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.