Why is the Customer Focus Strategy Your Best Strategy Right NOW?
If you could not continue to supply your entire customer base or your entire product range, which would you choose to continue and why? What data would this decision be made on? Too often companies make decisions based on their internal experience and view of the world and on what they know of past sales. If COVID19 has proved anything, it is that the past is not a predictor of the future and what happens inside the company has little relevance, you must reassess your assumptions on customer demand and sales expectations. The macro-environment has taken a bite out of the ass of micro decisions. Decisions must be based on what is going on in the external world and your conduit to this is through your customer.
Statistics from Gartner Group reveal that 80% of a company’s future revenue will come from just 20% of its existing customers. Do you know which of your customers contribute a disproportionate amount of sales revenue and value and which of your customer do not? If you do not know, then you are in serious trouble with or without the challenge of COVID19!
Now more than ever as we come out of lockdown, this is the time to apply a customer focus strategy to revenue growth.
If you are a business that has experienced accelerated growth, then you want to maintain this and invest wisely in your resources as these resources will become stretch as you manage growth. You must analyse where precisely the growth is coming from in your customer base as this may not necessarily be were growth was in 2019 or pre COVID19. You may have pivoted to go where the demand is, and so focus on the revenue streams and zero in on to understand and serve growth customers better.
If you are a company that has experienced growth in specific sectors or markets. You may decide to continue to invest in the areas of the business where demand and margins struggle, or to keep alive less profitable areas for when the customer needs revert. This area of the business has strategic importance to other productive parts of the company. You need to focus in on the areas of the business where there is growth and where there are new and old relationships and opportunities for further growth. You must focus on and understand your customer’s needs and relationship strengths and opportunities deeply for potential volume, value, durability, and partnerships.
If you are a business that has not experienced revenue growth with flat or declining sales. To protect the future of the company, a customer focus strategy is critical. Focus on where relationships are strong, where the opportunities can be developed now with predicted sustainable demand in the future. Focus your energy on the areas of the business where you have strong demand and healthy margins and competitive advantages and dispense with unprofitable areas of your business quickly. You have limited resource and time and therefore need to be strategic and decisive. This is the new normal, and you must take your lead from recent and relevant research data to focus on where you have the most robust relationships to build upon.
The customer focus strategy is to analyse and segment your customer base to better understand the characteristics better so that you can make wise investments and resource choices. A focused strategy applies customer data intelligently at where the opportunities are now and accessing future growth opportunities and investing in those identified opportunities to future proof sales revenues.
What Do I Mean by a Customer Focus Strategy?
It is essential to recognise that not all customers are equal and that a focused approach to delivering the best experiences to your better customers, is more efficient than providing average experiences to all customers.
Specific customers will be your high-volume buyers; it is essential to know who they are and not take them for granted. Do not lose sight of your best customers getting bogged down in acquiring new customers or dealing with problem clients. Make sure that you recognise your most valued and key customers and remain relevant to them, providing valued insight and delivering superior customer experience.
How to Recognise your Most Valued and Key Customers?
You use a simple but effective tool, the Pareto Principle. Italian economist Vilfredo Pareto, who, in 1906, found that 80% of the land in Italy was owned by 20% of the population. This Principle, also known as the 80/20 Rule, occurs everywhere, such as 20% of your time, produces 80% of your results.
The American marketer, John Wanamaker, famously said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
You can assess not only what % of your customers return the highest value, but you can identify who these customers are and then apply the focus strategy to increase customer value and sales revenues.
In part two on available Tuesday 30th, I will detail how you can use the Focus Strategy to double your sales revenue without increasing costs and the Scale Your Sales 7 steps to developing your Customer Focus Sales Strategy.
Contact me, if you would like a consultation to find out how you can accelerate your customer and revenue growth in these challenging times.