Invisible Balance Sheet - Sveiby Knowledge Management

The top five customers’
percentage of invoicing
30
25 ,.:.:.:.:.:.
The diagram shows that tk
top five customers accounted
for around 50% of sales
throughout the five years.
48
i.e. increase in turnover adjusted for takeovers, measures how well the company’s
business concept is being received in the market.
Note that bought growth, i.e. growth arising from acquisition, is not a sign of
success. It could be, e.g. if the purchase was a way of recruiting an important
group of revenue people, but if the know-how company grows by buying into
other sectors, it is more a sign that the original business idea no longer generates
sufficient growth. It may indeed be a sign of stagnation.
The proportion of big customers
The annual report should contain information about the customers/clients.
Two key indicators can be given: the proportion of invoicing going to the largest
five customers, or the number of customers who together account for 50 percent
of total invoicing.
Have we invested in the right marketing?
An appraisal of market investment is also part of the picture, both investment
already made and that which is planned.
What is meant by marketing is changing with the rapid growth of the service
and know-how society. For those selling know-how and services, the focus is
moving from mass communication and chasing new market shares, to more
qualitative marketing where the aim is to retain established customers and
strengthen relations with them. Terms such as “customer base management”
and “relationship marketing”, i.e. marketing to old customers, express this new
view.
An important indicator of the potential in customer capital is how the
company has decided to allocate its market investment between a) Looking for
new customers (offensive marketing). b) Looking after old customers (defensive
marketing).
A company with a high customer turnover should also be able to show that
it is concentrating its marketing effort on developing a customer database,
customer dialogue, surveys and quality.
A newly established company with an insufficient number of customers, or
a company that needs to change its customer structure, should be able to show
investment in more offensive marketing, e.g. building up networks and opinion-forming
contacts, developing the employees’ ability to create business,
displaying the employees’ competence and measures creating a distinct image.