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Do you know your valuable customers? Stefan Wilhelm, Stefan Gueldenberg and Wolfgang Gu ¨ttel Abstract Purpose – Customer knowledge has not yet been recognized as a possible source of strategic competitive advantage in expansion of the knowledge-based view. The purpose of this paper is, therefore, to gain initial insights into the strategic dimension of customers knowledge in order to enable companies to define, identify and motivate the right customers and work with them together on a strategically successful level. Design/methodology/approach – The following single case study is based on semi-structured interviews with nine employees and strategic customers as well as a document analysis in an entrepreneurially oriented smaller firm equipped with limited resources. Findings – The findings demonstrate that strategic customers take on a valuable position within the company. It appears that the strategic customer is more aware of his/her value than the company itself. A definition and first criteria of strategic customers could be determined and a systematic identification of strategic customers is possible with the help of this study. Research limitations/implications – The paper is an empirical contribution to the existing customer knowledge management literature and aids in gaining further insight into the definition, identification and motivation of strategic customers. A definition is derived based on a literature study and developed further through the results of the empirical analysis. An additional result of the empirical study showed that customer oriented knowledge management is a promising bridge between the knowledge- and market-based view. Originality/value – The apparent lack of resources in entrepreneurially oriented smaller firms can be overcome through the addition of external knowledge resources, which the paper refers to as strategic customers. Keywords Motivation, Strategic management, Customer knowledge management, Customer typologies, Entrepreneurial firms, Strategic customers Paper type Research paper 1. Introduction New challenges have surfaced for enterprises due to the perpetual environmental changes, globalization developments as well as the transition to a knowledge society (Zack, 1999; DiMaggio, 2001; Myers, 1996). It is therefore even more important than ever to handle scarce resources such as knowledge strategically as these constitute the decisive competitive advantage for knowledge-intensive companies (Drucker, 1964). Existing internal knowledge resources are utilized for strategic planning whereas the customer is mainly neglected as an external fragment (Zack et al., 2009). It therefore seems to be sensible to deal with one’s external counterparts by, for example, entering strategic alliances and including customers in parts of the value chain in today’s economy (Desouza and Awazu, 2005; Dyer et al., 2001; Gibbert et al., 2002; Gulati, 1998; Hood, 1998). Customers can represent important external sources as they possess knowledge and skills, which they have acquired through experience. They have also collected suggestions for improvement from their day-to-day activities and therefore embody the best source for further value adding activities (Handlbauer and Renzl, 2009; Gibbert et al., 2002). In order for the DOI 10.1108/JKM-12-2012-0385 VOL. 17 NO. 5 2013, pp. 661-676, Q Emerald Group Publishing Limited, ISSN 1367-3270 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 661 Stefan Wilhelm is based at the Institute of Entrepreneurship, University of Liechtenstein, Vaduz, Liechtenstein. Stefan Gueldenberg and Wolfgang Gu ¨ttel are based at the Institute of Human Resource and Change Management, Johannes Kepler University Linz, Linz, Austria. Received 17 December 2012 Revised 22 April 2013 24 April 2013 Accepted 26 April 2013

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Do you know your valuable customers?

Stefan Wilhelm, Stefan Gueldenberg and Wolfgang Guttel

Abstract

Purpose – Customer knowledge has not yet been recognized as a possible source of strategiccompetitive advantage in expansion of the knowledge-based view. The purpose of this paper is,therefore, to gain initial insights into the strategic dimension of customers knowledge in order to enablecompanies to define, identify and motivate the right customers and work with them together on astrategically successful level.

Design/methodology/approach – The following single case study is based on semi-structuredinterviews with nine employees and strategic customers as well as a document analysis in anentrepreneurially oriented smaller firm equipped with limited resources.

Findings – The findings demonstrate that strategic customers take on a valuable position within thecompany. It appears that the strategic customer is more aware of his/her value than the company itself. Adefinition and first criteria of strategic customers could be determined and a systematic identification ofstrategic customers is possible with the help of this study.

Research limitations/implications – The paper is an empirical contribution to the existing customerknowledge management literature and aids in gaining further insight into the definition, identification andmotivation of strategic customers. A definition is derived based on a literature study and developedfurther through the results of the empirical analysis. An additional result of the empirical study showedthat customer oriented knowledge management is a promising bridge between the knowledge- andmarket-based view.

Originality/value – The apparent lack of resources in entrepreneurially oriented smaller firms can beovercome through the addition of external knowledge resources, which the paper refers to as strategiccustomers.

Keywords Motivation, Strategic management, Customer knowledge management,Customer typologies, Entrepreneurial firms, Strategic customers

Paper type Research paper

1. Introduction

New challenges have surfaced for enterprises due to the perpetual environmental changes,

globalization developments as well as the transition to a knowledge society (Zack, 1999;

DiMaggio, 2001; Myers, 1996). It is therefore even more important than ever to handle

scarce resources such as knowledge strategically as these constitute the decisive

competitive advantage for knowledge-intensive companies (Drucker, 1964). Existing

internal knowledge resources are utilized for strategic planning whereas the customer is

mainly neglected as an external fragment (Zack et al., 2009). It therefore seems to be

sensible to deal with one’s external counterparts by, for example, entering strategic alliances

and including customers in parts of the value chain in today’s economy (Desouza and

Awazu, 2005; Dyer et al., 2001; Gibbert et al., 2002; Gulati, 1998; Hood, 1998). Customers

can represent important external sources as they possess knowledge and skills, which they

have acquired through experience. They have also collected suggestions for improvement

from their day-to-day activities and therefore embody the best source for further value

adding activities (Handlbauer and Renzl, 2009; Gibbert et al., 2002). In order for the

DOI 10.1108/JKM-12-2012-0385 VOL. 17 NO. 5 2013, pp. 661-676, Q Emerald Group Publishing Limited, ISSN 1367-3270 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 661

Stefan Wilhelm is based at

the Institute of

Entrepreneurship,

University of Liechtenstein,

Vaduz, Liechtenstein.

