Question: As the market is uncertain how do I compete for customers?
In this situation where the market is uncertain, aggression and competition is not the best way to approach business.
Being competitive becomes a “cat-and-mouse” game as you are trying to make more sales and increase revenues by winning clients over from your competitors - your competitors are also taking customers away from you.
Instead, the focus needs to be shifted to retention and the priority should be customer loyalty.
There’s a lot of glitz and glory around new customer acquisition and winning new business, however this should never be at the expense of your existing customer base.
Rather than filling your bucket this is the time to plug the holes. You don’t want to be continuously playing catch up: as you bring new customers in, the existing ones are falling out. This is not a smart nor a sustainable way to do business.
Instead, focus on adding value and securing the loyalty and ongoing business from your existing customers and make it impossible for your competitors to siphon them away.
Customers will only be loyal if you demonstrate loyalty to them and assure them that in this period of uncertainty, you’re a rock for them.
This is where you need to create and demonstrate competitive advantage. The first step to doing so is to segment your customers as follows:
1. Highly Loyal
These are customers that will buy from you repeatedly, they’ve been with you for considerable time, or they are high value in terms of their net worth.
2. Newly Acquired
These customers are getting to know you, your brand but don’t have the tenure or the relationship behind them. They need to be nurtured so that their loyalty is earned. You may wish to run a campaign to convert wow and impress this group so that they become “Highly Loyal” .
For these customers, they will shop around and competitor offers will be attractive to them, maybe even more than before. They will be sensitive to price, timing and a multitude of other variables. You may wish to run a unique campaign to demonstrate why they should be loyal to you.
Once you’ve segmented your customers, we need to review the retention strategy from a “back to basics” perspective. For each segment, start by reviewing the “Four P’s” - product; price; promotion; and place.
Here are some questions you could ask yourself:
What are you offering? How will this help to bridge the gap between where they are and their desired outcome? Do you have alternatives that will meet the needs of the customer at this sensitive time?
What is your price point? Does this deliver value to your customer? Are their opportunities to review this pricing? Are there any incentives, discounts, relief options I can consider?
How are you communicating? How will you differentiate yourself to this segment? What is your compelling reason for your customer base to stay with you?
Are there any gaps in distribution? Are there other platforms where I can be present? Have I achieved the most effective coverage for the current situation?
You may have other questions to ask yourself, and if you need some help with this, I certainly encourage you to reach out. Everyone’s situation is different and often we need an outside perspective to give clarity.
Finally, while I emphasise that we focus on retention and loyalty, the change in market conditions does provide some businesses with the opportunity to acquire new customers and fill their new business pipeline.
Look at Zoom for example: it was once a business conferencing tool, but in this current climate schools are using it for teaching, children are conferencing with their grandparents, and even some people are using it as a dating tool.
New business should certainly not be disregarded, but if your business doesn’t have this opportunity then it’s imperative that you roll up your sleeves, knuckle down and help out your current customer base and demonstrate greater value and increase loyalty.
If I had to write a note to all business leaders, it would simply say: “Be prepared! The world won't stop, and neither should your business.”
As a leader it’s important that you stay on top of your numbers. I’ve personally been through several economic downturns and the main lesson is that we will always get through this and we will always bounce back.
There are new opportunities arising and these need to be embraced, especially now as the times are changing. Be prepared to change and be prepared to protect your most valuable asset: your ability to generate revenue.
This is not the time to be cutting back on your business. Rather we need to stay prepared, create a clear plan, and then we need to work the plan.