Dilemma: I would love to just say “no” to one of our customers who is unfairly demanding and not that great in terms of profit. They do use our services often, but I can get past that loss with other, better customers. My issue is that I want to help them out so a competitor doesn’t sell them a similar solution and get more of a foothold with a service we’re a known leader in providing. What should I do?
Thoughts of the Day: It’s tough when customers know they have choices and use that to negotiate terms that are favorable to them and potentially hurtful to you. Think about what you can do to improve your services to differentiate them from what your competitor sells while you negotiate for a premium from customers who value that difference. Working through options and consequences is like playing chess on a multilayered board.
Clients should understand and appreciate your service—what they should not do is dictate how you handle your business. You have to decide what accounts are going to create long-term value for your company, whether it’s by paying at or above your average margin, making suggestions to help the organization grow and improve, or simply not trying to hold you over a barrel.
Go through your client list and figure out how many current clients and prospects meet the criteria that define what a valuable customer is to you. Are there enough for you to grow the business? If not, figure out a plan to acquire more value-oriented clients and find promising prospects.
Think about what sets you apart from your competitors. Differentiating what you do or creating a niche that only you can serve is important for any small business. That comes from providing something unusual, including the following examples:
• Special handholding for VIPs who prioritize ultra-high-touch service
• Putting a group of services into a package personalized according to frequent passengers’ needs
• Listening to your best customers’ complaints about what they aren’t getting from either you or your competitors, and figuring out how to meet those needs
Not sure what to focus on or where to start? If you’re stuck, consider the solutions that will lead to:
• The greatest profits from production and sales
• The greatest difference between you and your competitors
• The longest-term solutions in terms of identifying great clients who value what your company does for them
Remember that you can’t be all things to all customers, so don’t even bother trying to get there. It’s better to direct your energy and attention to the niches, services, and combinations thereof that your company already excels at or could plant its flag in—and then seek out clients who want exactly that. Take a look at your competitors and what they’re doing so you have a clearer idea of the services your market is lacking in.
If you’re especially concerned about competitors swooping in and either stealing current accounts or sweet-talking old ones, you can get a leg up by building profiles for each company with which you’re vying for work. These profiles should include information like:
• What they do and how you compare
• Who they provide most of their services to
• What recent innovations they’ve announced
• Customers who have left them recently and the reasons why
• Customers who have left your company for these competitors and why
Determine what competitors could be the most threatening to your company going forward. Pick one or two to focus on and decide if you can match what they’re doing and stay ahead of them over the next several years. Identify areas where those competitors are vulnerable.
Research the marketplace, too. Is demand for the services you offer growing or declining? Are new clients entering the market? What additional services are likely to be in demand in the next few years? For chauffeured transportation, technology can be a key differentiator.
Use that competitive marketplace profile to figure out whether or not you should try to compete to keep the business you have with your demanding customer. Don’t be afraid to divorce a customer if they are costing you more than you think (staff turnover, etc.). If it’s time to let go, focus on building a sales and marketing plan to bring in more new, high potential clients. [CD0419]
Robyn Goldenberg is Director of Operations and Marketing for Strategy Leaders. She can be reached at robyn@strategyleaders.com.