Time to flex your muscles with clients
One of my clients, like many businesses, found the recession very tough. They dropped their prices, took on low quality clients and over-serviced clients at unprofitable price levels. They found themselves having transactional ‘buyer-supplier’ relationships based on ‘doing’ rather than ‘peer to peer’ relationships based on being trusted advisers delivering massive value through their expertise. How should they now increase their prices? How should they tackle dysfunctional client relationships? How should they tackle scope creep and over-servicing which can cost a fortune? Every week I work with clients helping them improve their profitability, increase the confidence to increase their prices and be more successful. The techniques and strategies I demonstrate in my workshops work the majority of the time.
“The power balance is shifting away from the buyer to the seller”. These are not my words, they are the words of the Procurement directors’ trade magazine. Many businesses are experiencing growth and increased optimism over the past 12 months. However some are also recognising that they have made decisions during the recession which they now need to change or resolve. So how should we take brave decisions? What steps should we take to ensure we are in a better shape to ride the upturn over the next 12 months?
Hoping things will improve is not a solution. Hope is not a strategy. You have to take responsibility for improving your pricing and profitability. There is no Tooth-Fairy or Father Christmas. It’s down to YOU.
- Review your pricing. If you haven’t increased your prices for several years, this may be the time to have a price increase? Price is the number one factor to improve profitability. If you don’t get your price right you will be on the back-foot. I appreciate it is not as simple as just increasing your price. In my workshops we practice how to have grown-up conversations with clients about price. Rehearse your conversations. Do it when you are feeling confident such as just after winning some new business. I have helped several clients increase their fees, rates and prices. Typically the methods which I show them receive very little push back.
- Review your client base. Which are you most profitable clients and potentially most profitable? Which are the least profitable? How can you improve the situation or replace them with more profitable business? Develop a strategy for each. Work out the cost to your business of unprofitable clients. This should motivate you to resolve the unprofitable ones.
- Review the client relationships. Which are with senior decision makers and which are with juniors? Which relationships need to be improved? The best client relationships are with senior decision makers who have authority, budget approval and can see the bigger business picture. Don’t tolerate clients who treat you poorly. I believe you get the clients you deserve.
- Review your people. Who are your stars? I predict that during the next 12 months there will be a war for talent. As optimism and confidence returns to business so recruitment has pick up. Think hard how you will retain your stars. Simply throwing money at them will not be the answer. Understand their aspirations and ambitions. Show how they will have a great future with you. Identify your less productive people. How can they be more effective? Manage them better or manage them out.
- Review your products and services. Are they best in class? Do they need an upgrade? Are they looking tired? How well differentiated are they? How are your best competitors developing their products and services? How can you be ahead of the market? If your products and services look like your competitors’ then they will be commoditised and bought on price predominantly. Are you delivering real value for your clients which makes a real impact on their business? Become mission critical to your clients.
- Develop your vision for the future. How will your business develop over the next 3-5 years? How can you ‘future proof’ your business? How will your market change, customers change, competitors change? How does your business need to change? How will you balance growth in turnover versus growth in profit? Too many businesses fail to update as technology and their market changes. Don’t be caught out by a changing marketplace like Yellow Pages, HMV, Blockbuster and Comet.
- Now put yourself in your customer or client’s shoes. What are they thinking? How will they view you and your price increase? If they have been getting their own way beating down suppliers’ prices they may want to continue with more of the same! Will they let you get back to pre-recession prices? Unlikely. It’s so much easier to come down in price than to go up in price. Expect some resistance.
Seize the opportunities of the upturn. Take a serious look at your business and decide how best to take back some of the power.no comments