You understand the key buying factors used by your customers
 
 
Many organisations have taken insufficient time to understand the criteria their customers use to identify and select suitable suppliers. 
The criteria may differ depending on their position in the supply chain; price is certainly not the only key buying factor. Companies that trade primarily on price will find it very difficult to compete with overseas competitors who have access to low cost labour
Key Issues
·         You must fully understand why customers buy your products
·         The maxim that it is easier to keep an existing customer than find a new one, still holds true for most manufacturing-based businesses
·         Customers use a complex set of criteria to decide which products and services to purchase: price, while important, will not be the sole reason
·         It is important to identify the key features of the products and services you offer and how this benefits your customers. These features may be divided into two types:
o    Order Qualifiers are basic requirements that must be incorporated if your product or service is to be considered by the customer at all. Examples might include meeting international quality standards or specific interfaces for fluid power equipment
o    Order Winners will make customers select your products rather than your competitors’.
·         Knowledge of your customers’ key buying criteria provides a focus for your company when developing new products, organising the business and deciding its strategic direction
·         The reasons why customers buy your products may include:
o    Technical capability, integration and support
o    Delivery performance e.g. readily available on short lead-times
o    Brand, reputation for supplying a high quality product
o    Environmentally friendly and energy efficient
o    Established supplier with good reputation for customer service
·         Products sold purely on price are generally commodities
·         The whole management team must understand what their customers need and value
·         Everyone, throughout the organisation, should be encouraged to focus on serving their customer and meeting all reasonable expectations
·         Key decision-makers within the customer organisation should be identified and contacts made and maintained by the appropriate people at all levels in your company, on a regular basis
·         Customer accounts should be classified and those that generate the highest gross margins given the greatest attention; unprofitable accounts should be reviewed
Factors for Success
Factors to Avoid
1.     Continually assessing customers to identify those key to the future success of your business
2.     Training employees to identify and understand customers
1.      ‘Me-too’ products / services
2.     Competing on price
3.     Sales driven by people working on high rates of personal commission
Who does this apply to?
Senior managers, people involved with customers, everyone in the organisation
Realisable Benefits
Increased sales, greater customer loyalty, higher margins, focussed product range, ability to sell other products and services based on reputation for good customer care
Key buying factorsKey buying factors

Key buying factors

Understanding valueUnderstanding value

Understanding value

Measuring customer satisfactionMeasuring customer satisfaction

Measuring customer satisfaction

Improving customer satisfactionImproving customer satisfaction

Improving customer satisfaction

Quality standardsQuality standards

Quality standards

Delivering quality standardsDelivering quality standards

Delivering quality standards

Continuous improvementContinuous improvement

Continuous improvement

Deliveries (on time and in full)Deliveries (on time and in full)

Deliveries (on time and in full)