thank them for their willingness to allow me to go off to my “writing place” to bring the ideas to life, put the words on the page, and exercise my gifts. I only hope I am as a big of a fan and supporter as they exercise their gifts and talents and pursue their dreams.

My mother, Verna Pigues, and my brother Kevin Pigues have always been in my corner through every endeavor. And once again, they encouraged me to tackle another new challenge—providing encouragement and support every step of the way.

My business experience foundation and many of the important lessons I’ve learned were shaped by my father (the late Alonzo Pigues) during my formative years working with him and my brothers at Pigues Tire Company—those were special times. While he had no formal education, he knew more about business, understanding customers, meeting their needs, and running a profitable business than most.

The completion of this book would not be possible without the contributors (Brian Kiep, Alex Monacelli, Matt Cobb, and Gabriel Lerner). Their sharp minds and tireless efforts were a big part of this effort—thank you. And I am grateful for the incredible partnership with Jerry Alderman. Without his knowledge and passion for helping customers win, this book would not be possible.

The review and feedback from Dave Hofmann and Margaret Woodard were invaluable—providing very valuable perspectives from a professor and practitioner, respectively, to ensure the soundness and practicality of this “how to” book.

Judy Howarth and the editorial team at Wiley & Sons provided invaluable counsel and guidance as we navigated through the process from ideas and experience to the creation of the book.

Jerry Alderman

Anyone who has ever taken on the challenge of writing a book knows it takes a team. This is especially true in this case of our book, Winning with Customers, as the book is not so much about the ideas and philosophies of the authors as it is about the actual work this team has accomplished over the course of several years. I thank the team for their passion in our collective journey, the willingness to dig in and drive results, and the intellectual genius each has added. Most of all, I thank their families for supporting them and us in completing this gratifying piece of work. Thanks Brian and Alyson, Alex and Susanna, Matt and Jennifer, and Gabe.

If not for the success of Valkre, there would be no book. There have been so many people and companies who have helped us. Our advisors Glenn Dalhart and Jim McClung work to keep us grounded and generally guided in the right direction. My uncle, John Edwards, is always generous with his banking and financial assistance. And most important, our customers are everything to us. Owens Corning in particular has been the most amazing collaboration partner any company or any person could have. They have challenged our Valkre team and made us better. Thanks to all of you.

And finally we thank Keith for doing this project with us. Keith has been one of our biggest fans for years. Anyone who knows him knows that he is an inspiration to have in your corner. Thanks for being in our corner, Keith, and we look forward to hanging with you in Hawaii!

Introduction

Glenn Dalhart, Retired Partner, Ernst & Young management consulting

This book captures the invaluable lessons learned from a nearly decade-long journey focused on perfecting the business science of creating value for customers in the so-called business-to-business (B2B) segment of commerce. Keith and Jerry have clearly arrived at an important destination. Not only has the customer value creation (CVC) science been significantly advanced, it has been proven by real-world applications in numerous B2B settings. This book provides a deep insight into the discoveries that can help you win with your customers and ultimately increase the value of your business.

I have had the distinct pleasure to participate in and witness this journey from its beginnings in the early 2000s. Keith and Jerry have come a great distance since working together in a client-consultant relationship at RR Donnelley. Keith has been a consistent CVC advocate, practitioner, and spokesperson. Jerry has maintained an unwavering focus on developing the CVC solution through a series of consulting organizations leading to his new company Valkre Solutions, Inc.

I have had a wide-ranging 35-plus year career in management consulting as a partner with Ernst & Young and several other prominent consultancies. In all my years of experience, I cannot point to a more powerful solution in the B2B setting than CVC. I truly believe that when a B2B business enterprise is aligned around CVC, it will not only create value for its customers but as a by-product it will create shareholder value for itself—most often many times greater than the returns enjoyed by its customers. This is the somewhat counterintuitive but perhaps the most exciting result of the CVC process. This is the ultimate “win-win” proposition.

