Total customer orientation

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Chemical Sales Marketing Conference

Amsterdam, March 14, 2007

Kai Howaldt

TOTAL CUSTOMER ORIENTATIONHow to make it happen and pay off

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TOTAL CUSTOMER ORIENTATIONis about value and values

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Megatrends in Marketing & Sales> Intense global competition for customers

– Customer, not product is bottleneck> Increasing need to understand customers

– From products to overall solution

> Growing significance of clear value propositions– From consumer goods to chemical

commodities> Increasing bandwidth of marketing

instruments and sales channels

CHALLENGE

Why we talk about total customer orientation

Catch thecustomer atthe momentof truth

> Further differentiation of customers' needsand customer value– No one fits all solutions

– Opportunity and need to differentiate

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"OLD paradigm"

Product

Market access

Customers

defines

delivers

"NEW paradigm"

Product/solution

Market access

Customers

defines

choose

Influ

ence

Catching the customer at the moment of truth requires a basicparadigm shift

Influ

ence

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MOMENTof TRUTH

Customervalues

Company valueproposition

Customervalue

At the moment of truth, all values must match

MUC-90007-043-05-02-Ec.ppt 5It's all about values

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Customervalue

Customervalues

Company valueproposition

Then it's highly likely that the customer will buy

MUC-90007-043-05-02-Ec.ppt 6It's all about values

MOMENTof TRUTH

Customervalue

Customervalues

Company valueproposition

BUY!

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Understanding the customer in this way can help build TCO

TCO Process

Momentof truth

Understand

Gain &retain

Target

Track

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TCO Processes

Source: Roland Berger

"Target" customers

"Gain & retain" customers

"Insights" about markets andcustomers

Secure efficiency &effectiveness

Target

Gain &Retain

Understand

Track

> Customer values and archetypes> Customer value> Actual value proposition

> Customer value & profitability> Sales funnel/sales effectiveness

> Relationship> Product/service/solutions> Touch points: sales, sales channel,

customer service> Price

> Target segments> Target value proposition> Target value creation

The customer-oriented and value-based market approach isbased on four key processes

Momentof truth

> Campaign effectiveness/ROMI

> Marketing/communication

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TCO enabler

Source: Roland Berger

Link to corporate strategy

Organization and processes

Technology

Culture and change mgmt.

Target

Gain &Retain

Understand

Track

STRATEGY

CULTURE

ORGANIZATIONTECH

NOLO

GY> CRM systems

> Living the customer-valueorientation

> Customer-oriented structures andprocesses

> Holistic approach/top managementissue

> Use of e-technologies> Selection of system/technology

partners

> Management processes andincentive systems

> Continuous change mgmt. andimprovement processes

> Markets and regions> Value chain

> Organizational efficiency> Organizational anchoring of the

TCO responsibility

Our understanding of TCO: A comprehensive approach to acustomer value-based company

Momentof truth

> Qualification and recruiting

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WHAT are values and needs ofthe customer?

WHAT > value proposition do I have todeliver?

WHERE are the customers onthe path to the momentof truth?

WHEN > do I have to take which actionto guide the customer on thepath to the moment of truth?

HOW valuable and importantfor the business is thecustomer?

HOW > much can I invest in gainingand retaining this customer ?

> much priority do I have to puton this customer?

Values grid

potential to buy…….. to paycost of servelifetime to sell

Customer value

Potential to buyWillingness to pay

Cost to serveLifetime to sell

Customer valueLost potential

IDENTIFY INFORM EDUCATE NEGOTIATE

Lost potential

IDENTIFY INFORM EDUCATE NEGOTIATE

Sales funnel

Three basic concepts drive the TCO process

Understand Target, gain & retain, track

> marketing & sales mix do I needto convince the customer?

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TOTAL CUSTOMER ORIENTATIONin basic commodities

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CustomerVALUEprofile

PurchasePrice

PurchasePrice

OwnershipCost

OwnershipCost

SoliditySolidity

ExperienceExperience

SimplicitySimplicity

CommitmentCommitment

LoyaltyLoyalty

IntegrityIntegrity

EmpathyEmpathy

ExcellenceExcellence

CustomizationCustomization

InnovationInnovationServiceCompetence

ServiceCompetence

DurabilityDurability

PrecisionPrecision

I

T

SECURITY RELATIONSHIP

COST PERFORMANCE

CompanyVALUEproposition

Roland Berger has developed one common language for valueprofiles based on 15 values/needs

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CUST

OMER

SEG

MENT

BASI

C CH

ARAC

TERI

STIC

S

"IMAGE SEEKER"

> Trusts the brand instead ofchecking theproduct/service provided

> Is not price conscious,buys instead of high ABCprice; sees that asconfirmation for highquality/reliability

> Once satisfied thiscustomer does not activelycompare with competition

"QUALITY SEEKER"

> Focuses on consistentadherence to specifications,particular in terms of purity

> Highest performance,quality and servicerequirements

> Does test the qualityregularly without trustingthe brand (therewith lowloyalty)

> Allows a higher price forhigher quality, but activelycompares with competition

"PRICE SEEKER"

> Can only be attracted bythe pure price

> Demands "standardquality", sees all suppliersas having the samequality and service level

> Accepts additionalservices, but does not payfor them

> Low loyalty towardssupplier as price is thedominating decisioncriterion

"RELATIONSHIP SEEKER"

> Focuses on the good (per-sonnel) relationship with ABC

> Seeks intensive support,service competence andcommitment are key

> Convenient services areabsolutely necessary, doesnot want to care about thedelivery

> Usually ABC are a D-productfor him, price is not decisive

> Usually does not comparewith competition and is a loyalbuyer, as long as needs aremet

"PROCESS PARTNER"

> Reliable and transparentlogistics services are key

> Price stability is important,but not the dominatingcriterion

> Allows a higher price iflogistics services aresuperior (delivery of morecomplex servicesdemanded)

> If high (service)requirements are met,loyal buyer

EXAMPLE – CHEMICAL COMMODITY

Need-based customer segments

Source: Project team, Roland Berger

Based on different customer needs, we defined five customersegments

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Total customer orientation ...

... rapidly pays off – In specialties and commodities

... is a new paradigm and needs change – Customer values and value are key.Consistent market approach and organization are the natural consequence

... is a top management issue – It is not a marketing concept but involves theentire company (R&D, supply chain, organization, culture, ...) and givesorientation (joint language)

... is pragmatic and implementation oriented – Although it looks sophisticated

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...make it happen, it pays off!

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TOTAL CUSTOMER ORIENTATIONHow to make it happen and pay off