Presented By- Arihant Surana(204), PGDIM-18,C

Reference

Characteristics of a good Customer reference for a process equipment supplier-Salminen,Risto T.,Arpalo Janos,Pekkarinen Olli,Jalkala Anne,Mirola tuuli.-24th IMP conference,2008

Introduction

Customer references is the suppliers relationship to its existing or former customers that can be evaluated by the customers in terms of the suppliers product, service, management and cooperation performance. The Purpose of the study is to increase the understanding of good reference characteristics for a process equipment supplier. Research Question- What are the characteristics of a good customer reference for a process equipment supplier?

Customer reference-Objective

Expected to reduce the uncertainty of a potential customer. Re-establish credibility among existing customers. Maintain/awaken sleeping relationships. Serve as an enforcement to remain loyal to the supplier. Establish insecurity and induce competitors to withdraw from competitive biddings. Create credibility among actors( consultants, financers) of the Project.

Communicating reference to MarketPractices

Reference listsApplication specific Product specific Technology specific Country/area specific

Reference visits Company Website Press release Brochures of success stories Articles in trade journals Promotional material Seminars

Research process

Minsys Filteration. Internet Based Survey. Importance of the customer reference characteristics was evaluated on a seven point Likert rating Scale where 1 stood for not important and 7 for extremely important. Response rate is (89/780)*100=11.4%

Overview of process equipment supplierMinsys-provides filtration solution and services 12 subsidiaries, 430 employees in 36 countries, current net sales of 130 million euro (95% export) Main customer segment-mining & metallurgical industry and Chemical process industry

Sales process

Lengthy sales process of up to 2 years as Minsys provides large capital investment goods(1-10 million euro).1.Who would be potential customer 2.References are presented to customer 3.If interested first negotiation begins-Preliminary cost figures and equipment need are worked out. 4.Test at customer site carried out using minsys equipment process guarantees are specified 5.If interested ,full commercial quotation is given. 6.If selected Minsys tailor make the equipment. 7.Typical life span of the product is 15-25 years.

Reference Characteristic(RC) Model (As used in the survey)

Customer reference characteristics are divided into three parts1. Process and equipment characteristics

-Related to filter and the process where it is used2. Reference relationship characteristics

-Relationship between Minsys and reference company3. Reference customer characteristics

-Characteristics related to the reference company

RC-ModelProcess & Equipment Characteristics Reference relationship characteristics Reference customer characteristics

Buyers Perceived Risk

Application Similarity

Equipment Benefits

Continuity

Commitment and Trust

Similarity

Expertise

Reputation & Credibility

Study Hypothesis1.

A) The more similar the reference application to that of potential Buyers application ,the more the potential buyers risk is reduced. B) The more Equipment benefits are expected to be gained, the more this perception would reduce the buyers perceived risk.

2. A) The longer the relationship between the supplier and

its reference customer, the more credible and risk reducing that reference relation ship is from the buyers perspective. B) The more the relationship between the supplier and its reference customer is based on trust and commitment, the more risk reducing that reference relation ship is from the buyers perspective

Study Hypothesis3.

A) The more expert and the more similar the reference customer is to the potential customer ,the higher is the risk reducing influence on the potential buyer. B) Better the reference customers reputation and the more credible it is, ,the more risk reducing that reference customer is from the potential buyers perspective.

Study resultsThe Proposed hypothesis were well supported by the responses giving fairly high correlation with reducing the risk perception of the customers. Application similarity and equipment benefits are the most important factors followed by expertise, reputation and credibility, then continuity and commitment and trust and finally, similarity of reference and potential customer company

Practical Implications

Supplier should always consider every aspect of RC model when selecting a reference site or when communicating Reference to the Customers-they are all important-use check list. Its extremely important to communicate suppliers equipment benefits to Customers. the

Check list for selecting reference visit site-explored characteristics are witnessing equipment performance, interaction with reference customer personnel, getting info on problems and daily experiences in using the equipment and seeing how service is working. Service benefits should be clearly demonstrated in a good customer reference.

Thank You!