Customer Base Analysis
As a business owner or Sales Leader, when was the last time you analysed your customer base to conduct a ‘risk-analysis’ on your existing-customer revenue stream?
For clarity, what I mean in this instant is, what if you lost your top spending customer or client, what would be the magnitude of the impact to your revenue?
This analysis is crucial, you need to know just how ‘sticky’ your customers or clients are. You can do this in a simple way by analysing some metrics like, How many of your products or services do they rely on? Are your products or services commodities or specialist? How well do you know the purchaser? Have the volumes gone up, down or remained consistent with plausible reasons that you are fully aware of? – make sense? But there’s more to it than this, let me explain.
Let’s start with a ‘What-if? – What if the purchaser left that business, do you have a strong enough product USP to not be worried about this? If you answer yes, then you are very unique in the market, but I would still raise a warning that you mustn’t allow complacency to creep in, there’s always other companies looking for new revenue streams and to develop upgraded products. Secondly, if you don’t have products and services with strong USP’s what do you have? – here are a few other thoughts to get you thinking:
1. Make sure you get to know each and every person within your customer that comes into contact with your product and any other part of the business that your product or service touches e.g. how well do you know the finance department who authorise the payments? Are your invoices easy to understand? Do your part descriptions match theirs to make it easier for them to identify what you are invoicing them for without any need for interpretation or time wasted to go and find out? Do you know why your customer purchases from you? or How many relationships your customers or clients have within your own business? – the more the merrier. Don’t micro manage your clients and control the flow of communication, allow your people to form what I call strong ‘communicationships’ with the customer or client, especially technical staff, they generally have their own language!
2. Conduct a ‘Threat Survey’ and keep asking the ‘What-if’ question about everything. What if a competitor offers a cheaper price? What if a competitor moved into the local area? What if a competitor designed an upgraded product or service? What if the customer or client moved out of the area or UK? What if the customer or client was bought by one of their competitors who use one of your competitors? What if your supplier went out of business? And so on, the more ‘What-if’ questions you can answer the more prepared you will be if and when it happens.
3. Have regular ‘Deep-Dive’ reviews, especially with your high revenue customers or clients. If you have Account Managers that do these, get involved and attend these meetings. Make sure they are conducted thoroughly and taken as seriously as they should be. Long term relationships where an Account Manager and Purchaser have been working together for a while has its benefits, but it can also make way for complacency to creep in, an intermittent injection of energy and focus will keep things on the right footing. Don’t become a stuck record either, measuring the same metrics at each meeting, asking the same questions and so on. Ask some of the ‘What-if’ questions and work through them to let the customer or client know you are forward thinking about the relationship and making sure you are willing to make changes to ensure longevity.
4. Use the same metrics to measure success. Don’t quote your average metrics measured across your customer base as some form of success within that relationship – they don’t care. Agree a number of success factors specific to your customer or client and make them real and meaningful. Find out what measures they are using to ‘score’ your service, if they don’t use any measures you are lucky, and you need to ask ‘What-if’ they start measuring you? Be pro-active, if there are no measures in place, in the next review meeting ask them for their view on critical success factors, again be proactive. If you shy away from these things and a competitor begins to ‘crack the door open’ with these appealing conversations, then you face a threat.
5. Product usage, you must ensure your customers or clients are using your products or services to the greatest extent and what they are meant for. Let me explain this from my own experience. I once joined a large software company that had been using (or should I say neglecting) a CRM platform for years. This software platform was very capable, feature rich, laden with reports and everything you would need to monitor the sales metrics. However, if I was to say only 10-15% of its capabilities were utilised I’d be pretty close, how previous managers interpreted the data I’ll never know. I’m not saying that all software has 100% usage anywhere, as I don’t believe it has. The point being, it was very easy to displace this software platform with a new shiny one. If the supplier had spent time ensuring that their software platform was firmly embedded into the company, it would have been nigh on impossible to displace. Ensure your products or services are embedded, fit for purpose and delivering a solution to a problem.
A finishing point here is to say, buyers are changing the way they buy, sales have got to wake up and change the way they interact and position themselves for these changes. If you ask yourself as a company owner or sales leader, Do we ‘hit and run’ or Do we ‘hit and dabble’ or Do we ‘solve customer problems and really care’? – which one would you associate yourself with – and please don’t kid yourself, be honest. Only with honesty can you begin to put things right and survive the journey.
Oh, and by the way, if you went for the latter option ‘solve problems and care’ – says who? is this your measure, a gut-feeling or do you measure what your customers are experiencing?
Reflexive Business Coaching have 25+ years of experience in the Sales & Marketing arena – we solve sales problems so you can generate more success.