I believe that CVC draws its power from the ingenious combination of three powerful business principles: outside-in thinking, competitive advantage, and continuous improvement (e.g., Kaizen/Six Sigma). First, CVC is absolutely focused on understanding and measuring value from the customer’s point of view. This point of view is critical and is differentiated from the approach taken by most businesses that ask the question: “How profitable (to me) is this customer?” CVC turns that table and asks a much different and more powerful question: “Do you (the customer) make more money doing business with us than with our competitors?” Second, CVC embraces the well-established principle of relative performance when it comes to understanding competitive advantage. CVC applies this principle at the customer level by measuring its value proposition relative to its competitors—as you will learn, this measurement is central to the CVC solution and is called the differential value proposition (DVP). Last, CVC embraces the continuous improvement principles of Kaizen/Six Sigma by embedding DVP measurement within a closed-loop process: Discover - Analyze - Execute - Measure.

The CVC solution is truly unique. Although it resides primarily in the “Customer Intelligence” space, the CVC solution is truly different from the typical “Customer Loyalty,” “Customer Satisfaction,” “Voice of Customer,” or “Customer Relationship Management” solutions. CVC is differentiated through the analytical rigor of its DVP measurement process and through the “relative to competition” measurement framework. Perhaps most important, CVC is an active, forward-looking solution that answers the question: “What can we do to create additional value for our customers?” Most “Customer Intelligence” solutions are passive, backward-looking, and ask: “How loyal/satisfied are our customers?” The collection of answers to the CVC question from many customers across the value chain and from various channels provides valuable enterprise-level perspectives that inform critical investment decisions. In this way, CVC morphs into a powerful closed-loop management decision-making system that aligns and impacts all functional areas of a business.

In forming Valkre, Jerry has taken the bold step to transform his company from a consulting focus to a software product focus. This development makes it possible for businesses to readily institutionalize CVC. Along with consulting support, Valkre offers two powerful software platforms, Render® and Academy, which allow businesses to effectively institutionalize and maintain CVC without ongoing consulting help. Additionally, both products are offered in a “Software as a Service” format that reduces implementation and maintenance complexities.

To most effectively benefit from this book, you may need to put aside the current paradigms you apply to B2B relationships. An open mind will allow you to more fully grasp the powerful new ideas that are offered by Keith and Jerry. After reading this book, I think you will agree that Keith and Jerry have made several important breakthroughs in the B2B business setting.

Chapter 1

Why We Lose

We show up every day and do the things we believe are necessary to run the business, grow profits, and increase the value of the company. We create demand for products, manufacture these products, sell the products to customers, deliver service to provide a good customer experience, develop additional products and services, and measure and report the results of our efforts to interested parties. We take actions and make investments that we believe will generate acceptable profit today and grow profit in the future.

Sometimes we achieve the sales and profit goals and sometimes we do not. There are many variables and moving parts in every business that contribute to the results—some we control and others are completely out of our control. All too often, we do not have a good handle on whether the actions and investments we pursue actually work and can be repeated.

The efforts to reduce production or manufacturing costs, by their very nature, are easier to manage, measure, and repeat. We typically have control of most of these costs and they are more easily identified and quantified. The systems used to reduce these costs and predict future cost reductions are proven and readily available thanks to Six Sigma, Lean Manufacturing, and other cost management systems.

Conversely, the actions and investments undertaken to provide customers what they value most—value propositions that contribute to their profits—are not as easy to manage, measure, or repeat. Identifying the specific components of the value proposition that contribute most to customer value and profits is difficult because it requires an in-depth knowledge of the customer’s business. The relative impact of the value proposition versus that of competitors is more difficult to quantify and measure. Your value proposition has a direct impact on customer profits and represents the best opportunity to gain and maintain a true competitive advantage. Systems to manage these actions are not proven or readily available, making success difficult to repeat. This is where we focus the attention of this book.

Why? It is because of the absence of a rigorous business management system to tackle the challenges described above. Without such a business management system, organizations lack the ability to consistently and predictably create more value for customers. This results in being outmaneuvered by competitors and losing in the marketplace. Yes, we lose more than we would like.

