How Vulnerable Are Your Customers? (Part Three)

By: Curtis Bingham Click author's name for more of his/her articles

In Part Two of this article series, I described the current situation with how customers are feeling vulnerable: Now more than ever, your customers are being bombarded by competitive offers and even some of your most loyal customers are actually listening to your competitors.

Your customers are vulnerable. What can you do about it?

The second question you need to ensure you can answer is, "Why do your customers buy? What are their core value drivers?"

If you know the exact answer to this, you are ahead of many executives in businesses small and large. So many times we suppose we know the answer and are surprised when we find the real answer. In one of my blog posts entitled, "Why Don't You Understand Your Customers?", I described a Fortune 20 company in the midst of a worsening downward spiral of customer defections and plummeting margins, all because they were marketing services their customers didn't understand and didn't value.

Customers buy for one or more of the following basic reasons:
1. Increase revenue
2. Decrease costs
3. Mitigate risks
4. Assuage emotions

The more of these Customer Value Drivers you can address at the same time, the more compelling your value to your customers. Consider these:

-Shorten the sales cycle through the discovery & leverage of specific Customer Value Drivers & Buying Center Behaviors that will avoid wasted effort, false-starts, and botched sales.

-Acquire more profitable customers as you identify the prospect segments that place the highest value on your products/services and are the least price sensitive.

-Differentiate products/services and command premium prices as you refine or tier product & service offerings to reflect Customer-segment Value Drivers.

-Minimize discounting by unambiguously discovering, & justifying financial Value Drivers, or the attributes & characteristics of your products/services that enable your customers to increase revenue, decrease costs, or mitigate risks.

To confirm that you know why your customers buy, you need to ask them. Pick a large handful of your best customers and go talk to them. Ask them the following simple questions:

1. Why do they buy from you vs. from a competitor?
2. What do they value the most (or, if everything else were stripped away, what are the key things that would keep them from leaving)?
3. How your products and services help them satisfy the aforementioned value drivers?

By asking these questions, you will learn the real reasons why your customers buy. Most importantly, you'll learn the critical aspects of your products and services that you cannot afford to cut lest you jeopardize the relationship beyond repair.

In the next article in this series, I'll continue with the third of five things you need to consider as you adjust your Customer Strategy: How to leverage technology to enable you to deliver more with less.

Copyright (c) 2009 Curtis Bingham

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About The Author: Curtis N. Bingham, President of The Predictive Consulting Group, helps organizations dramatically increase customer acquisition, retention, & profitability. For more information about Customer Strategy or Chief Customer Officers, visit his website at www.predictiveconsulting.com or his blogs at www.curtisbingham.com or www.chiefcustomerofficer.com .