A few weeks ago, I interviewed the president of a large retail organization. We talked about the economy, his leadership team, and the challenges in his industry. He then summarized the conversation: In the past, you could provide average products with average service and do fine. Now being average means you may not survive.
What Is Changing?
I’ve since talked with many executives with similar experience. So, what is changing?
Unexpected Competition
Sirius Radio has always relied on their varied and unique programming to distinguish themselves. In March major league baseball released an iPhone application that will stream games from all 30 teams. Sirius customers get that now. Only iPhone will additionally offer video clips, live score updates and do it all for $10 for the entire season. Sears is offering to service your car while you shop. Wal-Mart is in the grocery business and Google just announced they are entering the Venture Capital market with 100 million dollar commitment. As one executive noted, “The consumer is measuring you against competition that didn’t exist until now.”
Well Informed Consumers
More than half of patients research their symptoms and alternatives before visiting a doctor for a major health issue. They’ll ask what pacemaker will be implanted, what medications are prescribed. Pharmaceutical companies advertise prescription drugs directly to the public because it works. Few people directly call hotels or airlines anymore to make reservations. They shop for the best price. Before visiting the local auto dealership, a car buyer identifies the ideal automobile online and finds out what the dealer pays for it from the manufacturer.
Speed of Competitive Response
What happened to the yearly sales plan? If your sales promotion, pricing, or product introduction is successful, the competitive response is immediate. One executive explained, At my level, we used to track numbers by product, by location on a monthly basis; now it is daily. We need to be prepared and flexible to change our product mix, pricing, and strategy in real time in response to what customers and our competition are doing.
Customers Are More Demanding
The economy has created a new breed of customers who are focused on cash. They don’t have enough of it; they can’t easily borrow it; and they’re spending as little of it as possible. Over 60 percent of organizations rate “financial pressure to cut costs” as one of their top priorities (up from 36 percent three months ago. Retail operators are seeking double-digit rent reductions from landlords and getting them.
What You Can Do
Your customers or potential customers are experiencing pain and want to know what you are going to do to help them. Here are two things you can do today to help your customers:
Help Them Reduce Costs
Most organizations have had budget cuts. Customers are saying, “If you want me to buy from you, help me reach my objectives with a reduced budget.” So, look for ways to reduce transportation costs, bundle products, change the packaging, offer bulk purchase, extend warranties, or show flexibility in payment options. Accenture, for instance, introduced a new claims and underwriting program for insurers that costs less and reduces the time it takes the insurance company to implement solutions. Offering products that cost less and save time is a winning combination, and now it is especially rewarding.
Help Them Innovate
Most organizations have downsized. Some departments have experienced reductions of 30 percent or more. As one head of customer service explained, “In this troubled economy customer calls are more difficult and time-consuming. We are doing it with fewer people.” These people have moved past the point where everyone is asked to work a little harder. The challenge is to get more done with less. Their energy is committed to getting today’s work done. The resources (time, people, and money) just aren’t available to do much else.
The average organization is having a difficult time. The best organizations, however, will grow even closer to their customers. They know that to earn the business, they need to partner with their customers to help the customer save money and become more innovative.
Originally Published In Leadership Excellence Magazine
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