Stefan Gueldenberg and

Wolfgang Guttel are based

at the Institute of Human

Resource and Change

Management, Johannes

Kepler University Linz, Linz,

Austria.

Received 17 December 2012Revised 22 April 201324 April 2013Accepted 26 April 2013

enterprise to generate and sustain this competitive advantage, they must possess the ability

of recognizing the value of new external knowledge and fitting it to the company. The

capability to acquire knowledge has been described as ‘‘absorptive capacity’’ (Cohen and

Levinthal, 1990).

Certainly, knowledge gaps can appear during the process of reaching a future strategy

(Zack et al., 2009; Zack, 1999). It has become clear that knowledge is especially limited in

the entrepreneurially oriented smaller firms (Glancey, 1998; Desouza and Awazu, 2006;

Jarillo, 1989; Aragon-Correa et al., 2008; Coviello and Martin, 1999). Smaller entrepreneurial

companies are often forced to use external knowledge sources because of lacking human

capital (Egbu et al., 2005; Gulati, 1998; Robson and Bennett, 2000). It is likely that customers

could fill these knowledge gaps in the form of a value adding complementary resource, we

define these customers as ‘‘strategic’’. The ‘‘strategic customer’’ in a knowledge-based

sense is seen as a sustainable, cooperative, and value adding knowledge partner instead of

a passive product receiver. The purpose of this paper is, therefore, to gain initial insights into

the strategic dimension of customers knowledge in order to enable companies to define,

identify and motivate the right customers and work with them together on a strategically

successful level. It is for this reason that a clear and unambiguous definition of a strategic

customer relating to the knowledge-based view (KBV) needs to be established.

Furthermore, the identification criteria and motivational reasons for the strategic

customers’ involvement should be discovered so that it becomes clear where they can be

integrated in the company.

2. Theoretical background

2.1 Customer knowledge management

The KBV places knowledge resources in the strategic foreground. Knowledge resources are

the only resources to consider if one wishes to differentiate oneself from the competition

(Drucker, 1964). Interestingly mainly internal knowledge and capabilities (such as employee

knowledge and efficient processes) are seen as key success factors in the KBV (Grant,

1996; Spender and Grant, 1996; Teece, 1998; Davenport, 1997). External knowledge, like

customer knowledge or knowledge from networks and alliances has been largely neglected

as of yet on a strategic level. On the other hand there is a lot of literature about integrating

customer knowledge on a much more operational level, e.g. as an idea generator or as a

knowledge source for unique improvement. Thereby the companies often follow the goal to

integrate as much customer knowledge as they could possibly get, without asking the

question of whether the knowledge is strategically relevant for them, e.g. helps them to close

a knowledge gap (Zack et al., 2009; Zack, 1999). The implementation of customer

knowledge management (CKM) is based as a strategic process in the contribution from

Gibbert et al. (2002), where one can turn passive product receiver customers into active

‘‘empowered’’ knowledge partners. This poses the question, however, of where the relevant

piece lies if all customers should be empowered and entail a strategic dimension. The

contributions concerning CKM continued to mention the theoretical basis of ‘‘customer

knowledge flows [for, from and about the customer]’’ over the past few years. These

primarily take on an operative dimension and therefore apparently neglect the strategic

components (Salomann et al., 2005; Gibbert et al., 2002; Garcia-Murillo and Annabi, 2002;

Gebert et al., 2003). This is the reason for which the goal of the present contribution lies in

describing the interaction between the company and customer using the three identified

customer knowledge flows. Another goal is to analyze the strategic level of the individual

knowledge flows. We will therefore at the beginning take a look at the three customer

knowledge flows.

2.1.1 Knowledge for customers. The customer is hereby supported in their buying cycle

whereby a continuous knowledge stream from company to customer is necessary

(Salomann et al., 2005). Not only their existing knowledge, but also their lack of knowledge

can influence the purchasing behavior of the customers. The kind of knowledge the

customer wishes to receive from the company should be determined. This makes it possible

to simultaneously identify and close knowledge gaps. The company should offer customers

PAGE 662 j JOURNAL OF KNOWLEDGE MANAGEMENTj VOL. 17 NO. 5 2013

the demanded knowledge concerning the product range, service, structures, and

processes so that the existing ignorance can be eliminated. Both continuous relationship

management and a constant flow of knowledge between companies and customers are

necessary. This includes, for example, the company sharing information with the customers

concerning their product, market, and distributors. If the customer is provided with

information about the product and market, then their needs should be satisfied (Davenport

and Klahr, 1998; Garcia-Murillo and Annabi, 2002; Schaschke, 2007). Not only the latent

need for knowledge in the form of a product can be satisfied with the help of this knowledge

stream, but it also provides the highest value adding contribution in this knowledge stream.

This not only concerns the product sales but also deals with the transferred knowledge (in

the form of service activities), which places customers in the position to adequately utilize

the product.

