Managing your customers in tough times
When times are good and your company is growing, you tend to focus on increasing market share or targeting new markets, and it’s easy to forget about your customers. And although nobody enjoys trading in turbulent times, they provide the opportunity to re-assess and bring your focus back to your customers rather than the market.
The Acid Test
Operating in a downturn can be a good acid test of your company’s strategy. For example, your strategy is differentiation and you consider your company has something unique to offer your customers; however, if your customers start leaving for the competition, you will soon see that you did not differentiate enough.
In turbulent times, your emphasis must be different from that in times of growth. In the latter situation, you concentrate on three things: attracting customers; satisfying them by delivering on what you promise; and keeping them.
In a downturn, you have one priority: Put customer satisfaction before everything else. You need to think about the quality of your service, make sure you don’t over promise, and ensure that every customer is happy. You need to care so much about your customers that they will not be tempted away by lower-priced competitors.
Maintaining the Customer Relationship
You can build and maintain strong relationships with your customers in troubled times by simply following these three steps:
Deconstruct your market customer by customer, segment by segment. What do your customers like about you? What don’t they like? When is the last time you contacted them? When was their last transaction?
Every customer is important, and you need to know their views and understand what they want. You can no longer think: “I don’t care, I have other customers.” Listen to what your customers are telling you and act on it.
Adapt or innovate. Can you come up with a new product within your client’s budget but still within the positioning of your goods or service? The luxury goods market is a good example. In a downturn people may not be able to afford large luxury items but will spend their money on smaller indulgences. Rather than stick to the big high-priced products, if you can adapt and bring out new, smaller luxury products, you can keep the customer loyal and maintain your relationship.
Taking these steps alone may not be enough to avoid losing a customer. In challenging times, it’s worth considering whether there are any customers you can afford to lose, or any you should focus more of your attention on.
For example, you can focus your efforts on the customers who see you as a partner or as adding value to their business in terms of your market knowledge. These are the customers who are likely to stay with you; whereas those who are focused on price alone are less likely to be loyal. In challenging times, it’s worth considering whether there are any customers you can afford to lose, or any you should focus more of your attention on.
When there is pressure to discount your prices, remember you have other options. If you know your customer well, you may be able to offer added benefits that are normally not included in the deal, or work out a way to reduce their cost of usage. It will mean empowering your front-line staff to play on these options and to weigh up the value proposition for each customer.
In a nutshell, these are ways of maintaining your relationships with customers during challenging times:
- Think customers, not markets
- Focus on keeping existing customers, not simply attracting new ones
- Think in terms of the whole “give away” — the additional benefits or cost of usage — rather than price discounts
- Keep in constant contact with your customers, even when no sales transactions are taking place
- Focus on the right customers
- Adapt and innovate
- Remember that although your sales might go down in the short term because every customer buys less, you will keep your customers in the long term
If you stick to these rules, you should be able to ride out the storm and keep your key customers by your side, until the waters calm. And along the way, you’ll learn a lot about your customers and your strategy.
Article reprinted from The Drake Business Review, a quarterly publication helping high performing managers and executives meet the challenges in their businesses now. Reprinted with the permission of author Jaques Horovitz and CEOFORUMGROUP. CEO Forum Group specializes in peer group briefings and network services for the CEOs, CFOs and HR Directors of the Australian subsidiaries of foreign-owned companies.