I have been involved in a series of meetings with business owners regarding problems in their companies.
Declining sales and market share due to international competitors, inability to compete or a decline in the entire industry sector are some of the reasons mentioned.
Solutions that were discussed and debated including cutting costs of raw materials, increasing worker efficiency, lowering logistics costs, streamlining the administration and related costs, government intervention and protection, outsourcing and even forming alliances with the international competitors.
What struck me as incredibly odd was that not once were the customer’s needs mentioned.
Not once did anyone mention creating new ideas, products or services for the customer.
There was no discussion of investing in new technology because “things are difficult now”.
There was never a comparison made between the marketing and promotion, branding or image of the competitors versus the company’s marketing, promotion, branding and image. Why not?
Every comment or observation focused on lowering production and logistics costs to the customer, never on increasing the benefits to the customer.
All that mattered is “how can I sell at a lower price”.
That’s right. The entire future of these companies, and in some cases entire industries are focused on how make their products for less. How to beat the Chinese, Indonesia or Brazil or whatever developing country has access to cheaper raw materials or labor.
Common sense tells us this is not a viable, long -term solution.
Each of these companies has stated in their publicity, website and in their mission statements that their focus is on the customer and on customer service. Why aren’t the customer’s needs and future needs part of the search for solutions when sales are declining?
If the customer really truly cares only about price, your product is a commodity.
If the customer only cares about price, they don’t care about your company’s service, advertising and promotion, attitude or participation in their business.
If you really think that the low price will guarantee the sale, cut out the customer or technical service. Take away financing. Take away delivery and logistics. Forget environmental and worker protection. Reduce your inventories. Standardize your prices and order sizes. Cut down on sales and promotion.
Call me when your sales skyrocket and the money pours in.
I suppose it’s normal when sales fall, to attack costs, and costs are a fundamental element in being competitive in certain goods and services.
It is not the only element. It may not even be the most important one for your customer.
It probably is the easiest area to change quickly, and requires no investment. People like easy solutions that don’t require investment.
The relationship with your customer, the ability to meet their needs with your product or service and allow them to make a profit is what makes business click.
How well do you know your customer?
What problems are they facing?
Is your contribution to their product important, significant or fundamental in their success?
Do they see you as simply a supplier of a commodity or an integral part of their supply chain and future?
Have you explored how you can work with them to make them more competitive?
Once this has been accomplished, bring the results to the boardroom and start the discussion of how to aid declining sales and deteriorating margin.
Don’t stop with the easy solutions.
Look for the difficult solutions, the ones that require compromise and long-term commitment.
Look for solutions that require investment of resources; time, money, and ideas.
These are the solutions that the competitor focused on cost is not interested in.
These are the solutions that will provide confidence and mutual opportunities for growth.