2.1.2 Knowledge from customers. It is also important that Knowledge from Customers is

collected for the innovation phase of product and service activities. Needs are elicited, while

ongoing new developments and existing production modifications are carried out through

continuous customer interaction (Garcia-Murillo and Annabi, 2002). This category of customer

knowledge shows the potential that knowledge can have for innovation (Handlbauer, 1999;

Thomke and von Hippel, 2002; Chesbrough, 2003). Long-term survival as well as an increase

in market share and market value can be ensured through innovative products (Chaney and

Devinney, 1992; Debruyne et al., 2002). The customer is therefore included in the innovation

process and is no longer seen as a passive product recipient but as a fixed component of the

value creation process. The customer acts as the idea generator, which is referred to as

‘‘prosumerism’’ by Gibbert et al. (2002). The customer needs and complaints can be

integrated into the value adding process. This enables the company to think about new

strategies and positions based on the customer knowledge streams.

2.1.3 Knowledge from customers. The analysis and collection of this knowledge flow

represents one of the oldest knowledge management activities (Salomann et al., 2005).

Knowledge about customers is primarily used when trying to determine what motivated and

which sales strategies initially urge the customer to come to the company. It not only includes

the demographic customer data (such as their name, contact address, etc.) but also

provides the company with information concerning previous customer transactions. It is also

possible to discover which products have been purchased and if individual customer

preferences exist (Davenport et al., 2001; Day, 2000). Customer relationships need to be

maintained as a result of increased competition and decreasing customer loyalty (Gebert

et al., 2003). These pieces of information are often managed and analyzed in customer

relationship management (CRM) systems. Existing company processes can hereby be

supported (Salomann et al., 2005). These knowledge streams can aid in easily identifying

and analyzing strategically important customers. As a result, it can be said that it is possible

to identify strategic customers, but that the main focus of these knowledge streams lies on

the operative base, i.e. the marketing- and sales organization. Therefore, the knowledge

about customers flow possesses the least strategic character (Figure 1).

2.2 Definition of strategic customers, identification and their motivation

2.2.1 Definition and identification of a strategic customer. Interestingly, we did not find a clear

definition for strategic customers during our literature research. Research from Wirl (1996),

Su and Zhang (2008) and Su (2007) show that the term ‘‘strategic customer’’ can be used in

different contexts. The original work from McKenna (1992) showed that the emphasis clearly

lies on the market-based view (MBV), with focus on pricing issues and customer behavior.

Dickie (1951) has previously documented that less important customers should be

separated from key customers. This approach also leans on the MBV and represents an

important strategic determinant. We, however, concentrate on the strategic customers in the

knowledge-based sense. The company focus should therefore lie on customers that are

capable of increasing the success and the growth of the company through the expansion of

the resource base and the closure of apparent knowledge gaps (Hanan, 1989; Zack, 1999).

Both current customers and those who have future potential should be identified

(Handlbauer, 2000; Gibbert et al., 2002). The integration of knowledge from all customers

VOL. 17 NO. 5 2013 j JOURNAL OF KNOWLEDGE MANAGEMENTj PAGE 663

does not make much sense for the company and is extremely cost-intensive. It is therefore

necessary that the right customers (Gurgul et al., 2002) (i.e. the strategically important

customers that can provide added value) are identified for the external knowledge

acquisition. To our understanding, the present research is the first contribution in which a

strategic customer is defined in the knowledge-based sense. This new definition of the term

‘‘strategic customer’’ can be justified in so far as no standard definition has yet been

undertaken in the literature from the knowledge-based perspective. There is also no clear

criteria to satisfy a systematic identification of strategic customers. The strategic

components of each knowledge stream have been identified and summarized for a

formulated definition within the building block analysis, based on the literature of Salomann

et al. (2005), Gibbert et al. (2002), Garcia-Murillo and Annabi (2002) and Gebert et al.

(2003):

A strategic customer is a customer (1) who is actively engaged in integrating (2) his or her

knowledge in the sustainable value adding activities (3) of a company as well as using and

spreading his or her knowledge to other [existing and potential] (4) customers.

The definition of strategic components consists of the previously described customer

knowledge flows:

B Knowledge about the customer is necessary in order to know whether a customer is

indeed a strategic customer for the company. This does not mean to follow the knowledge

for marketing and sales purposes, but instead to identify strategic customers with the aid

of appropriate criteria.

B The knowledge flow from the customers is discussed at the point of customer knowledge

integration. The knowledge should hereby be actively absorbed and integrated so that

strategic measures can be derived.

B When it comes to sustainable value adding activities, the goal is to not only utilize the

customers or customer knowledge as a ‘‘unique effect’’, but instead to implement it in a

sustainable way. This enables the closure of possible strategic knowledge gaps and

relates to ‘‘knowledge from the customer’’ (in a sustainable way).

B Finally, it is also important to use strategic customer knowledge to pass on valuable

information (as a company initiative) that one has obtained to the remaining customers.

This measure can supply the customer base with more valuable information within the

buying cycle (knowledge for the customers).

