Today we have a guest blog from Elizabeth Andreini:
With apologies to Bob Dylan, the title of his song and album often comes to mind as I watch today’s dynamically shifting business landscape. You probably feel it too. The market is shifting, your competitors are making adjustments, customers’ needs change and your business continues to evolve. Nothing stays still for long.
One of the most challenging situations occurs when your business evolves so that your target customer isn’t the same as portions of your existing customer base. Your customers’ business needs may have shifted and you may no longer be the best match for one another. Other times a customer base is built opportunistically, and becomes a hodgepodge of different customers with different needs and wants, and these conflicting requests become a strain on company resources. Sometimes a low price competitor comes in and targets smaller customers who are more price (than value) driven and starts eroding your market share.
Here are some of the topics you might consider when you need to focus resources and clarify customer fit and changes to your ideal target customer:
Fit & Alignment
- How profitable are your existing customers? Are certain segments more profitable for you or are there certain situations where the solutions you offer are a better fit?
- Has your target customer changed or are your current customers’ needs changing so they want different products and services?
- Is your customer base a better fit for your older products & services? Have newer products & services been more successful with different types of companies? How similar are these two groups?
Transitioning
- What is the level of effort and cost it takes to service your current customer base? How far are you willing to go if a customer insists on a product or service to keep them but it isn’t one you want to offer broadly?
- What is the process for proactively deciding if you want to continue to meet a customers’ product (and services) needs? If you don’t, how do you mitigate the risk of them leaving or creating dissatisfaction in the marketplace?
- Do you want to “grandfather” existing customers so you continue to serve them while you focus on new or different customers and passively allow customer turnover?
Alternative Considerations
- Will holding on to your existing customers help block any competitors? What, if any, extra work or services will you have to provide to keep them satisfied? What is the resource cost of providing these extra services?
- Are there alternative products and services that can be offered to customers and others in their market segment if their needs have changed? Would a “lite” less expensive offering or a differently bundled offering keep them satisfied?
- How different is your ideal customer from your current customers? Is the difference size, type or location? What are the similarities and can you leverage any portion of your current customer base to help you move into a new market?
Not every customer is profitable and although it can be hard saying goodbye to a long-time customer, sometimes needs and the price a customer is willing to pay are no longer a fit for your company. It helps to take a step back and make sure customer needs and wants, what they are willing to pay and what you want to offer are still in alignment. Every choice a company makes has a resource and opportunity cost that limits your business’ ability to pursue other choices so make sure you are saying “yes” to the right customers.
In addition to providing experienced executive insight and guidance, Elizabeth often works as an interim CMO or VP to provide the hands-on leadership needed tore architect marketing and product management and improve execution from the inside.
