The Customer Is the Boss
Delighting current customers and attracting new ones is the key to building a sustainable business.
The purpose of a business is to create a customer and then keep that customer by serving her or him better than any competitor can. Most small businesses don’t fail because they run out of cash or financing. They fail because they don’t attract or keep enough customers to make their business viable.
And, yes, there is more funding available to start new businesses than to help small businesses that are already up and running. But there is almost always funding available to support a growing business that knows how to build its market and customer base.
Know your customers
To be successful, every small business must find a way to create new customers and to serve existing customers well. Small businesses need to build a strong base of established, loyal customers while also bringing in a regular flow of new customers to grow steadily and sustainably.
In a situation like the one we’re facing today, customer acquisition and retention are critical. Who are your customers? Do you know them by name? Can you count them? Can you count on them, and can they count on you?
Now is the time to get as close to your existing customers as you possibly can. Understand their needs and wants—not only those they can articulate, but also the ones they cannot, so you can anticipate and serve those needs better.
Remember the 80/20 rule: Many businesses generate 80% of their revenue from 20% of their customers. Believe it or not, some big, multibillion-dollar businesses I’ve worked on have generated more than 80% of their sales from just 10% of their customers...and one big business from less than 1% of the market. What does your data say about your business and your customer base? Do you know who your best customers are? Do you know what they’re worth in terms of sales and profits on a monthly, quarterly, and annual basis?
Grow your customer base
First things first. In this public health and economic crisis, do everything you reasonably can to hold on to your current best customers. Reach out to them. Tailor your product and service offerings to meet their current needs. Step up your level of service. Are there other products and services you might be able to provide?
Then, be adaptable, agile, and opportunistic.
Are there unserved or underserved customers in the market right now who could use your products and services? A lot of e-commerce and other retailers, and even a lot of restaurants, have picked up new customers and additional sales simply because they were able to stay open and pivot to provide flexible and agile product, service, and delivery options.Finally, do you have the capacity, energy, and time to devote to new point-of-market-entry customers?
Just about every category of business experiences a continuous flow of new prospective buyers and users. Knowing who these prospects are and, more importantly, how to reach them and encourage them to try your product or service offering can be an important part of your business strategy and plan.
A.G.’s perspective: Introduce your BRAND
It can be something like - A free gift pack of Pampers Swaddlers for a young mother right after she delivered her baby. Free samples of Tide in every new washing machine. A free Gillette razor as a gift on the 18th birthday of every young man. A free Crest toothpaste and toothbrush with every dental checkup. At Procter & Gamble, market-entry sampling programs like these introduced new-to-the-category users to our brands, products, and services, and in many cases began a long relationship of regular purchase and usage.
Is there a way for you and your business to reach out to new-to-the-category users, to newcomers to your town, to high-potential customers to complement your current established base? (If you’ve already done this, I’d love to hear your story).
About the author
A.G. Lafley is the former CEO of Procter and Gamble, who worked for decades in and with large public companies. Over the last 15 years, he has turned more of his attention, energy, and time to small businesses and nonprofit organizations. He currently serves on the boards of Omeza, Snapchat, Tulco, Hamilton College, and as the founding CEO of the Sarasota Bay Park Conservancy. A.G. is the author of two best-selling books, The Game Changer about innovation and Playing to Win about strategy, as well as numerous articles on leadership, management, and business strategy for Harvard Business Review.