Which customers contribute to the success of a company and how much? According to a study carried out by EBS (European Business School), many board members, senior managers and entrepreneurs simply don’t know. There are few analytical tools and control instruments to do justice to the growing importance of customer relationships. As a result, as part of his master’s thesis in financial control and consulting at the School of Management and Technology, Michael Ritzmann decided to look at the contribution made by customers to the success of the company sponsoring his degree, an electronics firm called SÜTRON.
SÜTRON electronic GmbH develops, manufactures and markets customized solutions in the field of machine operation and observation – HMI solutions used in the automation of machinery and mechanical equipment. Given the company’s focus on customer understanding in sales and the heterogeneous structure of its client base, it is particularly important for the company to work out the different ways its customers affect its success, since this dictates how customer relationships should be managed. Michael Ritzmann developed a tool that is based closely on business theory and can help senior managers at SÜTRON to understand the contribution made by its customers to success, analyze this in detail, and thus work out control mechanisms.
To determine customer value, an integrated model was designed that revolves around the requirements of SÜTRON. Particular emphasis was placed on working out customer value in quantitative terms. Drawing on a comprehensive battery of assessments of the cost and profit structures of each customer, Michael Ritzmann developed a way for his company to calculate each individual customer’s direct profitability. Based on this, he established ways to analyze and depict the customer value structure of the company and adapted this to its individual business environment. Such methods are an important starting point for senior managers at SÜTRON in order to understand the strategic implications of how they manage different customers and customer groups. As part of his study, it became clear how important it is for the company to carry out meaningful assessments of customer successes. To use the instruments in practice, however, reliable data is needed and calculation methods need to be identified that do justice to the likely causes.
The result of Ritzmann’s project is a comprehensive, meaningful, standardized, multi-dimensional model for calculating customer success, which largely works automatically. As an instrument of evaluation and control, the customer success evaluation tool helps determine the value of all customers in a detailed and transparent manner. This can then be analyzed for specific use by senior management. Having completed his degree, Ritzmann is now responsible for management accounting at SÜTRON, a job which involves calculating success rates every month, as a key tool for providing information to manage customers as required.