Customer Selection – Part 1 of 4

June 8, 2010

Continuing with my series of my favorite CSIA presentations from 2010, I very much enjoyed the Are You Selecting Your Customers…Or Are They Selecting You? by Dean Streck, CEO of V I Engineering who is an NI Select Alliance Partner.  In his presentation, he astutely illustrates that customer selection defines everything about your company from how you quote and the prices you can charge, to your process model and how you work, to the people you hire and the skills they need, and ultimately to your profitability and your ability to control the destiny of your company. Dean offers a fresh perspective on your customers and offers advice on your selection process, so you can truly understand your customer contributions to your business.

Know Thyself

Dean starts with the premise that it is hard to pick your customers if you don’t first clearly understand who you are. He recommends several tools that can guide you in this self-evaluation including some methods already mentioned in this blog.

Porters’s Five Forces – a look at the most common factors that affect your business.: Your buyers Your suppliers, Your Rivals, Substitutes, and Barriers .

Where You Play – what is your competitive position and how are you choosing a unique point on the Productivity Frontier.

OAS Statement – What are you Objectives (ends), Advantages (means), and Scope (domain). The OAS statement is basically your business strategy. Check out these tips for your annual planning process.

Strategy Map – is a visual representation of the strategy of an organization. It illustrates how your organization plans to achieve its mission and vision by means of a linked chain of continuous improvements.

Balanced scorecard (BSC) – is a strategic performance management tool – a semi-standard structured report supported by proven design methods and automation tools that you can use to keep track of the execution of activities by your staff within their control and monitor the consequences arising from these actions.

Your Customer Selection Process – who in your organization is responsible for your customer selection. That starts with the CEO who develops and communicates the customer selection criteria. It then falls to marketing and sales to identify the accounts and create the opportunities that fit the criterion. Then, the rest of the operations on both the technical and business side must work to meet the needs of those clients.

Looking Into the Mirror

As you can see, customer selection is as much about you as it is the customer. You must first figure out who you are as a company today and the company that you want to be. Then, you can be proactive about selecting the customers that will help you achieve your goals.

Customer Selection (Part 2 of 4) – Know Thy Customer

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Your Business Foundation – Part 3 – Creating a Business Plan

April 20, 2009

Creating a business plan requires an understanding of the owner’s purpose for the business as well as the guiding principles for the business. A business plan typically describes the 2-5 year direction and objectives for the organization. That is, where the organization is going and how it is going to get there.

Basic Elements of a Business Plan

Check out the Small Business Association Planner for some good tools and advice. Typical business plans include:

  1. The purpose of the business – essentially a statement of the owner’s purpose, the company’s mission and vision
  2. Objectives – where will the company be 2-5 years from now (size, profitability, efficiency, ….)
  3. The organization – a description of how the company is organized to meet it’s purpose and objectives
  4. Strategies – Overall strategies for obtaining objectives
  5. Action plans including metrics for implementing strategies

Porter’s Five Forces

porters-five-forcesThere are a number of methods for determining a business plan. One of the common is to review ‘Porter’s Five Forces’. That is to look at the most common factors that affect your business. 

  1. Your buyers – the current and potential customers of your products and services
  2. Your suppliers – the basis for your products and services on. How is that changing and affecting your business?
  3. Your competitors – those competing with you for your business. What are your relative strengths and weaknesses?
  4. Substitutes – really another form of competition. What outside forces can affect your business?
  5. Barriers – kind of the opposite of substitutes. What can is protecting your business? How can you take advantage of that?

Obviously, you could spend a lot of time working on this and I’m not advocate wasting time. Still, if your business is important, then you need some sort of business plan to get you where you want to go. This business plan will fuel you annual strategic planning process – Part 4 of this Business Foundation series.

Question: Did you evaluate Porter’s Five Forces to create your business plan? If not, what other analysis did you find useful?