Why change may make your customer results worse

Why change may make your customer results worse

What changes are your customers making today that may impact your relationship tomorrow?

This is one of a dozen questions every organisation and key account team must ask.

Why? Because each change made by a customer today is a step away from your relevance to them in the future.

Let me share two examples.

Manufacturing company

In 2019 we began working with a large manufacturer of silicon products. Over a number of years as taxes and new regulations drove-up their costs. They began to see 20% of their customer base move to explore manufacturing overseas to reduce their own costs, access new markets and grow their profits.

As a manufacturing company primarily based in the US and Europe it would take a tremendous amount of resources to scale fast enough, identify a partner, go through proper due diligence, form new agreements, resell this back to their customers. In fact they had very quickly equated the cost of time, energy, resource and infrastructure as close to 10 million.

What do they do?

Digital Company

Take another company providing unique market intelligence for large global organisations in the pharmaceutical and retail industries. They realised two things:

  1. The growth of IOT brought in rapid entry of competitors offering innovative and quick access tools for organisations.
  2. The tools allowed organisations to do things themselves at almost 50% less than the cost of doing business with them.

In response to this the digital company could attempt a number of things.

They could make an acquisition, restructure their product so there is a DIY option with connected resources, buy in more specialised engineers to design a new product, get clarity on their key strategic customers, segment on priority and focus on co-creating something with a handful of key customers.

All of these could be an option.

What do they do?

The Change Decision

In both scenarios, the two organisations had to make some very important decisions.

What do we do when a customer pivots and you haven’t?

What if what you have on offer is no longer as relevant to your customer?

Many would call this a time to “pivot”.

Believe it or not, there are different kinds of changes that are made in business. And you must know the implications of each.

Pivoting is one type of change and an important change to master when managing and supporting your customers.

You must understand what kind of change you want to make in order to understand what change is needed.

Let’s explore four types of change.

The four types of change

Each of these four types of change is vital to understand, so you are aware of their varying implications.

1. Pivot

This happens when you recognise the need to implement a completely new course of action based on a perceived change by a customer or market.

2. Adaptation

This occurs when an organisation needs to respond to dramatic change that impacts the way many aspects of its business and relationships interact with other internal or external stakeholders or entities.

Check out Hyper Adaptation for reference.

3. Transformation

This is when an organisation decides to make a shift that impacts all areas of its business practice in order to gain a perceived future business outcome that will give it some enhanced market advantage.

4. Improvements

This takes place when you recognise an existing asset, resource or process isn’t optimised to perform better.

How does this help us?

In a time when we’re constantly having to change, the kind of change used helps to give focus on the kinds of questions you may ask before committing to a change.

This becomes even more important when viewing how our customers are changing or not changing to decide if the kind of change is worthwhile.

What is customer pivoting?

Often when the word “pivot” is used it is usually within a story of a person or organisation making a huge change in a time when they’re in some kind of trouble.

This is not a healthy way to view pivoting because it creates a reactive approach instead of it’s best use. Pivoting can be extremely valuable if applied to a customer context.

Customer Pivoting is the process of adjusting your current resources, capabilities and assets to come in line with a current or new customer’s present or future solution needs.

You could easily add market pivoting, process pivoting etc… depending on the case.

There are many well-known companies that have chosen to pivot and won in somewhat challenging and opportune times. Organisations such as…

  • Twitter
  • Nokia
  • HP
  • Starbucks
  • Nintendo
  • Instagram
  • Avon
  • Suzuki

Now, any pivot decided must be done with considerable planning and thoughtful execution.

There are three starter questions you must begin with.

Three important considerations for commitment to a major pivot with your customers…

Is this pivot about your customer or your industry?

An important question to consider especially if this move is about your industry, as it won’t be long before your other customers take the leap as well. If this is about a specific type of customer then it’s important not to be reactive and move impulsively out of fear.

Take the situation of the silicon manufacturing company...

They were in a real predicament. Working with them, we identified this as a customer based situation. So instead of reacting we took a step back to…

  1. Better understand what has brought the quick change.
  2. Know where the client is heading – goal or new outcome.
  3. Understand the core challenges.
  4. Evaluate what of the products or services are still relevant.
  5. Determine based on current allocated resources the most important pivot needed to engineer greater confidence and trust.

As you can see there is a whole list of things to consider.

The result!

With one single pivot, focusing on becoming a channel partner to the customer, they kept 92% of their customers and developed a new service line that allowed them to offer greater cost savings for customers while remaining profitable.

Not every pivot is a huge investment and neither was this.

They identified existing assets and relationships to enable the “customer pivot” to happen.

As a Key Account Manager or Director you must begin with identifying the difference between the customer and the industry.

Does this pivot fit in with your core proposition and offering?

We can all become very attached to the customers we work with. This is hard as no one wants to have that feeling of a customer slipping through our fingers.

The solution can seem easy. Just give them what they want!

We can feel compelled to be the jack of all trades to your customers. But you must be aware of what you don’t do, what you can do and what you’re willing to do.

This comes down to one thing…

Does this pivot fall into your core message?

Considering this one thing means you help solve for your customer what they came to you first for.

Take the situation of the digital market intelligence company...

They were in a relatively strong position but had become very vulnerable to new entrants in the marketplace, and this was not going to slow down.

They recognised that their customer really wanted more flexibility and variety to manage their own account, and get insight in a more readily available way.

This wasn’t a drastic change in solution, it was a change in the delivery of the solution. The customer was willing to sacrifice the initial visual aesthetics of the material for functionality.

The result!

We met with a select number of customers to have them trial this more flexible and accessible approach across multiple different departments.

The company was able to retain a $8 million portfolio of customers and spent less than $10,000 in the pivot. In the process it increased the number of users as the customer departments usage increased.

This situation may not be true for everyone.

I encourage every team and organisation to be honest about where your product is and isn’t. But this must always be done through a positive lens.

I’ve often found that the more transparent and collaborative you are, the more credibility you gain as your customers know you’re not just out to keep their money.

This deepens trust.

Do you have the capacity and resources to produce what your customers actually want?

I’ve seen this blow up in many businesses’ faces.

An overpromise here, a quick solution made up there, that gets presented to the client in a nice bow; sound familiar? Only for the result to be met with an unimpressed group of faces or worse still the customer eventually going with another company.

There are times when being resourceful is needed.

Saying yes, as long as it is in line with your proposition, can lead to creating new and better opportunities.

You can only do this with a clear and strong view of your actual capabilities. That often isn’t easy to understand.

Before saying yes, go one or two levels deeper.

  • What does your customer want?
  • Where are the gaps to providing this?
  • What are the possible, creative or collaborative ways to provide this, while maintaining quality of results?

If what is needed requires more effort, resource and time than expected, is it still worth pursuing?

This last question is something for you, your team and business to decide.

If you’ve answered the first two questions this last one should be easier to determine.

What next?

What kind of situation are you faced with today with your customers?

How do you evaluate the kind of change you need?

The identification and management of change in any organisation will often make or break a business or kill a customer relationship.

If you don’t have a known, understood, practised and proven framework for generating the results you want most with, and for your customers get in touch with me and my team.

Or get connected to the customer growth weekly emails for your growth and development.

Wishing you success as you become the kind of adviser your customer never wants to leave.