Figure 1 Various knowledge flows regarding customer knowledge management

Sources: Own figure based on Salomann et al. (2005); Gibbert et al. (2002); Garcia-Murillo and Annabi (2002); Gebert et al. (2003)

PAGE 664 j JOURNAL OF KNOWLEDGE MANAGEMENTj VOL. 17 NO. 5 2013

2.2.2 Motivation of the customer. Simply identifying the strategic customers is not enough to

attain the relevant customer knowledge. The customer needs to show their readiness to

share their knowledge with the company in order to be viewed as a strategic knowledge

partner. The process that allows the customer to share their knowledge with the company

normally cannot be provided. The knowledge distribution within the workforce only seems to

be afflicted with difficulties in classical knowledge management, where the employees lie at

the center of attention. We therefore pose the question as to why the customer, as an external

resource, would want to share its knowledge with the company (Gibbert et al., 2002). A

possible incentive could be that the customer wishes to have a certain product solution for

their own needs and therefore wishes to be an active part of the development and innovation

process. The strategic customer generates added value for themselves if a product is

created that would not have been conceived without their knowledge (Gurgul et al., 2002).

The customer can therefore define the devotion of their individual knowledge to their

colleagues seeing as they were included in the company’s value creation process (Gibbert

et al., 2002). We are looking to research the subject more closely in order to extend the

internal company perspective and discover why the strategic customer is pro-active and

tries to add value. The strategic customers will be questioned as to what motivates them to

enter into a strategic knowledge partnership in the course of further empirical enquiries.

2.3 Special role of entrepreneurially oriented smaller firms

Especially entrepreneurially-oriented smaller firms take on an important role in today’s global

economy due to their limited resources (financial-, human- and knowledge capital) compared

to larger firms (Glancey, 1998; Jarillo, 1989). Limited financial resources make it more difficult

for entrepreneurially-oriented smaller firms when it comes to innovation generation and

product marketing (North et al., 2001). They are often forced to use external resources in order

to widen their limited internal resource base (Egbu et al., 2005; Gulati, 1998; Robson and

Bennett, 2000). It can be said that smaller firms are strongly dependent on the attitude,

knowledge and skills of their personnel. An employee in a small firm generally fulfills multiple

roles (Major and Cordey-Hayes, 2000). Entrepreneurially oriented smaller firms are marked as

having simple organizational structures as well as strongly anchored company cultures. A

limited pallet of customers and products of ‘‘entrepreneurially oriented smaller firms’’ lessens

the company complexity. Entrepreneurially oriented smaller firms prove to have a strong

market and customer orientation through the named characteristics. Under customer

orientation, it is understood that the company should orientate itself towards its customers and

should handle to get a hold of useful knowledge concerning the current products

(Handlbauer, 2000). Smaller firms, which must constantly acquire new knowledge and find

themselves in an environment with a high level of customer-orientation (van Gils, 2005) are

fundamentally more strongly exposed to external factors than larger companies (Cheng and

Yu, 2008). The following criteria can therefore be mentioned:

B Company operates using a relatively flat hierarchy system (hardly any bureaucracy)

(Pelham and Wilson, 1996).

B Company was created with an orientation towards growth, is constantly searching for

‘‘entrepreneurial opportunities’’, and cannot be compared with the resource base of large

multinational enterprises (Desouza and Awazu, 2006; Jarillo, 1989; Aragon-Correa et al.,

2008; Coviello and Martin, 1999; Hitt et al., 2001).

B Decisions are at the complete discretion of top management, for example no external

parties (shareholders) may make decisions (Glancey, 1998).

B Flexibility and high customer orientation are integrated into the company strategy and

culture (Hitt et al., 2001; Handlbauer, 2000).

3. Research methodology

Considering the aim of our study, an explorative qualitative research approach appeared to be

more appropriate. The qualitative approach allows us to get close to participants and their

thinking in order to scrutinize the research problem as a whole (Maykut and Morehouse, 1994).

VOL. 17 NO. 5 2013 j JOURNAL OF KNOWLEDGE MANAGEMENTj PAGE 665

3.1 Case studies with qualitative research character

As previously mentioned, the first step refers to a case study (in accordance with de Vaus

(2001)), which possesses an explorative character. Yin (2009) describes a case study as

follows:

A case study is an empirical enquiry that investigates a contemporary phenomenon in-depth and

within its real-life context, especially when the boundaries between the phenomenon and context

are not clearly evident (p. 18).

According to the definition from Yin (2009), the case study method focuses on the meaning

of the research design. It becomes clear that the qualitative social research within the case

study takes on a meaningful determinant. When choosing a research design, case studies

are applicable when many variables need to be elicited, which limit themselves to a small

number of research units (de Vaus, 2001). The contemplation of a case study is especially

interesting in the context where the research design concentrates on new or scarcely

researched problems (Eisenhardt, 1989).

3.2 Research design

The structure of the present study was conceived based on the knowledge gaps described

in the theory section. Various research goals were thereby defined in this context. The four

following research questions have been formulated:

RQ1. What is understood under a strategic customer in the knowledge-based sense?

RQ2. How are strategic customers identified in the knowledge-based sense? Which

criteria are relevant for this?

RQ3. Why do strategic customers engage themselves in the company’s value chain?

What motivation lies behind this action?

RQ4. Which value adding contribution do strategic customers generally make in

relation to the presented customer knowledge flows?

3.2.1 Unit of analysis. The company selected for our single case study is a software

company located in the Principality of Liechtenstein. The company is a perfect fit for this

research study based on the criteria of entrepreneurially oriented smaller firms. The

company is referred to as Medical Software Company for the present research and

considers itself to be an innovative software developer that is in clear alignment with the

customer needs of modern ear, nose, and throat (ENT)-clinics. The company headquarters

is located in the Principality of Liechtenstein (Rhine Valley). The company also has a location

in Riga (Latvia), which was part of their expansion strategy. The company currently has 15

employees. Most employees possess an academic university degree. The company

develops and sells various databases that enable clinics, researching doctors in the

ENT-field and the pharmaceutical industry to record their therapies and perform statistical

evaluations. The product assortment also includes other merchandise. Additional individual

customer projects are conducted for clinics and various pharmaceutical companies. The

company refers to itself as an individual customer software partner in the medicinal field.

