As the first wave of businesses opened up these past couple of weeks, it is critical for business owners to cut through the noise and focus on the three things that matter most, to lead the way to preserve and restore revenue as well as profitability, rebuild and grow your business:
#1: Truly Understand Your Existing Customers.
All we will need here is a pen, a note pad, some Excel work, and the willingness to keep asking the hard questions until we find the ultimate answers.
A. Understand the impact of COVID-19: first and foremost, try to gain a thorough understanding of how COVID-19 impacted different customers differently, and see how the product and services you provide can add value to your customers’ recovery efforts. Communicate to them that the purpose of your company and your team remain the same as before the crisis: you are with them every step of the way to service their needs.
B. Concentrate on your most important customers
1. The most profitable customers: Who are the 20% of your customers that accounted for 80% of your profit? If you are not exactly sure, this is the time to figure it out. More often than not, they are your most loyal customers throughout the years and you have the largest share of their wallets. Can you list the 5 things that are most important to their businesses? Can you list the 5 reasons why they have stayed with you all these years? Are they well aligned? If not, how can you fill the gap? If there is such a thing called “above and beyond”, they are the group of customers to offer it to, and this is the time you make that offer.
2. The largest customers in terms of purchase volume: We all have those handfuls of customers that represent a large chunk of our businesses. Even though they may not be the most profitable, we hope they are still here today. Ask yourself why they bought from you. How have any of their value drivers changed through the pandemic? What are your plans to better serve them through the crisis?
C. Take a hard look at the few customers you can no longer afford: We all have those. They file the lion’s share of all the complaints, consume all the resources for the customer and technical services, refuse to accept every price increase you implement, switch back and forth between you and your competitors, and fuss over every single discount available. Change their behaviours, lower the cost to serve, otherwise this is the time to cut them loose.
D. Other existing customers: they vary from industry sectors, geographic locations, size, and type of companies. But what are the key basic elements that really separate them from each other? Purchasing decisions, behaviours, needs, the way they use your products or services? The point is you can not be everything to everybody. Find the underlying characteristics that differentiate them and service each (group) customer differently, based on their distinctive needs and wants. No matter what, it is always easier and much cheaper to take care of your existing customers than to go find new ones.
E. The customers who recently left you before the pandemic: pinpoint the reasons why they stopped buying from you. Reach out, and understand if and how COVID-19 changed their requirements. Make changes if feasible. Offer new and other products they have not considered previously. Communicate the changes you have made and convince them your value is better aligned with their needs under the changed conditions.
Revenue streams of most companies were hammered by the COVID-19 outbreak. All businesses strive to contain cost and conserve cash flows, which makes any sales marketing efforts increasingly competitive and difficult. It calls for companies to do a little “soul searching”- looking backward a little before moving forward:
#2: Focus on defining and reinforcing your unique market position and what makes you distinctive among your competitors
All businesses started out with specific visions in mind, different problems to solve, needs to fulfill, and segments of customers to serve. Over the years, incremental changes were made, activities and functions added, products and service portfolio expanded, and scope increased. As a result, companies in selected industries are more and more alike as competitions intensify.
A. Reinforce your unique market positions – the selected groups of customers you chose to serve and the way you decided to serve them (your business model). What has changed in most recent years? What are the factors that drove the changes? What is the impact of COVID-19 on the selected groups of customers and the impact on your business model? Are the market positions still valid today and in the foreseeable future? What would you have to do to adapt?
B. What makes you distinctive? A company’s products and service offerings are the direct output of activities performed. What activities do you choose to perform which are the most different from your competitions, and most effective? You can not offer products from A to Z. What products and service items you provide are the most distinctive vs. your competitors? What customers value your products and services the most?
The answers to these questions define your core uniqueness if I can call it “what you do best” for your selected customers. This is the time to focus on “what you do best”, fixate on doing it even better, and let your customers know it every chance you get.
C. Dramatic changes bring new opportunities: COVID-19 pandemic changed almost all aspects of business, from supply chain to sales marketing channels to customer behaviours. Many changes and impacts are here to stay. It is crucial to gain a thorough understanding of how the current crisis impacted different customers differently, and make the transition accordingly, with determination and full embracement.