After reading this chapter you will be able to:

• Understand why this books matters to you and your organization

• Understand what it means to Lose with Customers

• Define the six reasons Why We Lose

• Understand how this book, its authors and its partners can help you Win

Six Reasons Why We Lose

There are six reasons why companies lose.

Why We Lose

1. We don’t understand the customer’s perspective.

2. There is not enough quantitative rigor.

3. Data collected never finds its way into planning or execution.

4. We rely on individual surveys versus a continuous process.

5. The organization is not aligned or involved.

6. There is no systematic playbook.

We Lose Because We Don’t Understand the Customer’s Perspective

Before you react, let us elaborate on what we mean by losing. When our customers do not make more money doing business with us versus our competitors, we lose. If we do not know where we stand relative to our competitors in generating profits for our customers, we lose. If our organization lacks the ability to stay on top of customers’ ever-changing needs and adjust our investments and actions customer-by-customer to beat competitors, we lose.

We lose potential profits from these customers and in some cases we lose the customers. If we do not maximize profit and profit growth from customers period after period, we lose out on opportunities to create more value for our stakeholders—we may lose our jobs. These are real losses with real impact on us and our business.

Why does this happen? Why do we lose? Well, we believe there are several contributing factors. However, the single greatest reason we lose is because we do not truly understand the customer’s perspective of how to grow their profits. While this is a bold statement, it is not one that we make without significant proof from our experience and the experience of others with deep knowledge in this area.

First a personal story: I recall a strategic planning meeting with fellow members of the management team in a former company. We were going through the traditional process of strategic planning—identifying the key strategic growth issues and developing supporting strategies to pursue. A heated debate ensued about what customers really need, how much value they would receive if we met their needs, and how much money we could make in the process. The debate was great—we were wrestling with the key issues that would determine our success.

Each member of the team had an opinion supported by great anecdotes from customer visits and input from the sales organization. It was striking that each member of the team had a different opinion about the relative value of the various customer needs. There appeared to be no way to reach consensus and select the most important areas of customer needs to address. So I asked the question: “Do we really know what customers value from their perspective and do we have data to help us understand quantitatively how valuable these needs are to the customer?”

After a prolonged period of deafening silence, one of the team members mumbled: “Of course we don’t.” We had come to the recognition that we clearly did not understand how we could help customers grow their businesses. What followed is, unfortunately, something that we and many others have experienced. The leader of the business, in an effort to meet the timeline to complete the strategic plan to present to corporate, stated in a decisive voice, “Let’s stop debating what customers need and get back to running the business.”

Need we say more? This is an all-too-common occurrence in many B2B companies. There is a lack of understanding of the customer perspective and the value it brings. Yet we just move on and “get back to running the business” without having the fuel to run the business better—the customers’ perspective. This behavior results in decision after decision about priorities, actions, and investments built on anecdotes, opinions, and gut feelings. This begs the question: “How do we maximize profits without incorporating the customer perspective in all we do?” We believe it is impossible.

To amplify the challenge we have personally experienced, here are the views of a few additional thought leaders and professionals.

“The profitable growth challenges of B2B companies will not be fully addressed until a true, unfiltered and quantitative understanding of customer’s needs replaces the anecdotal and qualitative information that drives decision making in many organizations today.”

—Ralph Oliva, Executive Director of the Institute for the Study of Business Markets (ISBM)

“When organizations move from over-reliance on discrete market research as the primary means to introduce customer input into the planning process, in favor of a more systematic approach to capture and include the customer perspective at the center of the planning process, management decisions will become truly customer centric and yield better results.”

—Patrick Farrey, Executive Director, Business Marketing Association

“Even companies with the most effective strategic account management and sales organizations are challenged to systematically capture customer input and use it to align the entire organization to deliver winning value propositions. This continues to be an area of great opportunity to create and sustain competitive advantage in the marketplace.”

