Taking Care Of Business Part 1

Every business needs to think about getting the most out of its marketplace. If you're not increasing turnover every year, your business is shrinking in real terms.

Many businesses simply try to pick up extra sales wherever they can. While this opportunistic approach can be effective in the early days, it is unlikely to sustain longer-term growth.

There are several strategic options you can pursue to get the most out of your marketplace such as selling more to existing customers, focusing your customer service and marketing efforts on retaining customers, expanding your customer base to include similar people who are not currently customers, selling through new channels or into new markets and using your core competences to create new products or services.

This blog would hopefully help describe methods you can consider to increase your market share and how to plan, manage and monitor the growth.

Assess your customer base

There are many ways to sell more to existing customers and potential customers like them. But before you start trying to maximise your market share, you need to make sure you fully understand how you are perceived by both existing and potential customers. Work out the key questions

The first stage is to address the core questions about who buys from you, how and when they buy.

You need to be clear about

1. who your customers are
2. what they buy
3. why they buy
4. how they buy
5. WHO ELSE WOULD BUY FROM YOU* see the end.
6. the typical budget of existing and new buyers
7. where else they buy from

Remember that the reasons customers buy from you now will not necessarily be the reasons they buy from you in six months or a year's time. And if you consider expected trends in customer behaviour and your market, you may be the first to exploit a niche and gain market share quickly.

For example, how will your customers prefer to place orders? While they may prefer a phone call or face-to-face visit now, is there a trend in your market for online ordering systems? If you are one of the first businesses in your sector to offer the facility, you could gain significant market share.

Predicted future developments in your marketplace could also provide significant opportunities for growth. For example, with the growth of home computing, IT support has developed from a mainly business-to-business service to a larger customer base of consumers.

Use your research to get as clear a picture of the future as you can. It's often difficult to predict with certainty - but the more you know about how your customers and market will look in the medium to long term, the more likely you are to successfully build your market share.

Sell more to existing customers

It's often easier and more effective to sell more to existing customers than it is to acquire new ones. Once you understand why your existing customers buy from you, you can examine ways of getting them to buy more or more frequently.

Golden rule

The Pareto principle - often referred to as the 80/20 rule - says that 80 per cent of your success in any given field is often due to 20 per cent of your effort.

You can use the idea as a starting point to analyse how you can sell more to existing customers. For example, if a small number of your products and services account for most of your profit, can you sell more of the less profitable products to your customers? Or if your higher-margin products or services are only being sold to a small percentage of your customers, how can you raise that percentage?

You can increase market share by getting customers to buy more frequently.

If your research shows customers buy at a particular time, make contact with them just beforehand. For example, if you know that a business buys its stock from you at the end of each month, a courtesy phone call, email or letter in the middle of the month can be effective.

You can also add value to your products and services to ensure repeat business. For example, is there anything you can add to a service at little cost that is useful to your customers such as a free overall 'tune up' every time they send their car or computer in for repair?

Where appropriate, encourage customers to buy a premium product or service that better meets their needs and provides a superior return for you. This is known as 'trading up'.

You could also offer purchase incentives and price promotions on items that they usually buy from competitors, such as 'buy one get one free' or 'buy for ten months and get two free'.

It's also useful to focus on selling complementary products. For example, hairdressing outlets sell hair care products for customers to use at home.

Get old customers back

If people have bought from you before, they may buy from you again. You need to find out why they stopped buying from you and apply that knowledge to regain their custom.
Find out what changed

Identify why customers stopped buying from you. Consider whether your product or service is:

1. no longer necessary
2. too expensive
3. unsatisfactory
4. being beaten by a competitive offer

Rebuild contact with your customers

Research suggests the reason many customers stop buying is because they don't feel that they have sufficient contact with their suppliers.

Try to have some form of regular contact - eg monthly or quarterly phone calls, formal or informal visits to customers, mailshots or email newsletters - so that customers don't feel they are being ignored and look elsewhere.

If you have lost a customer for this reason, your first step is to rebuild contact and prove that you understand and are focused on their needs - eg a letter expressing regret that they have stopped buying from you and making them a time-limited offer.

It's worth trying a few times, but don't persist if you aren't getting any response. Many businesses have a limit to the amount of times they contact lapsed customers - usually five or seven times.
Make an offer to tempt them back

When you know why the customer is no longer buying from you, consider ways to make your business more appealing.

For example, if your price was viewed as too high, consider a time-limited discount to encourage them to start buying again, for example 20 percent off for three months.

If your service was unsatisfactory, ask what you could do to make it meet your customer's expectations and assess if it is possible and profitable for you to adapt your service for the former customer.

While you may be able to tempt many customers back, remember that you don't want them at all costs. You want to build a long-term profitable relationship. It's not usually a good idea to make long-term offers that don't contribute any profit just to get a specific customer back, unless there are compelling strategic reasons to do so.

All these actions should be built into your marketing plan. The faster you contact a lapsed customer, the greater the chance they will come back to you. See our guide on how to write a marketing plan.

*We all know WAU is a mountain of information and opportunity. We're all consumers naturally, and we can help each other to improve WAU member businesses. In my time in Sales, especially in Recruitment - sharing leads information between branches eg, during my time as a Consultant for an American owned business, Labour Ready UK Temporary Services / Labor Ready in America and Canada later known as Trueblue Inc. Actively encouraged this between branches and across the Atlantic. American organisations would open up in the UK and vice versa etc this resulted in many new business clients and a major increase on the bottom line. Think about this when you're looking for a new client/customer or a new employee - WAU could unlock further benefits above what it is currently used for.

I've not finished writing this blog, but know it's very lengthy so will leave part 2 for another day.

Chris B.
blackgoldrecruitment.com