…looking for a new way to classify our customers.
Assumption: the following text is just a part of a longer and more in-depth article I wrote a couple of month ago in Italian (and that I promised to translate as soon as I can find the time). The complete text, entitled “Did you say sell?”, Takes its cue from several excellent works (which I propose again at the end) and tries to conceptualize a new, contemporary and agile approach to the sales processes in our companies.
Unlike other parts of the article, the one that follows and I want to propose to you, is much more based on experience (experimentation) and personal practice than on an academic basis: I think this also makes it the most original. What’s the starting point? In the original text I insist that we all need a sort of new emphasis on the “partnership” concept and – consequently to this – a new tool (customer classification system) that shows it.
So. I hope to be able to publish the complete text in English very soon. For now, enjoy the reading.
Seems being more and more evident that todays relationships between the different players involved in a sales process are increasingly based on a “partnership” concept, about which it’s primarily meant “sharing” (of one’s own goals, strategies, skills, etc.). That said, we have to rig ourselves with some customer’s analysis & classification tools (cluster methodologies) that can really highlight this reality.
The classic XY – matrix classification, based on BCG and GE models, that we could generically link to the ”positioning” and “potential” ideas, and that we hitherto used to both a target market and a product or company, this type of matrix can represent a significant starting point but we certainly must implement and – in a certain sense – overcome it, with the aim of better describe todays reality.
Normally we would start by defining, on the X axis, our positioning related to the customer (or, conversely, his market’s exposure with us), which in a certain way defines our value for him, and then we’d focus on its growth potential, scaled on the Y axis, that’s mainly defined by the context and its intrinsic characteristics. In this classic two-dimensional classification system, all we defined as “partnership” is included in the rating of the positioning (abscissa): but – at the end – this does not return its fundamental and peculiar value, nor does it specify enough its quantitative dimension. We believe it becomes increasingly necessary to extrapolate this “partnership value” for describing it: we can easily do this by adding an additional Z axis, thus working through a much more responsive three-dimensional matrix.
The variables of this new matrix will then define the three “P”s that help us to classify (cluster) our customers:
- X axis: Positioning
- Y axis: Potential
- Z axis: Partnership
So we’ll classically have to define some surveys/check lists, in line with our market context, which give us back a value from 1 to 10 – in a linear scale – on positioning and potential. On the other hand, the returned values on the Z axis will be rebalanced in a non-linear scale, considering that these interdependent relationships (which we’d define “symbiotic”) can grow exponentially in terms of profitability the more we can integrate the systems/environments, while the difference in the lower levels can be barely perceptible. Therefore to correct this sort of mathematical distortion and to have a realistic positioning, we must convert the 1-to-10 value identified by the survey into 1.3(z): in this way we will find two linear scale axes and another one (the Z) with an exponential scale.
This definition of the “partnership level” must necessarily consider four main macro-areas (whose weight will be linked to the analyzed context):
- technological integration
- sharing/integration of mutual strategies
- economic-admin. sharing/management
This type of analysis give us the chance to classify – in a simple but deepen way – our customer base (existing or potential) in specific homogeneous clusters on three dimensions. This means, we are able to visualize the uniform characteristics and, at the same time, to define an absolute rate (a numerical one) that give us a progressive hierarchy. So by working on two different descriptive patterns, we’ll be able to highly improve the ability of our organizations in identifying accurately the focus-customers; moreover we can implement constant and effective monitoring systems for the market/context in which we operate (or wish to operate).
Different customers – different teams
So what’s the practical advantage of a more complete classification of the customers? This is a broader topic, but we can certainly affirm that in order to make our commercial action more effective, to implement a customer-centric mindset and to rebuild our companies in an Agile perspective (more flexible, quick and responsive), the 3P-Matrix help us to set up specific work-teams that will be able to “manage” at best the different types (clusters) of customers… and at the same time with which priorities (hierarchy) they have to do that.
Marginal Note: I hope this discussion doesn’t seem too sterile. Isn’t just a technical fun, but I know can give this impression when not supported by the complete theme (which – I remember – concerns the sales processes).
“There is no doubt that the current market situation is forcing our business organizations to work in new forms and ways, all of which are much more challenging than in the past. To govern – and not suffer – the evolution of your business we require a sort of capacity to navigate todays complexity.” …I wrote in the opening of the full article. It’s a big task, no? But it’s exciting.
We absolutely need to work out new tools: the one described above is one of them (or try to be so) and I hope it can be a good start for new discussions.
For Italian readers, the complete article “Hai detto vendere?” is here: click.
Below is a part of the complete bibliography:
“What Leads to organizational Agility: it’s not what you think”, E. Pulakos, T. Kantrowitz, B. Schneider, American Psychological Ass., 2019
“How to Make Sure Agile Teams Can Work Together”, Crocker , Cross, Gardner, HBR, May 2017
“The designing for Growth Field Book”, Liedtka, Ogilvie, Brozenske, Columbia Business School Pub., 2019
“Reinventing the Organization: How Companies Can Deliver Radically Greater Value in Fast-Changing Markets”, Yeung, Ulrich, Harvard Business School, 2019
“Doing Agile Right: Transformation Without Chaos”, Rigby, Elk, Berez, Harvard Business Review Press, 2020