—Bernard Quancard, CEO Strategic Account Management Association

“There were multiple definitions of ‘winning’ with our customers prior to Customer Discovery. Those definitions typically evolved on a customer-by-customer basis with an underlying theme of ‘We grow and prosper only when our customers grow and prosper.’ It all sounds great until you get into the metrics and attempt to understand if in fact growing and prospering is really taking place with a customer. The metrics typically had a disproportionate amount of Owens Corning’s business metrics and not much, if any at all, customer-focused metrics. Said another way, I am not sure we had a good grasp on translating what we were doing into how it impacted the customer. We didn’t have a good understanding or visibility to what it meant to their business . . . but we typically had a great understanding of what it meant to our business, our goals and our sales plans.”

—Chad Fenbert, Director of Sales, Owens Corning

“We were spending so much energy trying to get the most out of the marketing investments we were making, that we really hadn’t invested the time and energy to decide if we were making the right decisions.”

—Christian Nolte, Director of Strategic Marketing, Owens Corning

So we are not alone! Ensuring you include the customer perspective in the management of your business is not a “nice to have”; it is a “must have.” And you know what? There is no easy button for incorporating the customer view into the fabric of your business. It is a journey and an ongoing commitment to build capability within your organization at a pace that out flanks your competitors. Throughout the book, we will share the latest tools, practices, and techniques we have used to improve business performance by incorporating the customer’s point of view into the management of business.

We Lose Because There Is Not Enough Quantitative Rigor

Existing methods of measuring what customers ’ value and the impact these things have on their profits are not quantitative or rigorous enough. It is difficult to use outside-in customer perspectives unless you have some idea of the potential for improving business performance in dollars and cents. Being able to communicate within your organization what customers want in terms of profit dollar potential tends to get more attention than a litany of qualitative concepts.

It is quite amazing how important and even risky decisions are made to invest in new markets, new products, new services, more sales people, and so on without a quantitative understanding of how these investments impact customers’ profits.

Let’s be honest, what would happen if a business case was presented to the executive team for a plant expansion with only qualitative support, such as “Our largest customer thinks this is a good idea” or “We feel comfortable it will reduce costs and improve our competitive position.” Oh, and I love this one: “The customer will walk and we’ll lose all of their business if we don’t do it.” In most cases, the proposal would be dismissed without a quantitative and more substantive estimate of the operational and financial impact on the company.

However, business cases are presented and approved to invest significant sums in revenue-generating programs or other improvements to the company’s value proposition with the equivalent qualitative support. Even if there is a quantitative assessment of the financial impact on the company, it is not accompanied by a quantitative assessment of the impact on the customers’ operations and profits.

How is it possible to develop a sound assessment of the value that will be captured by the company without first assessing the value that will be created for the customer? A quantitative measure of the value that will be created from the investment is a prerequisite to assessing the value that can be captured in the form of sales and profits. A quantitative measure of the value created for customers is not often completed. As a result, we make estimates and develop business cases that are more risky and do not deliver the expected results in the marketplace. We lose because we do not use enough quantitative rigor.

A Brief Discussion of Outside-In and Improved Decision Making

We use the phrase outside-in consistently throughout the book. Before going further it makes sense to provide more background to what goes through our heads when we use the phrase.

We explored this in the previous book, titled Beyond Six Sigma, Profitable Growth through Customer Value Creation ( John Wiley & Sons, 2006). Although we explored this concept in our last book, we did not come up with the idea of outside-in. We are not really sure who did. But we give much credit to Dr. Daniel Kahneman, a professor at Princeton University, who won the the 2002 Nobel Prize in Economics for his proofs that we tend to be overconfident in our beliefs. This overconfidence bias yields decision making that can be faulty. The point of outside-in is that we need to use more outside-in information to combat our own overconfidence and eliminate a powerful yet natural bias in our decision making. If you boil this whole book down to its core, it is about finding rigorous and systemic approaches to breaking these overconfidence biases that we all have.