This field lies under the influence of strict guidelines, which steadily increase the qualitative

and legal requirements. The research and quality assurance in the medicinal field will

continue to grow in importance. The company finds itself in a niche market due to the

specific application of individual programs as well as the database, which is seen as a

complementary product to the clinic information system. This implies that the demand is

relatively small and that the market contains few directly competitive products. The company

has customers in over 20 countries despite its focus on a niche market.

3.2.2 Level of analysis (approach and selection of interviewees). The selected firm offers an

excellent research unit based on the chosen focus of ‘‘entrepreneurially oriented smaller

firms’’. In hindsight, it was important to the authors to integrate various perspectives when

selecting interviewees. Different departments and positions within the firm, distributors,

strategic customers, as well as various viewpoints from the management/supervisory board

PAGE 666 j JOURNAL OF KNOWLEDGE MANAGEMENTj VOL. 17 NO. 5 2013

were taken into consideration. A broader database could be created, which seems to

convey more meaning. The selection of individual interviewees was cleared with the

owner/leader of the business. A total of nine participants could be integrated into this study.

The duration of the interview depended on the individual and lasted between 30 and 90

minutes. The individual interviews were recorded and subsequently transcribed in a

four-month time frame, namely from January through April 2012. The characteristics of the

interviewees are summarized in Table I.

3.3 Data analysis

The conducted interviews were transcribed. These transcripts were then analyzed based on

the inductive approach of Hsieh and Shannon (2005). The data collected by the researchers

was transcribed in ‘‘high’’-German. Regional dialect(s) were hereby eliminated, the sentence

structure was corrected, and the mode of expression was adjusted (Mayring, 2002). The

researchers tend to use this analysis technique as the topic and content of the survey lies in the

foreground. It is necessary to transcribe this data so that all acquired information is complete

and correctly displayed for the analysis. The method from Miles and Huberman (1994) was

applied during the analysis phase. This divided the data analysis into three different areas.

First, the data is reduced, then made apparent, and finally recommendations are made for

future actions. The process of data reduction refers to the focus, selection, and simplification of

the acquired data and should not be separated from the data analysis. Instead, it should be

considered as part of the analysis process. The second part of the analysis activities consists of

the display of data. The display for qualitative data is usually passed on in written form. A fitting

alternative to present the data would be, e.g. figures, graphs, matrices and charts. These forms

of representation serve to organize information so that it can be made approachable in a

compact form. The third, and also last, part of the analysis activities consists of the data

analysis comparison with the available literature (Miles and Huberman, 1994). NVivo 9

(software for qualitative data analysis) was used to support the data analysis process.

4. Presentation of findings

4.1 Definition and identification of strategic customers

A company’s customer base is divided into active and passive customers. It becomes

apparent, if one considers various customer typologies, that only a small amount can be

considered to be of the active variety. As active customers are able to dissect the needs of

the company, they are also the only customers that are able to participate and carry out

value creating activities. The statements in the contribution from Gronroos (2000) are

covered in this context, which also clarifies that only active customers can successfully offer

a value creating input. Interviewee H (Strategic customer I) stated that there are currently

fewer active customers in the customer portfolio. The empirical results have shown that the

strategic customer represents a special and important group for the company. A strategic

customer was described by the interviewees as being an active customer who needs to

possess certain characteristics, who works together with the product development, and who

carries out marketing measures such as the creation of new connections to further potential

Table I Characteristics of interviewees

Interviewee Position

A CEO/ownerB Marketing & sales (M&S)C Research and development (R&D) ID Supervisory boardE Strategic consultantF Research and development (R&D) IIG Research and development (R&D) IIIH Strategic customer II Strategic customer II

VOL. 17 NO. 5 2013 j JOURNAL OF KNOWLEDGE MANAGEMENTj PAGE 667

customers. Interviewee G (R&D III) supports this if strategic customers possess various

characteristics. On one hand they can actively work on a product and on the other hand the

customers are labeled as strategic customers when they have a high reputation in the

market and can thereby force more sales activities. It became clear through the frequency of

communication analysis (documentation analysis) that the company’s activities were mainly

aimed at a small number of strategic customers. Interviewee B (M&S) describes a strategic

customer in the following way:

The ordinary customer is a passive product receiver. And the strategic customer becomes active,

is intrinsically motivated, and provides a value creating contribution.

When considering the literature, the contribution from Winter (2003) and Teece (2003) looks

at the continuous review of the customer base. Interviewee I (Strategic customer II)

considers himself to be a strategic customer and would generally consider a strategic

customer to have a typology that actively supports the product and its further development:

[. . .] the ones that want to bring their own ideas, which are active and strategically relevant.

4.2 Identification and motivation of strategic customers

Several criteria that constitute a strategic customer could be identified in the empirical results.

The goal is to identify the strategic customers with the criteria, which can be subsequently

integrated as strategic partners (Interviewee A – CEO). No simple criteria definition for the

identification of strategic customers could be found through the empirical analysis. Instead,

multiple criteria represent a ‘‘value adding‘‘ strategic customer. Some criteria for the

identification of lead users as well as pioneer customers could be elicited in existing literature.

