The Drug Supplier: Customers

Quick Summary: Customers supply the wonder drug: Revenue

Abstract:

Companies can only survive if they receive regular amounts of revenue from customers.  Revenue can be thought of as the wonder drug that is essential to a company’s well-being.  And the drug must be taken forever. There is only one supplier of the wonder drug: customers. 

In today’s climate, the mention of “drug supplier” seems to connote illegal drug activities and addiction.  However, legitimate drug companies keep us healthy and prolong our lives.  It is safe to say that none of us can survive without access to these life prolonging and saving products.  In the article in this series, “Revenue: The Wonder Drug,” the drug analogy for companies was introduced.  Revenue is the only substance that keeps companies alive and helps them grow.   Revenue seems to cure virtually every ill that can affect a company.  Like medical drugs, revenue can take many forms and comes in many sizes.  Unfortunately, its effects are not long-lasting and must be regularly received.  Again, like medications, revenue may have to be received daily, weekly, monthly, or even annually.  The key concept is that it requires continuous replenishment.

There is a short term substitute for revenue to keep a company alive.  It is investment from private or public investors who can infuse cash as a revenue substitute to prolong the life of an organization.  However, it can only be used as a stop gap measure that can ease the need for revenue.  Without revenue, the ability for a company to stay alive based on outside investment will cease.  Outside investment also has a negative side effect: ownership dilution.  The dilution may be painful, but necessary.

There is only one source of revenue:  Customers.  They are the wonder drug supplier.  They supply the company with revenue, the cash to continue operations, but expect some value-received in return.  That value can be a physical product, a service offering, or some form of intellectual property.  If the customer does not feel that they are adequately compensated for the drugs they supply, they are likely to stop supplying them and the company will need to find an alternative source – if one is available.

The customer drug supplier analogy just described may seem obvious, but is often overlooked inside an organization.  Individuals with direct customer contact and senior management may be intimately and intensely involved with customers and clearly understand that they keep the company alive.  However, others within the organization, without direct customer involvement, can easily discount the importance of the customer’s life-sustaining role.  Similar to some medications, their benefit may not be obvious or even noticed by the individual until the medication is no longer taken.  Degraded health or even death can occur and the impacts may not be reversible.

The drug supplier analogy and the need for addiction to it may not seem to be an appropriate subject for all company personnel, but it will leave a lasting impression and highlight the importance of customers to everyone in the organization.  Everyone must focus on keeping the stream of drugs from the drug suppliers flowing.  This can only happen if the drug suppliers value the products and services received from the company.  In this case, addiction is the desired outcome:  For customers, it is becoming addicted to the company’s products or services.  For the company, it is becoming addicted to the revenue provided by the customer and the need to continue to encourage them to provide their drug.

 

Article Number : 5.030201   

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