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Free thoughts, tips and tools for business leaders with 50 - 500 staff
In a recession, or when things are at least slow, when clients are tightening their budgets, growing revenues, or at least market share requires strategic thinking. Instead of solely focusing on acquiring new clients, consider maximising revenue from existing relationships by addressing their urgent need to reduce costs. Put yourself in your customer and potential customer's shoes and proactively explore ways to lower overheads and costs for them. For instance, analyse your client's procurement processes and identify potential inefficiencies that contribute to high costs. By offering solutions that enable them to purchase more efficiently, such as reducing prices or expanding the range of products and services they buy from you, you position yourself as a valuable partner in cost reduction. Proactively approach your clients with proposals that not only benefit them financially but also strengthen your business relationship. While implementing these ideas may present challenges, the goal is to stimulate innovative thinking and potentially open new avenues for growth in a challenging economic landscape.
Growing revenues and market share in tough times
Growing revenues and market share in tough times
In a recession or at least a tight economic climate many clients reduce their spending. So how can you use the tight economic environment to at least grow market share? It’s not easy, but the following may stimulate some ideas.
Grow revenues by winning new clients
Grow revenues by winning new clients
THe key to winning new business in tough times is to ask two key questions
How does the tough market make our product MORE attractive?
How does the tough market make a prospect MORE likely to switch?
A more attractive product
A more attractive product
This is clearly business specific, but in general I'd ask how you can
position yourself as the ‘value’ provider in the sector as Aldi and Lidl do as supermarkets. In their case they consciously lower costs by keeping the product range small and their shops, and presumably supply chain, efficient.
provide the products and services needed by people and companies because of the tough economy
facilitate purchases when finances are tough through financing and other arrangements
Customers more likely to switch
Customers more likely to switch
Customers may be more likely to swich if they are:
not be being serviced well by struggling existing suppliers, or even suppliers that are financially strong but who have cut back on customer service
needing to change as a result of their own response to the tough times
looking to retender supply with one supplier instead of multiple in order to reduce their costs
Grow revenues from existing clients
Rather than putting all your effort into winning the few new clients that are around think hard about how you can grow your revenues from existing clients. After all you already have relationships there, and hopefully have a track record as a good reliable supplier.
And a key technique starts from putting yourself in the customer’s shoes and remembering that many companies are at the moment quite desperate to reduce their costs. If you can help them do that you’ll be a hero! So here’s an approach that might work.
To reduce costs they need lower overheads and lower costs (which usually translates into getting better prices from their suppliers – i.e. You). Rather than wait to be asked to reduce your prices, why not get on the front foot, put yourself in their shoes and think about how you can help them in their goal with the help of the following example.
In a previous Managing Director role, I discovered that a key client had analysed their procurement processes and discovered it cost them £70 simply to purchase an item costing £1000 from us, and they were using 200 different suppliers to deliver thousands of units of the service we supplied!
So now apply this knowledge to your business, and look for opportunities. This doesn’t work for all businesses, but it does for most.
There are two key questions:
There are two key questions:
How much more or less profit would you make if your client paid 10% less per unit they bought from you, but bought twice as much?
Could they buy twice as much from you?
If you already have most of their revenues for one product, what about if they bought a wider range of products and services from you? Most customers only buy from most suppliers the one or two key products they know that supplier provides. Often they could buy a wider range but just haven’t thought about it.
So if this idea is working for you, you have a great pitch opportunity.
Proactively approach your supplier, suggest you can reduce your price by 5% (leaving room for negotiation) and save them a lot more in internal procurement costs (feel free to use the £70 per transaction benchmark – It’s pretty credible and they probably won’t be able to prove any different)in return for them putting all their business of the sort you do through you.
That leaves you with the minor challenge of actually doing it, but my purpose is only to provoke you with ideas that have worked for me, seem credible to me and might work for you, not to run your business for you. Nevertheless I hope the above has though provoked some thought!
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