It is becoming more and more important for companies to integrate strategic customers not

only in the research and development of new products (von Hippel, 1978), but also that they

possess marketing capabilities and the capacity to develop and market the product. A high

(intrinsic) reputation is required. The deciding criteria that are relevant for the identification of

strategic customers are elicited according to the following characteristics: high potential for

new connections (standing); prestige, which they enjoy presenting; good communicators;

expertise (development); famous and renowned experts in their field of research; research

interest; intrinsic motivation; sufficient free capacities; sustainable and loyal; high reputation in

professional circles (respected personality); stepping stone customers (marketing and sales);

innovative in respect to development; willingness to volunteer; active across divisions and

political/trade associations. It could be observed that strategic customers represent a

marginal (smaller) percentage of the total customer base. Especially the systematic

identification of strategic customers poses a great challenge. Helpful determinants could be

represented in this context with the utilization of suitable criteria.

Customer motivation can be based on further factors that relate to how customers can

proliferate through their integration in the value creation and thereby increase their

reputation in expert circles. The documentation analysis could elicit that the company

applied multiple strategic customer statements because the strategic customers are

satisfied when their quote is used by the firm in a publication. This occurs, for example, if the

customer’s portrait is published with an existing product and thereby strengthens their own

marketing (image and look) according to interviewee B. The implementation of the

customer’s idea and a better product is realized especially through the activity of the

strategic customer and represents a key motivation. The empirical results, just as in the

literature from Gibbert et al. (2002) suggested, it could be determined that valuable

customers feel valued through their integration in the value creation process and could

thereby pave the way for sales activities (customer profiling).

4.3 Integration into the value chain

It could be examined how customers have already been integrated in diverse value creation

activities based on the collected data. One can fundamentally mention that the strategic

customers are already involved in the innovation, marketing and sales value creation

process. The interviewees were also mostly aware of the customers that possessed strategic

value. This is due to the fact that only a small amount of active customers, and therefore

PAGE 668 j JOURNAL OF KNOWLEDGE MANAGEMENTj VOL. 17 NO. 5 2013

valuable customers, can be filtered and identified from the total customer base. The

interviewees mostly view the ‘‘R&D’’ value creation typology as a necessary integration

because the strategic customer will be involved in the process and his/her knowledge is

needed for the completion of the product. Strengthened strategic customers are also

needed in the marketing and sales division as a form of support and indirect advertisement

in a further step. Interviewee F (R&D II) describes the situation in the following way:

Sure, the strategic customers create a value for the company if they recommend the product to

others.

According to interviewee H (Strategic customer I), the value creation activities of the

strategic customers should be seen as an honest and constructive feedback during the

innovation phase as well as during marketing and sales activities. This should occur if they

can be seen as active reference contact partners for other customers. Interviewee I sees

themselves as a value creating partner in the innovation generation phase as well as being

involved in voluntary marketing activities:

Development and marketing both demand a high involvement. I conduct a lot of marketing on a

voluntary basis because I believe in the product idea and of course support the company. As far

as marketing is concerned, the booth that is used at conferences and trade fairs is not enough.

Strategic customers have to convince their colleagues of the products in a believable way

(Interviewee I – Strategic customer II).

4.3.1 Knowledge for the customer. It was shown that the customer base was not aware of the

use of all functions and did not always know whether or not the product was of relevance for

them. It was observed that a customer had received a demo-version of the product, did not

utilize the product in the correct way and therefore believed that the product was not of

relevance for them and the software only becomes especially useful after its implementation,

as it represents a holistic solution for the customer the requires a knowledge flow for the

customer. When looking at quality, the company creates a holistic picture through their

employee selection of well-educated and motivated employees as they are the only

guarantee for a high quality product. The quality management is carried out more

pragmatically where customers intensively test products before they are commercialized.

Feedback is considered in order to correct any mistakes that have turned up. Interviewee F

(R&D II) goes on to say that special documentation systems have been implemented as well

as a system, which lists and tests the functions and requirements and thereby guarantees

the product quality. Interviewee E and G both showed that it is not uncommon that customers

recommend the company when they are content with the program and will praise it in their

circle of colleagues. Marketing activities are carried out by the strategic customers

themselves (Interviewee I – Strategic customer I) and word of mouth propaganda is

conducted simultaneously:

[. . .] a delicate point in medicinal field is that many believe that they are best in what they do [. . .]

and one always wants to develop something on their own. A certain type of competitive thinking

occurs through this point.

This building block needs to be clearly separated from total quality management (TQM)

(Oakland, 1989; Chase and Aquilano, 1992) because of the empirical results. The strategic

customer is integrated into the company environment in a value adding way. Furthermore,

strategic customers not only serve as an innovation partner, but can also be seen as a

marketing and sales actor and could support other customers with their knowledge. The

same was mentioned in the contributions from Berthon et al. (1999), Hood (1998) and

Prahalad and Ramaswamy (2000).

4.3.2 Knowledge from the customer. The interview participants focused on the generation of

new products and the customer was given a central placement. The correct details and

needs could be elicited in the development process through the integration of strategic

customers according to interviewee A (CEO). This person would evaluate the customer

position during the innovation phase in the following way:

It is not possible to give these programs a market value without the customer. Because otherwise

we would just develop something that is not even demanded by the market.

