Consumers are more selective when it comes to spending in a challenging economy
by Darrell Hardidge
Have you ever noticed the performance difference between two very similar businesses? One seems to be totally on top of things and the other is struggling, but both face the same market conditions and are in the same location and sales catchment.
So why is it that one can totally dominate the other and achieve higher margins?
In most situations, market leadership comes down to one specific and fundamental belief and process — they obsess over their customers and not over their competitors. They put their customer at the centre of everything they do and make sure they have a finely tuned process that delivers optimal service.
The current economic outlook
The consensus is that the economy will be challenging and the need to master customer experience is more critical than ever. When things get tight, consumers are far more selective with their spending. If you can’t deliver superior service, then you will lose out on sales. Right now, smart companies are reviewing and finely tuning their customer journeys. They have a point of difference in the way they think about customer experience.
The key is in the mindset of smart companies around service innovation. By defining innovation as ‘change that adds optimal customer value’, they keep developing their process until they can prove it provides value to customers. Their approach ensures customers experience is front and centre and delivers value that goes beyond the price tag.
Optimising your service offering
Optimising customer value and margin is directly proportional to the standards of service delivered. If you just deliver a standard of satisfaction, you will sell what the market needs and minimise average sale values. However, if you obsess over customers and deliver a superior service model directed to what they value, you will find a whole new range of things to sell to them. This unlocks your ability to engage with customers and will make you front of mind as a forward thinking, value-driven supplier.
If you’re not remarkable with your service standards, then you’re not memorable and you will quickly become invisible. Marinating market relevance is essential if you want to leverage repeat business and average sale values; one hundred customers averaging $1000 a year is more profitable than 200 customers averaging $500 per year. Expanding after mastering the basics of service excellence is safer than going full tilt to get a sale without focusing on margins or your customers’ future transactions.
Obsessing creates opportunity and higher margins
Obsessing over customers and not competitors has one unique benefit that provides the highest margins and shortest sales cycles — personal referrals supplied by appreciative customers and, most importantly, why they were given. This is rarely measured, understood or included in any KPIs.
Consider your own behaviour when you give referrals, especially for high value products and services. You’d put your reputation on the line for a business that has earned your trust first. It must have gone beyond your expectations and delivered a unique experience.
Companies that you won’t risk your reputation for are the ones that focus on themselves and their competitors, forgetting the value they should be giving you. They must keep spending money to get you back, using special offers rather than relying on a respected and trusted relationship with you.
Get your team obsessed
Obsessing over your customers will cause your team to think about how to improve and how to build security into the customer base. Companies that have mastered customer experience don’t need to worry about the competition, because the competition is already worrying about them. The competition is more worried about the number of customers they’re about to lose because they can’t match-up on service experience.
Investing in designing a unique customer journey and experience will pay massive dividends and, when done correctly, can provide significant value on the balance sheet and the company’s brand equity. Having a roadmap to train your team in service excellence is one of the highest paying dividends you can achieve with them.
Being different isn’t always better; but better is always different. Obsessing over customers and not over competition will build you a powerful reputation of being better.
Darrell Hardidge is a customer experience strategy expert and CEO of customer research company Saguity, specialising in driving revenue growth from customer appreciation. Darrell is the author of The Client Revolution and The 10 Commandments of Client Appreciation. To find out more, visit www.saguity.com