You have a client, who has been in business for twenty odd years, doing what he knows best. He’s never been hugely successful, it’s not as if he can retire tomorrow. Sure he’s made profits, although recently things have taken a turn for the worse. But it’s not as if he’s likely to go out of business soon, he’s just not doing as well as he has done.
What do you advise him?
Every accountant, lawyer, and consultant I know has a good number of clients like this. There are countless businesses in the Black Country that were not set up as a ‘hobby’ or ‘life style’ business but have essentially become so (at least in terms of the owner’s financial return for their efforts) over time: the difference is their owners are working ever harder, they are doing far more now but for less cash, and they are enjoying it less. Why is that?
There are many potential reasons for this. The main reason I see time and time again is that the owners forget to continually ‘smell the cheese’. In the classic management book ‘Who moved my cheese?’, its author, Spencer Johnson, drove home the need for management to keep checking the things underpinning the business, never to assume those things will always be there, and to try different things early. I recommend it for your clients who appear ‘stuck in the mud’: if they don’t have time or the inclination to read it, then download the audio book and listen to it in the car or on the train. There’s no excuse for not doing so.
It’s more important than ever in a sluggish economy to understand your customers, particularly your existing ones. That way you maximise the income from them, by identifying opportunities to sell them more; you can eliminate waste within your own business by cutting out those things your customers don’t need or don’t value; you can tailor what you do or how you do it to provide those things customers really value, making your product or service less price sensitive, enabling you to charge more.
Here’s an article written by John Poole of Oakham Research. John helps businesses understand their customers better:
Why do companies become successful? The answer to this lies in the accepted principles of good marketing practice. That is, that they offer goods or services, of reasonable quality, which meet a need, at a competitive price, are easily available and are known to the end user. But every customer is unique. They have different cultural and life experiences, different expectations and requirements. This is true regardless of the end customer being an individual or a corporate body.
Companies are successful because they supply a product or service which ‘people’ want to buy. Often it is not the best product or the most cost effective product that succeeds, but the product which offers the best overall solution at a reasonable price. A low price is sometimes considered to indicate low quality and good quality products can be marketed at a premium price. A good example is the supermarket offer where the same basic product (i.e. Coffee) can be bought as a low price commodity, a medium priced essential or a premium priced luxury.
Clearly understanding the behaviour and changes in behaviour of your customers is key to future success. Branding and market positioning need to reflect the target audience or be adapted to changes in behaviour. Asking your customers why they buy your products and services provides valuable insight which can be fed directly into your business. It may lead to new product development, a change in advertising strategy, product segmentation, alteration of features and perceived benefits and ultimately underpin business development.
Often companies develop an offer which they believe is the best on the market. For example Sony’s Betamax video recording system. It was considered a better quality product in terms of picture quality, tape wear, design and user friendliness but lost out to JVC’s VHS format which became the industry standard prior to DVD.
Often companies do not know why they are successful and consequently fail to react to changes in the marketplace or miss the opportunity to transfer this success to new customers. Customer research is at the heart of making good business decisions.
Businesses which survive this recession need to understand their customers, that way they deliver exactly what their customers want (and no more), when and how their customers want it, and at the right price. Do your clients really know what their customers want?
When was the last time your ‘stuck in the mud’ client smelled the cheese?
My personal view on most Black Country businesses is that we are good at what we do, we just don’t market ourselves as well as we could. And unless that changes, given that it’s now been widely recognised that the recession will be with us for at least the two years, as a region we will lose ground. There’s a good chance that your stuck in the mud client will go bust in the next few years because his major customer will walk away through indifference, be tempted away by a competitor who has taken time to understand his needs, or indeed themselves go under. And that will hurt everyone, it will damage your own fee levels.
If you should like to contact John to ask how he can help with any of your clients, you can call him on 01384 353910 or e-mail him at firstname.lastname@example.org. John’s website is at www.oakhamresearch.com
In coming blogs I will be talking about why I think British management delay making major or painful decisions. I will compare the stages of mind leading up the making of major decisions to the grieving process when we lose loved ones. You’d be surprised how similar they are!