VOL. 17 NO. 5 2013 j JOURNAL OF KNOWLEDGE MANAGEMENTj PAGE 669

According to the value creating typology; the customer first delivers their ideas, these ideas

are consequently implemented by the company, the application is then tested by the

customers (through, e.g. a demo-database), and this then receives constructive feedback

and suggestions for improvement before it is commercialized and brought to market. The

cooperation with customers during the knowledge generation process is important for

interviewee G (R&D III), because the customers come into daily contact with the product and

therefore have further needs and experiences to share. In many cases the knowledge of the

customers is applied for database configuration:

We need criteria for the development of a nose database; what should an OP-consultation look

like, what diagnoses and criteria need to be included in OP-reports so that the database sets a

high level of use (Interviewee F – R&D II).

The empirical results of the study support that the customer fulfills both the role of an idea

giver as well as that of an active participant in the innovation phase (Gibbert et al., 2002).

4.3.3 Knowledge about the customer. The results have shown that the observed company is

systematically involved with the knowledge of the customers. The company uses a

CRM-technology for this, which is mostly implemented for operative activities. Interviewee B

(M&S) sees the advantages of CRM as follows:

The customer and all contacts (companies, partners, suppliers) are included in the system. Not

only in the form of address and telephone lists, but emails are archived and activities with the

contacts are described, i.e. what was discussed, which relationship we have to the customer,

which preferences and product interests do they have and even the shipping of Christmas cards

are criteria.

The CRM-system is mainly used in the marketing and sales departments and holds a high

relevance there because all experiences, interests, characteristics, etc. are summarized so

that an improved and targeted marketing action can be carried out. Interviewee D

(Supervisory Board) sees the implementation of a CRM in the company as follows:

The implementation is extremely important, especially for the sustainability of the company. If, for

example, the marketing manager were to leave the company then the entire construction would

have to be conducted by a new person. When a thorough and complete description of the

individual customers is within hands reach, how one should act around others, then it becomes

an immense advantage to have invested the time into creating this documentation.

The observations that were carried out in the marketing and sales department showed that

the employees were heavily involved with the available CRM-system and subsequently kept

it up. The knowledge documentation (CRM) was mostly used for operative marketing and

sales activities. As mentioned in the CKM-literature (Davenport et al., 2001; Day, 2000;

Gebert et al., 2003), the empirical results support that the implementation of a CRM-tool is

mainly focused on operative measures for the Marketing & Sales Department. But it was also

mentioned that with the use of the implemented CRM-technology the identification of

strategic customers will be supported.

5. Conclusion

The present work concerns itself with the question of what role CKM takes on in

‘‘entrepreneurially-oriented smaller firms’’. It also briefly discusses the research questions.

5.1 Summary of paper findings

5.1.1 Definition, identification and motivation of strategic customers. Based on the

entrepreneurial character and the mentioned criteria’s of the company it also became clear

that not many customers could be declared as being ‘‘strategic customers’’ seeing as the

company would otherwise dissipate. We succeeded in confirming and partially further

developing the previously mentioned ‘‘definition’’ of strategic customers from the theory

section. We empirically point out that the researched company is already aware about the

integration of strategic customers into the value creation process. We also show that it is not

easy to define a strategic customer and that multiple criteria are necessary, which we elicited

PAGE 670 j JOURNAL OF KNOWLEDGE MANAGEMENTj VOL. 17 NO. 5 2013

through the empirical study. An identification (criteria) list for the determination of strategic

customers could be made based on this:

B high potential for new connections (standing);

B prestige, which they enjoy presenting;

B good communicators; expertise (development);

B famous and renowned experts in their field of research;

B research interest;

B intrinsic motivation;

B sufficient free capacities;

B sustainable and loyal;

B high reputation in professional circles (respected personality);

B stepping stone customers (marketing and sales);

B innovative in respect to development;

B willingness to volunteer; and

B active across divisions and political/trade associations.

In order to subsequently integrate the customers in the value creation activities, the strategic

customers must be prepared to share their knowledge with the company. It can thereby be

determined that the strategic customer can obtain a high quality product through their

engagement, which is heavily influenced by their individual proposals and contributions. In

conclusion, the customer engagement dominates thanks to their intrinsic customer

motivation in comparison to the financial perspective. It therefore seems that it is important to

touch upon the intrinsic level rather than on extrinsic motivation.

5.1.2 Integration into the value chain and their customer knowledge flows. It was empirically

proven that some customers (especially potential customers) were not adequately informed

(during the buying cycle) or demonstrated latent knowledge with regard to ‘‘knowledge for

the customer’’. The few integrated strategic customers should be able to satisfy the

remaining customers if they were to distribute their knowledge in the market. It became clear

that the strategic customers are active in the value creation of the company regarding

‘‘knowledge from customers’’. They are mainly active and can be found in the areas of

innovation and the marketing and sales departments. It can be empirically proven that the

‘‘knowledge from the customer’’ takes on a decisive role for these departments and a

strategic decision can thereby be made. We lastly considered the ‘‘knowledge about the

customers’’ in detail. It was determined that the main focus of this knowledge stream was the

operative base, i.e. marketing and sales actions. The selection of strategic customers had

previously been based on intuition, yet strategic customers could be identified with criteria

using these knowledge streams and information technology from CRM. The selection and

cooperation of the customers in the value creation process was subsequently well reflected

upon.

