Business strategies to bolster your customer base
EVERY day brings new news of turbulence — the Chinese stock market crashes, falling steel prices, the rand at a low, the threat of recession — and business confidence is at a 16-year low, according to the South African Chamber of Commerce.
When confidence falls leaders can become like rabbits trapped in the headlights, unable to think clearly. The result can be panicky, short-term thinking rather than effective leadership. It’s at times like these that the knee-jerk reaction can be to work longer hours and do what you already do, but harder.
The problem is that your customers are also feeling the pressure and scaling back on their purchasing activity, as the Standard Bank purchasing manager’s index, produced by Markit, shows.
As output and new orders decline, your customers are under pressure and will likely want you to give them the same, or more, but at a lower price.
Your competition will also be trying harder so merely pursuing a “me too” strategy won’t cut it. If you don’t lift your game you risk losing relevance and seeing your margins eroded. Paradoxically, now more than ever is the time to make a clear-headed appraisal of your situation and develop a strategy to thrive, or at least survive, in challenging times. other? As a supplier, can you offer a difference that locks customers in and sustains prices?
What is the risk of new entrants? Can other people easily enter your market? What are the barriers to entry? If these are low, then again you can expect a downward pressure on prices.
How easy is it to substitute your products? If customers can find good alternatives for what you offer then you risk losing relevance.
What is competitor pressure? How will your competitors react to the challenges you both face? If they get better, faster or cheaper, you are under threat.
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