We all lose a customer at one point or another. The first reaction is to push the sales force to replace the gaping hole in sales. What else? Do not miss this opportunity to revise your strategy. A client departure cannot be taken lightly and demands self-examination at every level of the company.
The first question that you should ask yourself is whether or not this event is isolated or a symptom of a change in the industry. Then you have to figure out if an external or an internal factor triggered this decision.
By external causes we mean:
1. Production delocalization, to China for example.
2. Bankruptcy or acquisition of client by a competitor.
3. Product line elimination
4. Personnel change
5. Process change
The internal causes represent the failures of the company to adapt to the needs of its clientele:
1. Non-competitive prices
2. Poor quality
3. Below expectation service
It is not easy to recognize our own faults. How many times have we heard that prices or quality or service is not the problem? The issue is with the customer unrealistic expectations. Beware: being “unrealistic” can be contagious. Internal causes should be address immediately.
If the causes are external, the supplier should still reconsider its market strategies.
Take the example of the loss of a customer who represents 10% of the total sales of the company, the plant or the unit and 55% of its sales in a specific market niche.
1. Should you continue to support this niche?
2. Should you reposition your human and material resources in other markets?
3. Can you transfer the expertise from this niche to another?
4. Would you be able to rebuild a clientele for this market?
5. Is there enough volume left in this niche to continue to prospect in it?
6. Should you redeploy your efforts to conquer other market?
7. What culture change would this require?
8. Will the other customers adopt the same behavior?
9. Are there any other markets that look more appealing now?
The sales force must be guided by a well-defined strategy. A customer is not replaced simply by calling on more prospects. The leaders must create a strategic advantage in each of the markets that they have decided to pursue. The Sales representatives should then be able to communicate the added-value to the prospects and customers in the markets identified by management during a strategic planning exercise.