No one likes to lose to competition but the reality is your customers are buying 20-50% of services and products that your business missed offering them. In effect, you are helping to keep your competitors healthy. There is a comprehensive strategy that can; generate significant gross revenue; drive strong margin incremental sales; create more value within your existing cost structure; and retain customers longer while creating a barrier for them to leave or be seduced away.
Start By Understanding Your Customer's Lifecycle
For the purpose of this article "Customer Lifecycle" will be defined as, "The products and services your client use before, after, and with your service/product". Also consider, seasonality, market trends, competition, and your client's financial position whether it's growing, stable, or declining. Many of your customers have forecastable demands which will go to your competition if you do not offer what they need.
Another way of looking at this is, your customers are always buying products/services you are not offering. If you want to grow your business look at what they are buying from who, when, and why.
Review The Following Areas To Determine Incremental Growth Opportunities
1) Look at what your customers are buying to run their business. Regardless of the size of your business, or how diverse your customers are, you will find that there are several common areas your customers are buying in to run their business. For example, if you are selling software, your customers are buying and using servers, PC's, other software, printers, toner, tech support, system security, redundancy systems, and so on.
2) Look at what your competitors are selling that your aren't. Depending on how specialized or broad your business is, look at the products/services your competitors offer that aren't in your portfolio. If these are high selling areas your customers (or customers you want) are buying from competition, it is likely they are buying something similar that you offer from your competition along with the other product offers you don't give them. For example, if you sold clothing, and your top competitors offered similar products, do they sell belts, accessories, under garments, or shoes in addition to clothes?
3) Think about the suppliers they buy from. Suppliers are indirect competition in some cases for "share of customer spending". If a customer needs to use your product in combination with other products to get the full use out of what they bought, there is an opportunity to offer them something extra to increase their total purchase. For example, if you sold automotive parts to garages they are also using power tools, storage trays, racks for holding products, and waste disposal to go with your products.
I'd also suggest that another wasy to drive incremental sales is by looking more deeply at the customers business to get a better understanding of their customers.
When you can truly understand the needs of your customers' customers, you have the ability to have even more meaningful dialogue around how you can help your clients impact their customers in a more profound way.
Consider: are your customers' customers:
Growing
Shrinking
Hunkering down and protecting their current client base
With a better understanding of how you can have a deeper reach, you make your competitors less relevant, and solidify your position as a key advisor.
Posted by: Andrew Freedman | February 28, 2009 at 07:43 AM