Customers: Harder to Find and More Important to Keep
4/6/2009
There have been tremendous changes in many sectors of our economy. This is especially true for the business-to-business segment, with which our firm is most familiar. In 1992, according the Census Bureau statistics, the industrial sector (including construction, manufacturing, mining, wholesale trade, transportation, and agricultural) made up roughly 60% of all business establishments. By 2006, the percentage was 25%. The total number of businesses grew over that time period but the number of industrial companies fell from 3.8 million to just short of 2 million.
Consolidation, outsourcing of manufacturing to other countries, and the disappearance or decline of some industries (e.g., traditional residential telephone service) contributed to this change. As a result, there is more competition for a smaller pool of customers in many industrial markets (though in some cases, the customers may have greater sales potential). In this issue of Success Strategies, I’ll offer some suggestions on what to do if you are facing this environment:
- Develop retention strategies or, as a colleague likes to say, “Shut the back door.” First, look for telltale changes in buying behavior. Are your customers buying less or buying differently than in the past? Are you having more complaints from individual customers? In short, you need to have an early-warning system that will alert you to those “at-risk” customers. These are the ones who warrant attention in order to avoid defection.
- Focus on service. In most industrial markets service is essential. Service can make, or break, a customer relationship. Ask your customers for feedback on your service. As a simple first step, ask employees to rate the service the company is delivering. You may be surprised by what you hear.
- Make the value proposition crystal clear. Too often, managers assume customers understand the value their company offers. More often than not, customers may have an understanding but it is not clear. While there are times when price becomes a deciding factor in customers’ decisions, our research experience shows that price is probably number 4 or 5 down the list of things that influence whether they buy from you or not. For more ideas about how you can sharpen your company’s value proposition, click here for a white paper.
If your company is in an industry facing dramatic change, it is critical to seek new opportunities in more attractive markets. While looking, don’t overlook existing customers. Good habits developed with existing customers will carry over to new customers.
All the best for 2010.
Lynn
