Delivering on your Value Promise: Who is ‘Key’ ?

“We have choices about who we invest time in, where we allocate resources, and we should be aware of the long and short-term impact of the decisions we are taking.”

Value Chain Management doesn’t stop at understanding your marketplace and devising a value proposition, important topics we explored in previous blogs that form a series focused on Building a Strong and Compelling Value Proposition. Engaging your target customers/consumers also involves the successful delivery of the promise(s) you make, the delivery of which relies on others.

In exploring this area, the following questions emerged amongst our network of business owners:

What do we mean by a ‘Key’ Customer or Supplier?

Results from a survey of over 220 business owners [1], by Kent Business School’s Centre for Employment, Competitiveness and Growth, provided the group with vital insight to ‘key’ customers and suppliers:

  • We have lots of key customers:

Three quarters of business owners reported having fewer than 500 customers. When asked how many of these were ‘key’ customers, 60% of business owners reported that up to 20 of their customers were ‘key’.

  • We work with fewer ‘key’ suppliers:

90% of businesses reported having between 1 and 100 suppliers, and 9 out of 10 businesses would class under 20 of their suppliers as ‘key’ suppliers.

  • Relationships that can help us ‘survive’ is our primary concern:

In reporting what defined a ‘key’ customer, business owners were most likely to report a focus on survival in the short term (such as the contribution to sales revenue, essential cash flow) over a longer term perspective (such as providing the confidence to invest in the longer term). Similarly, business owners were reporting a focus on those suppliers seen as ‘critical to our business’, contributing a ‘significant share of expenditure’ and those that ‘go the extra mile’.

  • Strategic partnerships are further down our agenda:

Customer relationships were more likely to be focused on receiving few complaints and cooperating to resolve disputes, with some information being shared to ensure supply chain efficiencies (e.g. deliveries). Customer relationships were less likely to be used to develop new products, business plans or sales forecasting.

Supplier relationships were mostly based on sharing information to assure delivery and quality standards, cooperating to resolve disputes, with some information shared to ensure supply chain efficiency. Supplier relationships were less likely to be built on investing resources, identifying ways to improve quality or decrease costs, developing products and sharing information concerning strategies and business plans.

Why is it Important to Define who is ‘Key’ in the Delivery of our Value Proposition?

‘Key’ doesn’t have to mean large in size or monetarily (£). Our most reliable customers and suppliers may add other, important ingredients to our offer. There is therefore a need to understand the type and form of relationships we each have today, and those we want to develop for tomorrow (see [2] for a blog on the ingredients of successful value-based relationships).

Defining who we believe is ‘key’ enables each of us to make decisions over how we allocate resources, the time and effort we spend on developing direct relationships and even those relationships we seek to exit. As one business owner put it:

“We have choices about who we invest time in, where we allocate resources, and we should be aware of the long and short-term impact of the decisions we are taking”.

Continuing this thread, a business owner reflected: “It’s important to not make assumptions about how you see a relationship with a customer/supplier…there may well be differences of opinion!

So, how can we analyse our relationships?  What criteria can we use?

There are ways of analysing our relationships with our customers/consumers and suppliers, and our Expert for the day introduced a model that enables us to analyse what he terms as ‘inter-company process links’ [3].

The model presented split relationships into four categories:

  1. Those we manage: those that are important enough to be managed by you.
  2. Those we monitor: not critical, but important that they are integrated and managed effectively between other companies. Your role is to monitor how the process link is integrated and managed.
  3. Those we do not manage: you are not actively managing them, and they are not critical enough to use resource for monitoring.
  4. Those that are of influence, outside of our chain: supply chains that are influenced by decisions in connected supply chains.

In working through this model, members of the network made the following comments:

“It takes time and effort to understand the links and relationships you have now and want to have in the future, and this is really important work to do”

“It involves deciding the level of information we share and the trust we have and need to develop with our suppliers and customers”

“We can work with suppliers as ‘partners’, and this will influence the way we build a relationship”

“It’s important to recognise that not everything is in our control”

Finally, a moment of silence dawned on the group and a voice spoke: “We seem to spend more time with customers, and we tend to squeeze our suppliers; exactly the thing that we wish didn’t happen to us!”

Make a Difference (MAD) challenge from this section: In reading this section, we would ask that you reflect on the following questions:

  • Who currently are your ‘key’ customers and suppliers?
  • What criteria are you using to determine this?
  • What do you share with them?
  • What implications does this have on the way in which you operate & interact with them?

To read the blogs that form part of a series on Building a Strong and Compelling Value Proposition click on the following links:

For further information on the BIG Network or any of the Business, Improvement and Growth (BIG) programmes for ambitious owner-managers, and their teams, please get in touch with Simon on 01227 824740 or


[1] These results were obtained through our in-depth programme of research “Promoting Sustainable Performance” that seeks to understand the drivers of growth and performance.

[2] “Relationships Make the World Go Round” published on 24 October 2014 on the BIG Blog see: .html

[3] Lambert, Douglas, M. 2008. Supply Chain Management: Processes, Partnerships, Performance, 3rd edition, Supply Chain Management Institute. See in particular Chapter 11 on ‘Mapping for Supply Chain Management’ (p192-216).


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