Without good customers you don’t have a business. The only reason you will have customers is if you offer what the customer needs, and then supply it better or cheaper than someone else.
There are low cost value models such as Ryanair who get and keep customers by keeping the price down it’s that simple. Then there’s the luxury or premium models such as The Ballyfin Hotel where price doesn’t matter. The model must deliver what it promises or you won’t keep the customer. Do you know what your value proposition is? When starting out you need to choose the value, provide the value and communicate the value to the target market.
You need to develop understanding of your customer and what is important to them and how you can help them do their job or fulfil a need. Continuously refine your business processes to make it easier for your customers to do their jobs. You need to intertwine your business into your customers business, the borderless business model it’s called.
Target the right customer. Measure your profitability by customer and find out which customers are making you money and which are not, and then take the necessary action. Your management reporting systems should be able to provide you profitability by customer.
Satisfied customers are normally the best source of referrals so what are you doing to generate referrals from your customer base? However you need to measure customer satisfaction to ensure your customers are indeed satisfied, it’s too late when they are gone. Feargal Quinn has a full chapter in his book ‘Crowning the Customer’ about how to generate complaints. This might seem a bit unusual but this was critical to him building his business empire. His philosophy was to find the unhappiness, deal with it positively so then you have more satisfied customers than before.
A key element of market knowledge is competitor knowledge. Continually review what your competitors are doing, what they are doing better than you, worse than you, or different to you. An awareness and understanding of competitor activity and aspirations can help clarify one’s own market position. Competitors can be good teachers as well as good motivators.
A local success in Kildare Town is Hartes Bar and Grill which opened a few years ago in the height of a recession. Business continues to prosper for them by delivering consistently high quality food, with a friendly service. They figured out a gap in the local market and now provide what the customer needs.
Henry Ford one of the pioneers of the motor car once said to an engineer who questioned his wisdom of introducing new a car model, ‘if I asked my customers 20 years ago what they wanted they would have said a faster horse’. Henry obviously researched what his customers needs were in great depth.
Recent cases of completely new business models are Twitter, and Facebook which have gone public for billions seemingly only a few years after setting up. Will they be able to retain/grow customers, stay ahead of the competition and make profits in future, time will tell.
A ten point checklist which may help:
- Talk to your customers, communication cannot be overstated.
- Listen to your customers, they are most important in helping you develop your business.
- Measure customer satisfaction. Ask the customer questions about your service or product. What are you doing right? what are you doing wrong? what could you do better? What are you missing? would they refer you to others?
- Understand your customers business and their needs. Time spent here is time well spent. The greater understanding you have of your customers business and needs the greater value you can add.
- Review your competitor practices on a regular basis.
- Encourage a knowledge sharing environment within your business. Every employee should be a salesperson so employees need to be completely up to speed with your products and services and have customer service high on their list of priorities.
- How can you improve staff skills through training programmes in order that you increase customer value?
- How can you improve systems and technology so that you provide a better service or product?
- Be proactive not reactive, get your customer to rely on you.
- Finally, use knowledge gained from your customers and competitors to refine your product or service offering in line with the feedback.
To summarise you won’t stay ahead by hiding behind your desk. It’s far easier and cheaper to retain customers than go after new business so look after what you have. Patrick Sutton, O’KellySutton Chartered Accountants and Business Advisers, Kildare, Sutton@okellysutton.ie
This Article by Patrick Sutton, partner of O’KellySutton appeared in the Sunday Business Post 19 Jan 2014