Evaluate Mutual Value Produced
We had been discussing the various ways that increased collaboration with customers prevents commoditization when Ben asked,
“Can we collaborate too much with customers?”
The short answer is “yes,” but to delve more deeply into Ben’s point, we first revisited why customer-partnering has proven to be so effective in battling commoditization – it produces results for customers that fosters enduring relationships. Sales productivity is increased, driving growth in revenue and profitability.
But when customer collaboration reduces your profitability, it has gone too far. You can’t let collaboration detour you from achieving your vision and goals. Customer-partnering initiatives must remain focused on delivering your Unique Promise (your distinctiveness) to your Core Customer.
Ben’s question was actually exploring if investing so much effort in collaboration with customers could limit other options. If we follow customers too closely, could we end up following them down a rat hole?
The risk of such an occurrence depends on the value of that customer to your business. If some huge percentage of your sales (> 50%) is produced from one customer, then you are exposed to this risk and should be working aggressively to increase your customers and diversity your revenue.
However, for most of us, the danger is low that increased collaboration with customers could be detrimental. Does partnering with your customers constrain your ability to collaborate with others in pursuit of your vision and growth goals? Is there a more productive means of strengthening your differentiation and growing your sales than producing strategic value for a customer that builds their business and competitive advantage? For the business-to-business market, is there a more low risk – faster to market – higher probability of success process for new product development than co-creating a novel product or service in collaboration with a customer?
Together with your customer, annually assess the value produced by your strategic collaboration to ensure that it continues to be mutually beneficial.
Do you meet regularly with customers to evaluate the value produced by your collaboration?
How does this evaluation measure increases in quantifiable and competitive advantages?