5.1.3 Do you know your valuable customers?. The study could determine that the

company recognize and appreciate strategic customers as well as the strategic

customers actively share their knowledge within the firm. It is thereby especially important

for management of ‘‘entrepreneurially oriented smaller firms’’, which are supplied with

limited resources, to use these elementary strategic customers to extend the knowledge

base. The management should be aware that the strategic customers hold a valuable

position, seeing as the study showed that the strategic customer is much more aware of

their valuable position than the company itself. It became clear in this relationship that the

company may be working with strategic customers, but has previously identified them

from intuition rather than through the use of a systematic analysis. The systematic

identification can only be ensured in so far as it includes the motivational reasons for

strategic customer engagement.

VOL. 17 NO. 5 2013 j JOURNAL OF KNOWLEDGE MANAGEMENTj PAGE 671

5.2 Implications and suggestions for future research

5.2.1 Research implications. The CKM theory could be distinguished (based on an empirical

analyses) from other theories; open innovation, CRM as well as TQM. It has been empirically

proven that CKM could be justified as an exclusive approach. It was determined after a

deeper look that the CKM-approach is currently not viewed in a holistic way, but instead is

mainly handled on the operative knowledge management side. The strategic component

has hardly been considered until now. It is therefore necessary to integrate the construct of a

strategic customer to fulfill the strategic dimension for the consideration of a holistic CKM.

The customer could play a strategic role. A theoretical contribution could be made based on

this conclusion, that the definition could be expanded based on the literature with the

following three attributes:

1. The relationship between the company and the strategic customer is based on a trustful

partnership.

2. The strategic customer is intrinsically motivated.

3. Strategic customers represent a marginal (small) percentage of the entire customer base.

Furthermore, the theory could be expanded with the addition of a fourth knowledge flow to

the already presented three knowledge flows. The knowledge stream ‘‘knowledge through

the customer’’ could be relevant if the strategic customer creates their own value in the

market and is partially mentioned in the results from the ‘‘knowledge for customers’’ building

block. This knowledge through customers block mainly deals with marketing, sales- and

service activities. The remaining customers can be convinced by the strategic customers,

i.e. seek aid and support for their problems (based on the empirical analyses). Although a

systematic identification is possible with the help of determined criteria and does not touch

upon conceptual findings but is instead empirically backed. Finally internal knowledge

perspectives are primarily considered within strategic and operative knowledge

management (Probst et al., 2002; Gueldenberg, 2003) and can be incorporated into the

resource-based theory. Customer oriented knowledge management, or the integration of

strategic customers, can be seen as an expansion whereby the KBV and the

market-based-view (Porter, 1980), can be possible linked. Handling customer knowledge

appears to not be a one-sided process, but instead touches upon a bilateral value creation

cooperation between the company and the strategic customers.

5.2.2 Managerial implications. Based on the empirical findings, it is important for the

research group of ‘‘entrepreneurially oriented smaller firms’’ to systematically dissect the

thematic around strategic customers. If one looks at strategy and growth in the present

company, then strategic knowledge gaps pop up (compare the currently needed

knowledge resource base with that for the future). The professional cope of strategic

customers can serve the company in closing strategic knowledge gaps. With this measure it

is possible to uphold the competitive advantage. The ‘‘knowledge from customers’’ area

should be further explored as it strongly focusses on the R&D department according to the

empirical results. Customer knowledge in the marketing and sales sector could be

especially utilized. The company should acquire valuable market knowledge from strategic

customers, which not only deal with the product level. The company management in

capable of enabling strategic customers to take over a part of the value adding activities

through the fourth knowledge flow ‘‘knowledge through customers’’ thanks to the

identification of strategic customers, which could be consciously integrated into the

management framework. Strategic customer knowledge can thereby best be leveraged and

create added value for potential and existing ‘‘ordinary’’ customers.

5.2.3 Limitations and suggestions for further research. The following single-case-study

includes multiple limitations. The identification criteria of strategic customers appear to not

have been sufficiently researched so far in the relevant literature. This paper can supply a

first recognition. These must, however, be tested in further empirical works. This study

cannot be generalized to cover the ‘‘entrepreneurially oriented smaller firms’’ sector

because of the fact that a singular company was analyzed in the form of an empirical

PAGE 672 j JOURNAL OF KNOWLEDGE MANAGEMENTj VOL. 17 NO. 5 2013

explorative single case study. The empirical results of this single case cannot be transferred

to all business fields because the researched field contains special characteristics and the

customer holds a particularly important role. The goal of future approaches is to therefore

embellish the single-case-study with further research activities so that a broader data basis

is created along with stronger statements regarding strategic customer value. These

measures are described as ‘‘exemplary generalization’’ in qualitative research. The

profound individual questions, not the aggregate values of groups are relevant in this case

as they are also representative for other cases (Bortz and Doring, 2006). Furthermore, other

studies could elicit whether the strategic customers can be of various natures if the company

follows an exploitation or exploration strategy.

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About the authors

Stefan Wilhelm is a Research Assistant and PhD student in the Institute for Entrepreneurshipat the University of Liechtenstein. His doctoral study focuses on strategic knowledgemanagement. Stefan Wilhelm is the corresponding author and can be contacted at: [email protected]

Stefan Gueldenberg is Chair in International Management and Dean of the Graduate Schoolof the University of Liechtenstein. His main research areas include knowledge management,strategic management, leadership and change management.

Wolfgang Guttel is Head of the Institute of Human Resource Management and ChangeManagement at the Johannes Kepler University (JKU) Linz (Austria). He also acts as Deanand Managing Director of the JKU Management School LIMAK (Linz ManagementAcademy). His main field of research concerns strategic learning, i.e. governing learningand change on individual, group, and organizational level according to strategic objectives.

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