Many businesses’ revenue dropped 70% – 90% in a few weeks. There are always competitors who fare worse than you. Focus on your core customers, focus on “what you do best”, make changes quicker and earlier than your competition. Don’t let perfect get in the way of fast!
Amidst deep budget cuts and depleted resources, the four P’s of marketing are still the tried-and-true tool-set business owners should fully leverage to pave the path for recovery. This leads to the 3rd B2B business fundamental to focus on to restore revenue and profit, rebuild and grow your business:
#3. Marketing mix, during and post COVID-19: Product, Price, Promotion, and Place
A. Product: includes tangible and intangible aspects related to a company’s product offerings, such as product variety, quality, design, packaging, features, brand name, services, warranty, returns.
1. Product portfolio decisions: You can not be everything to everybody and offer products from A to Z for your target markets. In current crisis conditions, it is crucial to focus on existing customers and concentrate on the “most important customers” as we discussed in Part 1, with the products that these groups of customers value the most. The simple worksheet below could be a valuable tool to help you narrow down your product offerings while faced with scaled-down operations and decreased demand:
Ask yourself: what are the 20% of the products that generated 80% of the revenue, before the pandemic? Currently? More importantly, what is 20% of the products that generated 80% of your profit? How has that changed during the COVID-19 outbreak? What specific factors drove that change? Which (group) of customers largely impacted that change? What can you do to adapt and leverage the changes?
2. New products and innovation: Surviving through the crisis remain the ultimate focus. But do not lose sight of the fact that dramatic changes often create new opportunities. How did COVID-19 impact your most important customers? How did it change their behaviours, their needs, the way they service their own customers? How do you change your process, your product features, product performance to better serve your customers? All your competitors are struggling. Be the first one to beat the drum, embrace the changes, identify and fulfill the unmet needs of your customers.
B. Price: includes list price, discounts, rebates, allowances, payment period, credit terms, sometimes prices could also include or exclude logistics, shipping, packaging, and other related cost items.
1. Think really hard before you reduce your prices: All companies tightened their belts during the pandemic, even for the purchases deemed “essential” in the “regular” times. But cutting your prices may not generate more demand for your products this time around, as COVID-19 created shambles across all industries among all your customers. The temporary jump on purchase volume from price reduction may not offset the erosion on your bottom line. Don’t let short term gain destroy your long term value.
2. Exercise discipline when you offer discounts: Only offer short term price concessions to retain and attract strategically important customers, including key customers from your competitors. When you do, first explore if other pricing options, such as credit terms, or a combination of a couple of other elements, better meet your customers’ needs and specific situations. Think beyond just the products, communicate other components of the value you bring to the table.
C. Promotion: It is how and where you communicate to your target audience, attract and convert prospects into customers. It includes sales promotion, advertising, PR, direct marketing, so on and so forth.
For many B2B product and service providers, the primary marketing vehicle, e.g., events such as trade shows, become unavailable for the foreseeable future. It is almost a cliché to mention COVID-19 pushed digital into the forefront of all platforms and tools companies utilise to communicate and connect with the market place. It forces companies to adapt and make changes quickly. Books can be written on this topic. No matter what you do, the focus should remain to define and reinforce your unique market positioning and the differentiated value you bring to your target customer segments.
D. Place: It refers to the physical locations where customer transactions occur, which consist of distribution channel, warehousing, and inventory, location and coverage, product handling and transport, etc. For a B2B business, the choice and decisions you make on channel or “place” are detrimental to your company’s margin performance and “value” delivery to your end customers.
Besides innovation and new product development, the review and change of “place” for B2B business require significant time and resources to implement. The results will have a long-term effect on the overall business. From this perspective, dust is not quite settled on the impact of COVID-19 across the various industrial sectors.
Right before COVID-19 jolted the world into a screeching halt, we just had the longest-running bull market in history. Let the economists debate if the recovery would be a “V”, “U” or whatever shape they forecast, we have businesses to run, people to take care of, customers to serve. First of all, ask: What opportunities will COVID-19 create for me? If you don’t have the answers, you should ask yourself again, and again, until you do.