The Paint Coating Company

Customer Tiers and the

Balanced Scorecard Concepts
 The Paint Coating Company
Paint Manufacturers
Tier 1- Preferred strategic
solution seekers
Tier 2- Large price seekers
Chemical Coatings Tier 3- Least attractive price End Users
seekers
• Solvent • Architectural
Tier 4- Local manufacturers
• Resins • Automotive
Tier 5- Specific targeted
• Additives • Industrial maintenance
companies
• Colorants • Building products
Distributors • Appliances
Tier 1- Full alignment
• Metal office furniture
Tier 2- Large power
bargainers
Tier 3- Fragmented local
agents
Tier 4- Specialty distributors
The Delta Model in the Paint Coating Company

Tier 5

Tier 1

Tier 2 Tier 4 Tier 3

 The Paint Coating Company
Customer Segmentation by Tiers

Tier 1 - Preferred strategic solution seekers.

Tier 2 - Large price seekers.
Tier 3 - Least attractive price seekers.
Tier 4 - Local manufacturers.
Tier 5 - Specific targeted companies.
 The Paint Coating Company
Customer Segmentation by Tiers
Tier 1 - Preferred strategic solution seekers. These are
strategic solution seekers that will be the recipient of
total customer solutions provided by a team approach.
We will target these preferred companies by offering
solutions intended to increase productivity and
performance, reduce supply chain costs, provide
eBusiness solutions and develop jointly unique products
and a variety of other value added services. It is
mandatory that the customer value propositions will
result in quantified and well-documented cost
reductions, performance and productivity improvements
for our clients, improving our customers and our
shareholders profitability.
 The Paint Coating Company
Customer Segmentation by Tiers

Tier 2 - Large price seekers. Composed of large price

seeker paint & coatings manufacturers, which may not
be as responsive to receive the total customers solutions
approach of Tier 1 customers. Our intent is to make
every effort to move these accounts towards a closer
collaboration, seeking a true partnership for value
added.
 The Paint Coating Company
Customer Segmentation by Tiers

Tier 3 - Least attractive price seekers. These are the

least attractive price seekers that have non-existent
switching barriers to select a supply. These are
primarily transactional customers who will receive
minimal services.
 The Paint Coating Company
Customer Segmentation by Tiers

Tier 4 - Local manufacturers. These are composed of a

large number of local paint & coatings manufacturers,
but because of their collective volume, provide attractive
opportunities to us but cannot be targeted in the manner
of Tier 1 and 2 customers. We will utilize eBusiness and
telesales technology to address and satisfy their needs.
 The Paint Coating Company
Customer Segmentation by Tiers

Tier 5 - Specific targeted companies. Composed of

targeted companies that although small in size, deserve
special attention because they are either highly
innovative or address unique environmental concerns.
 The Balanced Scorecard Dimensions (Corporate)

Business Customer
Balanced Organizational
Financial Perspective Processes Perspective
Scorecard Learning
(Shareholder look) (Operational (Customer
Framework (Technology)
Effectiveness) Targeting)
Corporate • Volume, revenue, • Capacity utilization • Rate of product • Product market
Level earnings, gross margin by product introduction by market share
by product and/or market categories or segment • Customer
segment (actual vs. plan) production site • Percent of sales from market share
• Revenue and earnings • Unit cost by new products by by tier
by service and business Eastman ESQ market segment • Profitability by
models product categories • R&D as % of sales customer by tier
- Eastman ROI • % First pass quality - Resins
- Complementor ROI by product - Solvents
• Revenue and earnings categories - Additives
by specialty vs. • Budget vs. plan - Formulations
commodity (Cost centers) • Projected revenue vs.
• Growth of volume, • Specialty/ actual for tactical
revenue, earnings, gross Commodity ratio of portfolio reaching
margin (relative to sales commercialization
what?) (Growth
initiatives) • Projected revenue vs.
actual for strategic
portfolio reaching
commercialization
 The Balanced Scorecard Dimensions (Tier 1)

