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Customers or Clients. Do you know the difference?

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Executive Summary.

  1. Customers and Clients, the difference defined.
  2. Creating mutually beneficial value to clients and yourself.

In previous issues I've covered the building of trust in B2B relationships. I outlined how important it is that your client must participate and reciprocate. I went on to say, "you may need to choose carefully those with whom you may wish to build a relationship based on trust." I also introduced the four steps to building trust; from Subject Expert Based to Trusted Advisor Based. Why is this so important? Simple! In many cases, that I come across, there is a total misunderstanding of the difference between a customer and a client in the B2B space. This can also be true in the B2C space.

Understanding this crucial difference is critical in developing suitable relationship based marketing and sales strategies, not only for your business, but more importantly for your clients'. So what is the difference between the two? Which do you have in your business? Can you readily identify your customers from your clients and segment them accordingly?

Customer or Client

The distinction between a client and a customer is more than semantics. Customers buy a product or service with well defined characteristics that match their needs with little or no negotiation and discussion. A client in contrast, has a consultative aspect to it. There is a give and take to clarify and identify needs and recommend solutions, jointly. The focus on clients is a deliberate one. If you have customers, your relationships will tend to be narrow in scope. Whereas if you serve clients, you have the opportunity to develop collaborative relationships which need to be based on trust.

Market Space

Hence clients are those customers that one needs to develop an ongoing relationship with. They are often purchasing so much from a single vendor that they themselves are a market space (place) themselves. These market spaces, given different industry verticals, may be as little as R10M in annual revenue to as much as several Billion Rand. What is important in either scenario is that a client centric strategy is designed together with the client so as to ensure that not only is the relationship based on a Trusted Advisor status, but that in doing so, you have the opportunity of maximizing revenues, whilst minimizing competition in the client.

 

Expert or Advisor

To illustrate this, the first table outlines the difference in behaviour between experts and trusted advisors. The key is that trusted advisors invest time in understanding the client, prior to getting the client to understand, their value propositions. Only in this manner is a trusted advisor able to know what solutions and/or value propositions are truly relevant.

 

ExpertsVsAdvisors

The second chart, below, outlines the path to creating mutually beneficial client value, where both parties, the vendor and client share in each other's success. To get into the green quadrant requires an investment in time, people and resources from both vendor and client companies. As already mentioned, relationships have to be reciprocal, to succeed.

PathTrustedAdvisor

More and more, this is the model that successful companies, such as General Electric, have adopted. In fact GE's Chairman and CEO, Jeff Immelt, states "At the end of the day, it's about building your business around customers and finding ways to help them grow, that will make you succeed."

To conclude, how does this apply to B2C marketing? Here's a thought to leave you with. Assume the average purchase price of a medium sized family sedan is about R150,000.00 in today's value. The average car purchasing cycle is five years. So given a period of say 50 years, it's reasonable to expect a person to purchase about 10 cars in their lifetime. So the market space of the person in this example is about R1.5M, at a minimum. This could easily double or even triple with higher value luxury brands. Yet, I don't know of one car manufacturer taking this approach. If they did, their cost of sales would reduce dramatically, whilst revenues would go up.

 

Andrew Clare is Managing Partner of reLiance a business to business relationship marketing practice. We focus on improving client profitability through developing, implementing and measuring sustainable, collaborative business to business relationships.  This e-mail address is being protected from spambots. You need JavaScript enabled to view it www.rassa.co.za www.linkedin.com/in/andrewclare

 

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