Do not panic when your business is slow. That is your opportunity for cool, strategic plans and execution. Easier said than done? Let’s see.
Much is being written about how to survive a business crisis ….reduce inventories, re-finance, cut marketing spending, reduce your labor costs, etc. Good advice for many businesses, but not applicable to all.
Look around. Your business has a CART ... A cart that’s filled with your customers. And there lies an opportunity for every business that sells a product or a service. Make the task of customer evaluation one of your top priorities.
Customers are usually defined by total sales volume, but do you really know which customers are most profitable for you? That’s right….profit, not just sales. Many times, because of the high cost to service an account (slow pay, excessive returns, special shipping), that customer actually becomes unprofitable for you. If so, why keep selling to them? Cut them off or find a way to lower your cost of supporting them until they generate profit for you. Remember, profit is your objective.
Now, let’s look at your profitable customers. First, do all you can to keep them. It is far easier, and less costly, to keep a customer than to find a new one. Keep them in your CART !
- Cultivate them. Do your good customers buy all that they can from you? How can you sell them more? Do you offer another product or service that they currently buy from a competitor? Convert them. They already know that you are reliable.
- Ask for references. Ask them to recommend your company to others. Good customers usually know other businesses that you would like to have. Actively pursue them, especially if they will be profitable.
- Return the favor. Can your company buy more of what your customer offers? For example, if you sell cleaning supplies to company “A”, do you, in turn, use them to clean your facility?
- Thank them. Write a personal note telling them how important they are to you. Wish them continued success, especially in hard times, and ask how you can make their business better.
Let’s review. Use smart planning to turn soft business conditions into a success for your company. Evaluate each of your customers for profitability. Cut off those that make you lose money and keep the others in your CART. If you cultivate them, you will push that CART to the bank!
For all of your business questions, remember that your Orange County chapter of SCORE has over 100 experienced counselors ready to assist you. We can be reached for an appointment at 714-550-7369, or www.score114.org. We can help you with marketing, sales, finance, operations or other business topics. Just give us a call. All of our counseling services are free of charge to you.