Unfortunately for many companies, they still tout their love of customers as their main strength. If you think about it, though, who DOESN'T love their customers? Buyers of your products are who keep the doors open; without them, you would have no business. So, of course, you love them to pieces. It's a give!On what, then, should companies focus their attentions? The article states some interesting statistics that help put it in perspective. For instance, if a company experiences 6% growth each year with it's current customer base, it will double its business in 12 years. That's not bad, but, especially for companies with high growth potential, that could be increased dramatically by focusing efforts on gaining new loyal customers. That's right: NEW customers!
Remember the old adage: it's more expensive to gain a new customer that to cultivate an existing one. Does this new focus mean the adage isn't true anymore? No, of course not! It's still cheaper to keep existing clients. That means that less time and energy has to be spent to keep them happy. Now, what can you do with the extra time? Get NEW customers!
-MJP
Love this post. This is the reason smaller innovators can take down the giants. They have less overhead, which means they don't need the margins the giants require. Giants look past the innovative solutions because they don't fit in their profitability formulas. Innavators can offer more competitive prices and slowly take market share from the giants. As the innovative products become better engineered and more mainstream, the Giant has already lost out. The innovator has first-mover advantage and brand loyalty (if they've done things correctly).
ReplyDeleteIf the giants want to innovate, they'll have to move the forward-thinking projects out of their current system. They need time to mature and bloom. If they're stifled by the current bureaucracy or financial demands of the corporate, the giant won't ever experience the benefits of the innovative product or the new customer base.
For a better explanation see "Innovator's Dilemma."