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Growing Client Value in Tough Times

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  1. Yes it may be tough out there, but clients are still spending, although maybe less. So how do you leverage this downturn to your company’s advantage in ensuring you maximise your share of wallet within selected clients?
  2. Clients are more critical now than ever. Three steps outline how to maximise them for your business.

We live in a turbulent world, where no one, inclusive of politicians and  economists seem to know as what is happening tomorrow, let alone in three, six or 12 months. In fact the most accurate forecasters at the moment are the weathermen and ladies on our TV screens!

As professional marketers, we need to appreciate and understand that business has to go on. Yes, companies and consumers may purchase less than they have been, but purchase they will. To ensure that your organisation not only survives, but in fact grows in the current tough times, clients’ needs need to be understood and met, even more so. Those organisations that have consistently been able to understand their clients’ needs have developed a strong relationship that will see them through the tough times ahead.

In fact a poll recently published by Harris Interactive indicates clearly that although price is important in a purchasing decision, it is outstanding service that really is the key influencer.  Superior or service excellence rated 52%, whereas price rated 38%.

Your Client Service Bank Account

The good news is that those organisations that have made an effort to build client loyalty through exceptional client service will find themselves at least partially insulated. They have a credit in their client experience account at the bank. In tough times people like to deal with organisations who have a genuine track record of caring or having gone that extra mile. Organisations that have been ignoring or otherwise abusing their clients will suffer now. Their client experience account will be overdrawn before they now it. Red ink will flow!

As the table below, courtesy of the Peppers and Rogers Group, clearly shows, the key in tough times is to focus on your existing clients. They too will have additional challenges and pains in guiding their company through difficult times. In knowing them as you do, what is your business able to do in assisting them in meeting these challenges and in so doing growing your share of their market space, whilst at the same time, building the loyalty effect.

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To quote Don Peppers “Clients have memories. Their service experience today, if positive, will enhance their future value to your company, a critical consideration in an uncertain economy.”

Clients Rule – especially in an uncertain economy.

There are really three primary reasons for this, outlined below:

  1. Clients give you ‘growth’

What’s growth? The knowledge that even in the worst economic downturn, there will continue to be clients who will be spending. Some may even increase in value. Some will pay a premium to remain with you, rather than incur the expense and inconvenience of moving to a competitor. Don’t focus on new business; rather focus on assisting those clients that are prepared to build the relationship.

  1. Client retention is a strategic capability.

In an uncertain economy, losing clients, especially good ones, is a huge cost to carry, as they will be very expensive to replace. The cost of retaining clients is proven to be 10% of the cost of acquiring new ones. Hence solidifying these relationships is a strategic capability based on Trust. Also, new business opportunities are declining as M&A will grow during the coming upturn. Further, Standard and Poor’s recent index of company longevity shows that it has dropped from an average of 84 years

in 1935 to just 15 years in 2005. What will it be after the current downturn, say in 2012? Less for sure!

  1. Investments in client relationships may be made incrementally.

By prioritizing your limited client services resources against the subset of most valuable and most growable clients, spending may be refocused, driving retention and increasing revenues and profitability through specifically identified client segments and/or clients.

So moving into 2009, the key message is that relationships become even more important than ever, given our economic challenges, both in SA and the world as a whole. It’s also important to understand that these uncertain times aren’t going to last forever. However the strength of the relationships that organisations build with its clients will endure and indeed gain in strength.

This article, I hope, will assist you in making smart decisions in so far as client relationships are concerned, that will not only assist you and your organisation in turbulent times, but also position them for the upturn when it arrives.

Andrew Clare is Managing Partner of reLiance a business to business relationship marketing practice. We focus on improving client profitability through developing, implementing and measuring sustainable, collaborative business to business relationships.  This e-mail address is being protected from spambots. You need JavaScript enabled to view it , www.rassa.co.za

 

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