Regardless of how long you have done business together, it is critical to understand and protect your relationship with your best customers - the ones that you count on to meet your goals for a stable stream of revenue and a healthy balance sheet for your company.
In a challenging economic climate, you may be finding that prospective customers are strongly focused on downsizing and cost cutting rather than on expanding their business or acquiring the latest product features. Companies that may have been in growth mode last year are putting projects on hold, reducing capital budgets, and paying renewed attention to cash management.
In the face of retrenchment, it is increasingly costly and time consuming to develop new business. Now, more than ever, it makes sense to keep your existing customers close and invest in expanding business with companies that are already buying from you. In challenging economic times, your key customers may be far more vulnerable to lower-priced offers and discounting than they were when times were good.
What can you do to protect your base from price cutters, and continue to expand your business, even in these hard times?
The first step is to reassess your relationship with each of your major accounts and determine how likely they are to consider changing suppliers in the near future, as well as determine their needs in today's environment.
The second critical step is to develop strategies to shore up your defenses and reduce the risk of losing customers to predatory competitors, and provide innovative solutions for profitable growth with a true ROI.
Strategies for protecting your base.
Regardless of where you feel your current customers are today, you can protect against erosion of your existing relationships, and even expand your share of business. Focus on how you can increase switching costs and reduce the probability of engaging in unprofitable price wars just to keep your current customers. Additionally, focus on providing real value every month and document that value to customers so they understand your worth.
Look at how customers use your product or service offering.
If customers view your offering as a "commodity", consider how they buy it, use it, and dispose of it or re-order at the end the usage cycle. Can you link to the customer's ordering and purchasing procedures? Can you offer innovative solutions for replacing or recycling? These kinds of links can be developed with any customer, whether their current switching costs are higher or lower.
Make sure you are performing at the highest level to meet customer requirements.
Consider not only whether your customers have invested in dollars, equipment, procedures, etc., but also what other sources of value you are providing. If they care about delivery, conformity to specifications, and quality, is your company aligned with how they need and want to buy? Make sure your company is performing in all areas to the highest standards. If it is not, identify ways to enhance and improve performance on all critical factors.
Make sure the customer is aware of your value.
Don't assume the customer understands the extent to which your company is meeting and surpassing their requirements with every interaction or order. Arrange a meeting with customer executives to provide an update on what you are doing to help them meet their business requirements.
Look for new ways to address the customer's current business issues and concerns.
Ask how you can provide additional value and benefits that will help the customer's business succeed. Consider the expertise of your sales representatives. Since they are the first line of customer contact, can they serve as genuine business partners in solving problems and advancing the customer's goals?
Developing innovative approaches that impact business results will differentiate you and your product or service, and will create unexpected value to the customer's organization. You might be able to improve how you are delivering products or services to help your customers gain competitive advantage in their own markets.
Consider this: Most sales representatives spend far more time researching and preparing for calls with new customers than they do on preparing for calls with existing customers. This is because they believe they "know their customers" and that they have already won their loyalty. In fact, rapidly changing conditions are affecting your existing base just as strongly as they are affecting prospective customers.
Maintaining a keen awareness of your current customers' issues and concerns and taking steps to strengthen your relationships can make the difference between falling behind and continuing to thrive, even in hard times.
CEO Advisor, Inc. provides CEO advisory services, including business and strategic planning, operational efficiencies, sales planning and team building, marketing planning and implementation, mergers and acquisitions and other services to CEOs and owners of small and mid-size companies. Contact Mark Hartsell, MBA, at MHartsell@CEOAdvisor.com today for a free consultation.