Giving customers a treat


An article in the Financial Times “Customers more cautious and choosy” [1] provides some interesting pointers for businesses in the developed world facing the prospect of either a painfully slow economic recovery or the dreaded “W” double dip.  The lessons, which come specifically from consumer markets are:

(1) In times where sources of capital are difficult to find, focus on organic growth. This means brushing off marketing, sales and importantly innovation skills. We are talking here about external innovation capabilities (new products, new services, new customer experiences and new markets) not innovation in reducing the cost of internal processes where there has been so much focus over the last decade.

(2) Maintain a broad choice of products and services.

(3) Give your customers a treat. Remember that consumers like a treat even in the worst of times. The cosmetics brand Revlon was, after all, conceived in the Great Depression of the 1930s.

(4) Think very strongly about how you can extend existing offerings (products and services) to other markets. This applies importantly to your core competences as well (the skills, knowledge and experience that makes your business different).

I would like to return to point (3) – Give your customers a treat. You may say that in consumer markets this is all very good, but how can this be applied in the business to business marketplace? Well, treats for commercial customers may come in enabling them to:

(a) Innovate to enable organic growth (the importance of which we have noted above).
(b) Reduce costs in their value chain
(c) Enhance the skills of their staff when training budgets are tight.

Try this exercise. Draw out your business’s value chain (basically a flow chart showing how each function – including “overhead” functions – add value). Now draw out your customer’s value chain. Think how your value chain can add to your customer’s value chain by answering these questions:

(i) How can we help them achieve organic growth?
(ii) How can we help reduce costs?
(iii) How can we help to increase their skills?

The result may be some interesting ideas for “treats”.


References

[1] Groom, B. Customers more cautious and choosy. Financial Times February 8, 2010

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