How Vulnerable Are Your Customers? (Part Two) by:Curtis Bingham
In Part One of this article series, I described the current situation with how customers
are feeling vulnerable: Now more than ever, your customers are being bombarded by competitive offers and even some of your most loyal customers are actually listening to your competitors.
Your customers are vulnerable. What can you do about it?
First, you have to understand, "Who are your best customers and those that you can't afford to lose?"
Most every company has their "key accounts" that they will do almost 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 this change your perspective on these key accounts ? As well, in these times, financial strength needs to be a key element of the analysis. It doesn't matter how much the customer is contractually obligated to pay if they don't pay promptly, or worse yet, are entering 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--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 a "lite" version of your products and services to keep them within your franchise when they need a lower cost alternative.
You need to be prepared to do what it takes to keep these core customers satisfied and loyal, so they are not enticed away by hungry competitors with their low-price offers.
In my next article, I'll continue with the second of five things you need to consider as you adjust your Customer Strategy: How to discover your customers' core, non-negotiable value drivers and refuse to scrimp on these.
Copyright (c) 2009 Curtis Bingham
About the author
Curtis N. Bingham, President of The Predictive Consulting Group, helps organizations dramatically increase customer acquisition, retention, & profitability. For more information about Customer Strategy or Chief Customer Officers, visit his website at
http://www.predictiveconsulting.com or his blogs at
http://www.curtisbingham.com or
http://www.chiefcustomerofficer.com.
http://www.articlecity.com/articles/business_and_finance/article_9979.shtml
Researching Business Ideas in a Fast Moving Marketplace by:Dan Boudreau Top Ten Business Plan Killers by:Dan Boudreau Leveraged Buyout (LBO) to Make Large Acquisitions by:David E Simpson Taking Advantage of a Down Economy With Investment Hiring by:Elizabeth Rice, SPHR Four Major Reasons to Hire Older Workers by:Mary Lloyd The Best Way to Set-up and Maintain Your Superannuation Fund by:Sam Gooch A Review of Cheap International Calling Options by:Bob Graham Advantages of Cash Budgeting by:Ryan Windley Good Investment Properties available in Maryland and Washington D.C. by:Robert Kilonzo Rich Men's Playgrounds by:Alexander Kraft Trophies Can Increase Sales Performance by:Bruce Munro The Top 5 Free Typing Test Sites for 2009 by:Chewy Ine Outsourcing Your Way to Product Creation by:David Hale