Financial Business Customer

Balanced
Perspective Processes Organizational Learning Perspective
Scorecard
(Shareholder (Operational (Technology) (Customer
Framework
look) Effectiveness) Targeting)
Customer Tier • Volume • Cost to serve the • Revenues emerging from R&D • Product market
Level - Tier 1 • Revenue customer technology partnerships share by
• Breadth of - Customers customer
• Gross Profit
customer - Complementors • Solution
• Earnings from engagement revenue/earnin
• Revenue emerging from
Operations (use +5 to -5 gs by customer
customized technology solutions
• Return on VDS scale) by customer • Cost to serve
Capital • % of revenue the tier
• Return on invested hours of
• Return on VDS from technical support being provided • Value added
Investment differentiated to customer for product VDS integration
• Year over year customer development and for process level
sales and solutions improvement - Customer ROI
earnings growth - Revenue from
differentiated
• Rate of product introduction by - Eastman ROI
• Working capital products market segment • Joint revenue/
levels - Revenue from • Percent of sales from new earnings from
- Receivables customer integrated products by market segment for complementor
solutions and each customer relationship
• Profitability of services
“customized” • Total R&D as a % of Total Tier 1 - Customer ROI
manufacturing • % revenue from
decommoditized Sales - Eastman ROI
revenue stream • Projected revenue vs. actual for - Complementor
products ROI
tactical portfolio reaching
commercialization by customer
• Projected revenue vs. actual for
strategic portfolio reaching
commercialization by customer
 The Balanced Scorecard Dimensions (Tier 3)

Financial Business Customer

Balanced Organizational
Perspective Processes Perspective
Scorecard Learning
(Shareholder (Operational (Customer
Framework (Technology)
look) Effectiveness) Targeting)
Customer Tier • Volume • Time to complete the • Fees emerging from • Product market
Level - Tier 3 • Revenue transaction from start R&D technology share by customer
to finish wizards • Service fees
• Gross Project
• Measure customer - Customers generated
• Earnings from satisfaction with the • Cost of developing
Operations • Cost to serve the
transaction standardized low customer by
• Return on “low cost” • % revenue, volume cost product channel
VDS Capital and earnings by solutions by product - Inside sales
• Return on “low cost” channel • R&D cost associated - Distributor
VDS Investment - Inside sales with providing non- - Self serve
• Year over year sales - Distributor customized - Direct
and earnings growth - Self serve differentiated - Digital
- Direct products
• Working capital • Unit delivered cost
levels - Digital • Rate of product to customer
- Receivables • % revenue from introduction by
decommoditized market segment
• Cash flow
contribution by products (CAB, • Total R&D as a % of
customer MAK, CPO, new total Tier 3 sales
products)
 The Balanced Scorecard Dimensions (Tier 4)

Financial Business Customer

Balanced
Perspective Processes Organizational Learning Perspective
Scorecard
(Shareholder (Operational (Technology) (Customer
Framework
look) Effectiveness) Targeting)
Customer Tier (Data by Customer (Tier 1 metrics (Data by Customer Group) • Market share by
Level - Tier 4 Group) may apply to customer group by
some subgroups product
and tier 3 • Feeds emerging from R&D
• Volume technology wizards • Service fees
metrics may generated by
• Revenue apply to other - Customers customer group
• Gross Profit subgroups) • Cost of developing (ROI justified)
• Earnings from (Metrics will be standardized low cost product • Cost to serve by
Operations developed by solutions by product customer group
customer group) • R&D cost associated with
• Return on VDS • Value added VDS
Capital providing non-customized integration level by
differentiated products customer group
• Return on VDS
Investment • Rate of product introduction - Customer ROI
by market segment - Eastman ROI
• Previous year’s
month sales and • Total R&D as a % of total Tier • Joint revenue/
earnings growth 4 sales earnings from
- Quarterly • Projected revenue vs. actual complementor
- Annually for tactical portfolio reaching relationship by
commercialization by customer group
• Working capital customer - Customer ROI
levels
• Projected revenue vs. actual - Eastman ROI
- Receivables
for strategic portfolio reaching - Complementor ROI
commercialization by
customer
 The Balanced Scorecard Dimensions (Tier 5)

Financial Business Customer

Balanced
Perspective Processes Organizational Perspective
Scorecard
(Shareholder (Operational Learning (Technology) (Customer
Framework
look) Effectiveness) Targeting)
Customer Tier • Total leveraged • Breadth of • % of revenue from • Customer’s relative
Level - Tier 5 value across all technology and differentiated technology market share in the
customer tiers from business or business model niche
tier 5 innovation solutions • Size of EMN market
- Volume engagement - Revenue from differentiated potentially impacted
- Revenue (use +5 to - 5 technologies by tier customer
- Gross Profit scale) - Revenue from customer
integrated solutions and • Size of additional
- Earnings from services revenue for the tier
Operations
• % revenues from customer innovated
• Cost to manage the decommoditized products by EMN (prepare
relationship these companies for
• Revenues emerging from acquisition by tier 1)
R&D technology
partnerships
- Customers
- Complementors