[CustomerStrategy] Are Your Customers Vulnerable

Last week alone my daughter received more than 20 solicitations from colleges and universities around the country. Some are creative, some are boring, some are promising a great education and others seem to be promising one long party (that one didn't make it past the parental filter!). Like my daughter, How many of your customers are being bombarded by your competitors? How many are now seriously considering your competitors' offers?

Companies of all sizes have made massive cuts to their sales, marketing, and support staff. Customer service hours limited. Perks and niceties that customers have grown accustomed to have been thrown out the window.

While these cuts may have been deemed critical to the business health, the net result is that the infrastructure to support the customer relationships has been decimated. Despite the very best efforts of those that are left, in the eyes of the customer, service stinks. Account managers are unresponsive. Salespeople don't return my calls.

Your customers are vulnerable.

For the first time, your customers are listening to your competitors. They've always been bombarded by competitive offerings, but now they are beginning to wonder if the grass just might be greener on the other side. As I wrote in the December 2008 newsletter, customers' value equations are changing. They are trading downwards to lower-cost alternatives because they've realized they no longer need the premium products. As well, if the service they've been enjoying is no longer there, and the relationship is suffering, the barriers to exit are falling fast.

What can you do?

There are at least five things you can do as part of your overall Customer Strategy; here are the two most important:

Determine who your best customers are--those that you must keep at all costs

Find more prospects trading down into your market

If you want to learn the remaining three, you are welcome to visit the articles section of our website and read the whitepaper entitled, "How Vulnerable Are Your Customers?"

Who are your best customers--those that you can't afford to lose? Most every company has their "key accounts" that they do most anything for. It is my experience that these key accounts are often the largest by revenue, and often the least profitable. How can that be? They've mastered the negotiation art-form using vulturous purchasing agents, and reduced every possible nickel while maximizing every service you are required to deliver. If you analyze the total cost to serve your key accounts vs. the revenue generated, would your key account list shrink? As well, in these times, liquidity and viability need to be a key element of the analysis. It doesn't matter how much the customer is contractually obligated to pay if they enter bankruptcy. Beyond financial terms, which of your customers truly value the products and services that you offer? One client of mine had a huge number of customers that didn't value all the bells and whistles they had introduced to their software product--and it seemed that all they wanted was a lower price. However, when I examined their customer base, I found a market segment that wanted all the functionality and more. This segment was sufficiently mature and savvy to understand how they could use this extra capability to generate far greater profits than their competitors. By focusing more heavily on a similar market segment, you can minimize the incessant price discussions.

Perhaps one of the most important things you can do is to evaluate the possibility of introducing "lite" versions of your products and services so that as they consider downsizing that they stay within your franchise, rather than defecting to a competitor.

You need to ensure that you do (most) anything that it takes to keep these core customers satisfied and loyal, so they are not enticed away by hungry competitors with their low-price offers.

Find prospects trading downwards--into your market
If you're like most companies, you have prospects that have told you that "you weren't big enough to support their needs." They may have sneered at your lack of credentials, capabilities, etc. and ended up going up-market to your larger competitor. Those prospects you'd thought were lost are now your best chance for profitable new customers.

These prospects are disillusioned with the lack of service they're receiving from your larger competitors who've slashed staff. They've decided that perhaps they don't need the most glamorous PR agency--and the decidedly unglamorous fees. Or perhaps they've decided that the biggest, bestest, and fastest computer hardware isn't actually as necessary as they thought. They are considering trading downwards, and your goal needs to be to present them with the perfect value for their newly defined equation.

Where do you find these? You start with all of the lost opportunities in your CRM system where they had budget but you lost out to a competitor. You start scanning your competitor's websites and their PR announcements to find their customer lists. And you call to find out if they are interested in receiving greater value and much greater personal attention than they are receiving now.

If you are flat-out with everything on your plate and just can't add one more thing, give me a call. I'd be more than happy to help you keep your best customers longer, and help you find more profitable customers.