By Vivian Hairston Blade
At a recent stockholders meeting, the vice president of sales for a global manufacturer reported, The economy has been tough on our industry. Sales volumes significantly declined and have not nearly returned to pre-recession levels. The company has laid off employees, cut expenses and, unfortunately, had to cut prices to remain competitive. Competitors have cut prices as much as 40 percent on some products. Were under water on critical components our customers need. But we have no choice.”
Sound familiar? Could this be your company?
Like so many other businesses, this company is having a tough time bouncing back from the recent recession. Consumers wallets and businesses checkbooks continue to be tight. In fact, the Price Index for personal consumption expenditures, excluding food and energy, had bottomed out in late 2009, but is showing signs of being unstable again.
While sales and profits continue to struggle, employment will remain stagnant and the economy will be slow to recover. Its a vicious cycle. Every company feels the trickledown effect. Customers have reset their expectations and companies cut prices in an attempt to retain customers, grow share and increase top line revenue.
But is this really a viable business strategy? Focus on short-term revenue hinders investment in substantially improving the quality of your business for the future. Though not sustainable, many companies still operate on this short-term view.
Five Myths Every Business Must Avoid
Its time for you to take a look at five common myths that keep companies sprinting to the finish line. If you want to survive the recovery, avoid these failed strategies to stay ahead in the marathon.
A Look in the Mirror
Do any of these myths plague your company? Where do you feel the effects? Does the number of customer defections surprise you? What are these defections worth in revenue? margin? Are you spending more on new customer acquisition? How much more does it cost to win a new customer vs. retaining current ones? Are your customers really price conscious” or are they value deprived?”
Studies show that when customers believe they get more value for their money, they are much more loyal and spend more with those brands.
Why Invest in Value-Based Customer Relationships?
Companies that take a long-term view of investing in value-based customer relationships are rewarded with double-digit growth and profitability that compounds over time.
Does this mean higher costs? More often, investing in value-based customer relationships means reducing costs or being able to charge more for highly valued products and services.
Were not fighting for the highest volume but for the best reputation, customer satisfaction, and the best profit,” said Dieter Zetsche, CEO of Diamler, on the prospects of surpassing Toyotas Lexus as the No. 1 luxury U.S. brand in Business Week on August 2, 2010.
Most marketers and corporations are now looking to reduce costs in order to improve the bottom line,” said Donovan Neal-May, executive director of the CMO Council, on Forbes.com. While they do, it will be important to remember the favorable economics of keeping and growing customers vs. finding new ones.”
VALUE is about how you make your customers successful. Dont forget that customers define VALUE and expect you to deliver VALUE, at a minimum, to meet their fundamental expectations if the relationship is to continue. A change in the economic climate causes the needs of your customers to change, which requires a change in how you respond to their needs.
5 VALUE-Creating Imperatives
How do you effectively deliver greater VALUE in this tougher environment and remain profitable to survive the recovery? There are five VALUE-creating imperatives you can integrate into your business operations. Consider these imperatives and challenge your current thinking, culture and processes!
How well do you execute in each of these areas? How much VALUE do your customers really feel?
Each of these VALUE-creating imperatives requires a discipline to become part of your organizations DNA. These are critical to your success for improving your customer retention and making your business more profitable, no matter what the economic environment.
Be unequivocal about creating promoters who sing your praises customers who know you are committed to their success and who are committed to your success!!
Vivian Hairston Blade is president and CEO of
Experts in Growth Leadership Consulting LLC (EiGL)
that, through a combination of coaching and training, helps Fortune 1000 companies execute value-based strategies by building high performance, high quality and high service level organizations. She can be contacted at
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