Time to Put On Your Running Shoes
 There is a story I have been telling ever since our economy began to contract, which is especially
relevant now we face a bleak 2009 thanks to the global financial crisis. It involves two Canadians who
are out tramping in the bush. As they round a corner, they see a Grizzly bear in the middle of the trail
about 30m ahead of them. They stop and remain quiet and still, hoping the bear will amble away. But
the bear has caught their scent and is looking at them menacingly. Then the Grizzly starts to make those
little movements that indicate it is in an aggressive mood and likely to attack. One of the trampers
slowly takes off his knapsack, gets out his running shoes and removes his hiking boots. “What
are you doing?” asks his companion. “There’s no point putting on your running shoes.
You can’t out run a Grizzly.”
“I don’t have to,” replied the other, tying the laces of his running shoes. “I
just have to out run you!”
There is no question that spending will be down in the next twelve months but that does not mean spending
will stop. Housing starts, for example, are down significantly from the high of 24,000 but there are
still over 18,000 new houses being built. Somebody is going to be doing this work and others will be
selling things to them. It will be the same in your industry and your job is to make sure the money
that is being spent comes to you rather than a competitor. In other words, you will need to maintain,
or even increase, your market share in this tight market. But do not make the mistake of trying to buy
market share. The aim is to make a profit, not to be busy. Your pricing needs to be competitive but
it does not have to be the lowest.
The best way to maintain your market share is to make sure your existing customers stay with you and
do not migrate to a competitor. Thus customer retention must become your number one priority. Do not
leave this to chance. Make sure your staff understand your best customers are the ones you have already
got and that it is essential you hang on to them in this tough market. Make sure they know the lifetime
value of your top customers or customer groups. Then set goals for customer retention and measure how
well you are doing. Discuss these results with your staff regularly. Finally, develop a plan for staying
in touch with your top customers and for developing offers to encourage them to buy.
In a tough economic environment, customer retention
must be your number one priority. |
The best way to increase your market share is to persuade your existing customers to spend more with
you. To do that, you need to know what share of their wallet you have right now, what they buy from
your competitors that you could sell them, and most importantly, what you would have to do to persuade
them to buy those things from you. Visit your top customers to learn this information. Get your staff
to ask questions of customers who contact your business. Work out what might be a good companion item
to pair with your top selling products. Talk to your staff about on-selling. Explain that selling is
not persuading someone to do something they don not want to do. It is giving people an opportunity
to buy a solution to a problem that bothers them. Thus, if they do not offer the on-sell, they will
be cheating their customers. Ask them how they would feel if they had a problem and were not offered
the solution because they did not know to ask for it. Then they discovered later they could have had
that problem solved if the salesperson had been more proactive. Again, set targets for increasing the
share of wallet you get from your various customers or customer groups. Measure your progress and discuss
the results with your staff regularly.
The second way to increase your market share is to entice new customers to buy from you and the best
way to do that is through word of mouth advertising. In New Zealand, when customers have a good experience
they tell nine others and over half do not just tell the story, they recommend the listener does business
with the company that has delighted them. Tell your staff their job is to give your customers such a
great experience they are inspired to tell others how fantastic you are to do business with. Explain
to them it is word of mouth advertising that will bring you new customers, even in a tough economic
environment. Make sure they understand that satisfying customers is not enough. They need to delight
them by going the extra mile.
Most importantly, remind your staff (and yourself) every day that 100% of your money comes from your
customers. Consequently, their job security and your business’s ability to survive the coming
months is totally dependent on your ability to attract, make money from and retain your customers, the
people who voluntarily choose to put their money into your hands. Therefore, everything they think,
say and do must be designed to create an outstanding customer experience and such great customer value
your customers are happy to pay your prices and then want to return to buy more. This is the smart way
to do business.
When the going gets tough, the tough may get going but it is the smart ones who win!
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