A company`s choice of customers is of strategic significance because customers determine the quality and quantity of its intangible knowledge revenues.
This is the opinion of James van der Westhuizen, MD of Gauteng-based knowledge management consultants, KnowHouse, a company that assists organisations in managing their intangible assets.
"Most customers are sources of value in forms other than hard cash," he says. "They provide training for employees, they act as references, and they spread the word and image - revenues from intangible assets take intangible forms."
Van der Westhuizen maintains it is imperative to know which customers are contributing intangible revenues. "Having IBM or General Motors as a customer is a valuable reference, however the size of the customer has little to do with how interesting or challenging the projects are. The most challenging and educational work is often done for less well-known customers."
A focused strategy that takes intangible revenues into account therefore involves getting to know one`s customers well. When armed with an intimate understanding of its customers, a company can be more selective in its marketing, he continues.
"It can concentrate the company`s most valuable (scarcest) skills on projects where they best fit in and which will do the most good for the customer and the knowledge company itself."
Satisfied customers are vital assets. The key, therefore, to sustained profitability is the ability to establish and maintain stable customer relationships. Van der Westhuizen says one can distinguish three kinds of intangible revenues (customers): those that improve customer relations, those that improve the internal structure (a company`s essence or character), and those that improve competence. "Thus a strategic aim should be to attract customers whose projects improve all three areas, as well as profitable and high quality customers."
If companies do not have an intangible asset value, they will be competing for resources to work for them and for customers to work with them based on price alone.
Finally, when developing a strategy, it is necessary to consider visible earnings (how profitable each customer is), but this alone is not sufficient. "In the ultimate analysis, the flows of knowledge from customers are more critical because they are the source of invisible revenue.
"Companies should look to all customer interfaces as knowledge gateways. Whether it`s the secretary or sales person, these people can channel intangible revenue into an organisation."
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