There are plenty of books and cases on the legitimacy of injecting outside-in customer perspectives that go well beyond our simple treatment here or in our last book. Books written by far smarter and famous people than us. We are huge fans of Richard Thaler, Chicago Booth Professor, and his work on decision making whether it be corporate or personal. One of his recent books, Nudge, is a brilliant and practical piece on getting inside the brains of people and understanding how they think and make decisions.

Barbara Bund, MIT Professor, wrote a book titled the Outside-In Corporation that chronicles several well-documented cases of companies prospering from the use of outside-in customer information. Her book also documents how difficult it is to establish and maintain an outside-in culture.

Rick Kash’s book The New Law of Demand and Supply does a nice job of establishing how more and more markets are being driven from the customer back (outside-in) and not from the supplier out (inside-out).

Bill Hass and Shep Pryor, friends of ours, recently completed a book, The Private Equity Edge, that discusses how private equity markets can take advantage of their nimbleness and use outside-in customer knowledge to outperform the markets.

These previous works and many more serve as foundational thinking to shape the approach to collect and use outside-in customer information. In this book, we focus on our experiences on using this proven concept to provide you with more of a “so what do I do in the operation and management of my B2B company?”

We Lose Because the Organization Is Not Aligned or Involved

These companies do not have the functions of their organizations really vested in using an outside-in customer perspective to improve their decision making. The responsibility for collecting and making use of the outside-in customer information is far too silo’d within a functional area, either sales or marketing.

As a result, other critical parts of the organization do not provide input into the process and do not buy in. When the new offerings are developed and ready for launch, these groups become onlookers rather than participants. Execution is doomed from the start when this happens. When the uninvolved groups are coerced or forced into participation, there is not a clear understanding on how they specifically contribute to delivering the value to customers.

Creating and delivering value to customers is a team sport! Getting the team on the same page seems a simple enough concept but the reality of day-to-day business is that it is not so easy to accomplish. We will talk about how to get this done.

We Lose Because the Data Collected Never Finds Its Way into Planning or Execution

This is almost a universal problem. In this case, companies may have some form of outside-in customer information but fail to use the information in their planning processes. In our years of doing this work, we have found a miniscule number of examples where customers who provided feedback would say their feedback was heard and resulted in change.

It is commonplace to have the marketing or market research organization conduct research to assess customer growth opportunities. Yet, the results of the research are not often used to shape the development of customer offerings or the growth strategy of the company. Thus, the information and valuable customer knowledge gained through the research is wasted.

Many organizations seem to be on autopilot, using the same anecdotal or historical view of customer needs to drive planning and execution. The research is reviewed and then is stored on a favorite hard drive or flash drive, yet operations, sales, marketing, customer service, R&D, and other functions do not change priorities consistent with the findings from customers. Customers continue to be dissatisfied with the relative value we bring to bear on their business versus competitors. The new learning or insight is not acted on and we lose opportunities for innovation in the way we serve customers and help them succeed, while also losing the opportunity to generate more profit for the business.

All of the successes and failures we have been a part of during our journey have hinged on execution. No surprise. It is such a complex road between successfully understanding what your customer really values through to executing on the insights and knowledge gained. To the comments we made earlier, it seems like we get all excited, figure out what really matters to the customer, and then come back to the farm where you get a big dose of “Okay, that’s great but let’s get back to running the business.” Using outside-in customer information must become part of how you do work and not something extra. We’ll talk more about this in the chapters ahead.

We Lose Because of Reliance on Individual Surveys versus a Continuous Process

Surveys work better to determine how a company is doing in deploying its inside-out approach to business rather than serving as a source of outside-in data. If we intend to augment the management of our business with an outside-in customer perspective, then we must find a continuous process that can be improved as our organization learns and grows.

There is a lack of continuity in developing an understanding of customers’ needs and how they change over time. This approach hinders the organization’s ability to develop a knowledge base of the key drivers of value in the customer’s business. It also limits the ability of the organization to anticipate or predict the outcome of situations faced previously.

