In past blogs I’ve written about companies that are operating in what’s termed as ‘zombie’ mode where the business is simply going through the motions and just about making enough to pay the bills. And we’ve spoken about businesses that have battened down the hatches so much that in essence the owners and management team are locking themselves out of the business and by being risk so risk adverse are essentially locking out any investment, innovation and growth. Is it true to say these businesses are surviving, well yes, just but in spite of themselves but not because of themselves in many instances.
Many businesses that I have met at networking meetings and some of those I work with seem to have lost sight of what a thriving business might look like, they are so entrenched in the survival mode they are spending all their time looking down and not looking up and beyond.
My great friend and mentor Peter Thomson regularly says there are three golden questions each business has – how to get more customers, how to increase the average order value and how to increase the average order frequency and the diamond question of how to retain those customers? And we all know that getting new customers is more costly and takes more time then selling to our existing customers. So why aren’t these businesses talking more to their existing customers? Even if it’s for referrals?
One of my clients said that 70 – 80% of their business comes from their existing customer base sometimes years after they first engaged with that customer. And whilst they have a scheme where they offer new customers incentives other than the annual open day and mailshot that accompanies it there is no contact with past customers on a database that is more than 15 years old. And so is rich with contacts.
Now when operating on a B2C basis the referral system is possibly different to a referral scheme where the business operates on a B2B basis but the underlying principles are still valid. And that’s regularly asking the customers for referrals even if its once a year; that can always be done in conjunction with a newsletter or similar.
Nurturing your existing customer base goes beyond the service provided when customers call about the existing products – its about making sure that your customers know about all the products and services you provide. Its also about giving them advice and guidance on their existing products and services and helping them with the products and services they want which are affiliated to the products and or services they bought from you that you don’t provide i.e. collaboration and preferred partners.
I understand that providing advice and guidance on the products and services may cost money but with the use of the Internet and social media there are cheaper ways of doing this than hard copy letters but then again those are read by customers whether B2C or B2B and when an email is received, scan read and deleted its gone whilst a hard copy piece of mail has a potentially longer life span as it were.
And how many of your customers know all the products and services that you offer? It may be that at the time the purchase was made they bought the ones they needed at the time and haven’t really thought about the other products and services you provide and unless you remind them they simply won’t know and therefore can’t buy them from you. And if there are new products and services or new collaborations with other businesses how will your customers know about those?
Another client has recently started collaborating with another local business, which is an obvious perfect partner, he sells white goods as well as TVs etc. and the partner sells kitchens and refurbishes kitchens. A perfect marriage and yet neither had really considered beyond advertising at their shops and in their usual local newspapers. They can’t even start to contact their existing customers because even though they have been trading for over 40 years there is no customer list or database.
Again, and said in the nicest possible way, these businesses are surviving in spite of themselves and not because of themselves. And yet the extra effort and cost that would be needed to thrive really isn’t that much and the returns on the investment are likely to be significant.
And of course when asking for a referral it’s a great way of testing your relationship – if someone is hesitant on giving a referral they probably have concerns about your product, service, delivery or aftercare.
And so what role does the leader/business owner have to play? Archie Norman, ex Chairman and Chief Executive of Asda and current Chairman of ITV has this advice about the recession “communicate to everybody in the business that this is a long term affair and then you can get on and enjoy it”. And since the recession is not completely over and the growth beyond the recession is likely to remain slow or sluggish then what a great way to think about it!
If we need to change the way we do business because they way we have done business doesn’t work any more then we have to engage more and collaborate more with those in the business and look to innovation. And if there is fun to be had by enjoying the ride and being creative then embrace it.
The alternative of moaning about it, believing that no growth is inevitable, and having an excuse to fail isn’t even going to support survival mode for a business yet alone allow a business and the people within the business to thrive. And that too is one of the keys. If the mentality of the business means that the mentality of the people in the business is survival mode they are not even close to being in the right space to consider thriving. A business will only thrive if the people in the business are thriving. So what is it that as leaders we can do right now to change that mindset from an insular survival mode to thriving? Because right now is when we need to start action.