Second of 5 of the Most Common Mistakes to Avoid When Growing Your Business
After you understand and increase your vigilance about customer and product profitability, as featured in the theme of How Well You Accurately Know your Best ten customers, it’s time to consider how your business appreciates the impact of relentless change.
Simply put, let’s look at the aspect of avoiding mistakes when changes occur to your customers, specifically your top 10. Being aware how your product affects your top clients along with the changing dynamic of their company is pivotal to keep updated in today’s competitive business world. If your top clients are losing profits or innovating the state of their product—you need to know. Your services and products could substantially decrease if you are not catering to their changing business needs or unaware they are steadily losing profits. Or out-of-the blue, they could be acquired by someone who changes out your value based relationship despite your best efforts.
Once you open your planning to the fact that your business is going to lose some of its best customers, you can create contingency planning options. Start with asking yourself to answer True or False on this statement. Your company knows how changes to one of your top 10 customers may affect your bottom line.
The results on this question are harder to evaluate by size. Although most middle market company (normally 50 million dollars and up) are comfortable with their basic customer and product profitability, most are NOT comfortable about understanding how changes to their best customers will impact them. Understandably, smaller companies often struggling with an accurate grasp on customer and product profitability are not much happier with their capabilities in this area.
Whatever the size of your business or client forecasting monitoring capability, let’s go deeper on the topic of change in your customers’ business and planning for its impact on you.
How Changes to Your Top 10 Clients Can Affect Your Business.
How will your profitability on your top customer accounts be impacted when those customers’ profitability decreases? There will always be a time when one of your top ten customers will drop off your A list. Consider this over-the-top example. Buggy whip manufacturers were profitable customers for some businesses until automobiles became the standard. Rather than laugh at that comparison, review how the product or service your company provides might become the buggy whip of tomorrow, for one or more of your current best customers.
Another more relatable example is Kodak. Kodak did not change their business model, innovate and failed to create the digital camera. Trying to maintain steady top clients that are innovative may be something to consider. Also, if there is a huge change in management with your top 10 customers, make sure you are the first to know. Then you can be ready for possible changes and find ways to update relationships with new management. Welcome new management of your top clients aboard with a positive attitude. You don’t know if they may suddenly want to go in a new direction with someone else’s services or products.
Time to return to the leaders whose business answers “no” regarding the ability to monitor change at your best ten customers. A company that does not know who its most profitable customers are, probably will have major difficulty estimating how their customers’ profitability could damage your business. There is a value to recognizing this blind spot. Just imagine how that lack of knowledge or visibility increases risk? The moral of the story is that your top ten customers will change over time, so it’s up to management to continuously analyze their data. Moreover, ensure you are serving the current ten best customers and recognize changes that need to be taken on these customers that have fallen off the A list.
Whether you are in the yes or no answer group relating this second common mistake to avoid in growing your business, always be on the lookout for new clients, because your A-list customers may suddenly go out of business. That may be out of your control, but easier to manage when you have other customers in the queue.
- Resolve to puts time on your side to be better prepared for when, not if, you lose all or a large part of one of today’s 10 best customers.
- What can you start doing now to grow or acquire a comparable valuable to your bottom line replacement customer?
- This could be as simple as looking to see which customers would provide you more money if you created a product extension or service to offer even more value to them.
How long will it take for one of these options to help your business make more bottom line profits by better managing limited resources available to improve customer and product profitability, even if you lose one of today’s ten best customers?
Known as the Fiscal Doctor, Gary W. Patterson has helped 2 INC 500 companies and over 200 companies in manufacturing, technology, service, construction and distribution in companies from start-ups to Inc. 500 to Fortune 500. Gary Patterson helps you grow top line revenues, keep more of the bottom line and make life more fun. Author of Find Your Blind Spot – Before It Finds You, and Million Dollar Blind Spots. Contact Gary when you need a speaker or consultant on strategic profitable growth while removing risk at www.FiscalDoctor.com or 678-319-4739.
© Gary Patterson, the FiscalDoctor® www.FiscalDoctor.com
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