So, when faced with the same opportunities or challenges, we recreate solutions rather than rely on sound documented history of what has or has not worked in the past. The absence of continual learning that comes from an ongoing capture of customer needs inhibits our ability to quickly adapt to changing customer needs.

Raise your hand if you enjoy surveys. Enough said. If you don’t like them, then what makes you think that your customer does? I am personally not aware of a General Manager who will sit down and put an hour of serious thought in response to a survey. There are better ways and we’ll touch on a couple.

We Lose Because There Is No Systematic Playbook

This simply means that the company does not have a process. All companies, large and small, need some kind of method or playbook to organize the collection, analysis, and use of outside-in customer information. Collecting this kind of information on an ad hoc basis may work for a short period but does not stand up to the test of time.

It is critical to understand the customer’s perspective. Yet when organizations only understand the customer’s perspective at a point in time using an ad hoc approach, it is difficult to refresh the customer perspective as things change.

Things do change. Market conditions change. Customers’ needs change. Competitors’ responses change. To be effective at identifying and meeting customers’ most valuable needs (from the customers ’ perspective) better than competitors period after period, a systematic playbook is required. This is too important to manage on an ad hoc basis.

As we explore what it takes to win with customers, we focus on how outside-in customer knowledge and its use addresses the challenges companies must overcome to win—helping customers make more money, and capturing more money in return. However, experience has taught us that the unique challenges faced by the various groups within the organization must be addressed with different solutions—all based on the application of outside-in customer knowledge.

We’ve taken this well beyond a process, to what many now refer to as a customer management system composed of process, tools, and people. We will build on each of these elements as we go.

Is This Book for You?

During the course of this book, we explore the perspectives of each of the functional areas of the organization in relation to these common problems that companies face in executing an outside-in customer approach. In our years of doing this work, we have also uncovered the unique challenges faced by various parts of the organization in their quest to win with customers.

If you are interested in helping improve the financial performance of your company and learning more about “how to” use a proven new business management system to win with customers, this book is for you.

Executive/management is tasked with the decision-making responsibility of selecting the growth strategies for the business, overseeing the operations, and delivering the financial results. Many executives and their teams make awfully important decisions that determine the company’s success or failure without the benefit of valuable outside-in customer knowledge to inform their decision making—introducing a higher level of risk into their decision making.

If you are an executive who would like to feel more confident that your company’s investment decisions will actually create value for your customers and your company—this book is for you.

Sales carries the inc\redible burden of delivering top-line growth month after month, quarter after quarter, and year after year. As organizations pursue strategies to increase customer share of wallet, transform from product to solution sales, and capture more value from every sale, sales management and their teams are increasingly challenged by customers to prove the value of their offerings versus those of competitors. The “proof ” increasingly sought by many customers can only be provided by rigorous quantitative analysis and the resulting measurable value of a specific product or service when consumed by a specific customer. The increased complexity of this type of selling effort demands a set of supporting sales tools that help clearly communicate and measure value, accelerate the selling process, and help to establish the most loyal and profitable customer relationships.

If you are a sales professional who would like to have your customer heard by your company and want to sell products and services that are truly differentiated in the market—this book is for you.

Marketing is continually seeking ways to find the most attractive growth markets and segments, while developing strategies, brands, products, and plans to deliver the highest levels of sales and profit growth year after year. Despite myriad new efforts explored, the degree of meaningful differentiation among competing products and services continues to diminish. Many marketers are discovering the true basis for differentiation is found in measurable financial value delivered to customers, based on outside-in customer knowledge. However, few marketers have access to an approach, sufficiently skilled people, and the supporting tools to implement an outside-in approach cost-effectively. Although some marketing organizations have experienced success on a one-off basis, most struggle in gaining the support of other parts of the organization to implement a systematic deployment of outside-in customer knowledge to create sustained differentiation that delivers sales and profit growth.

If you are a marketer who would like to hear your organization’s value proposition communicated by the sales force on a consistent basis, achieve alignment with sales on key customer needs, and develop communication that is used proficiently by the sales force in their selling efforts—this book is for you.