The director told me that, regardless of whether it’s sales, marketing or production, the conversation always wound up focusing on total revenue and costs. The end game is always to quantify the resulting company EBIT outcome.
There is scant investigation of customer-specific impacts that drive material variances within revenue and functional costs. Such a confirmation provides much insight as to why customer KPIs end up being overshadowed by internal functional KPIs.
This happens all the time, and it creates such a haze for businesses. We forget that a company is really made up of all the individual customers and the profitability that comes from each account.
Most B2B suppliers have four or five major customers that underwrite the business. If you are not managing customer profitability with the assistance of customer-focused functional KPIs and regular reviews, you miss seeing where value is lost or gained as it gets mixed and absorbed in the total cost bucket.
In recent times, suppliers have started to introduce Key Account Management Teams (KAMs) to manage their key customers. These teams are made up of cross-functional representatives from within the supplier and seek to align the service experience to customer expectations, whilst uniting the respective functions.
Do you remember me mentioning “the bowtie effect” in another post? It referred to how significant margin erosion occurs if ownership and accountability for customer satisfaction and welfare is left to only the sales team.
If you replace the bowtie with a “round table” and share the ownership of an established set of customer KPIs, you can circumvent much internal disharmony and value loss.