(I published this post in June on tompeters.com. The news of the past few weeks encouraged me to republish it here.)
The U.S. economy is in bad shape. If, by chance, you haven’t heard about this yet, just turn on cable TV news for 30 seconds.
What does this mean to your business? It could be terrible, but it doesn’t have to be.
How can I say that?
For the last few months, I have been asking workshop audiences the following questions:
1. What percent of your customers are giving you all the business they reasonably could?
2. What percent of your referral sources are giving you all the referrals they reasonably could?
The answers to these questions have stunned me, because they have been so low. I knew they would be quite a bit lower than 100%, but I’ve found that most executives estimate that only somewhere between 0 and 25% of customers are giving them all the business they could. The numbers are even lower for referral sources.
So, let’s say that the economic downturn has softened the market for your products or services by 10—20%. Yes, that’s a lot. But it pales in comparison to the 75% of the business you are missing if your current customers are only giving you 25% of their potential business.
Here’s the cold, hard (but potential-laden) truth: For most companies, the untapped latent profit in their existing customer relationships is much greater than the magnitude of our current economic problems.
The downturn is real. But so is the amount of business you are missing from your current customer relationships. How do you develop this potential with your existing customers?
Customers who believe they are in “We” relationships with you will give you a larger share of their business. They are willing to pay more, and they are less likely to leave you for a competitor. On the other hand, customers who are in “Us & Them” relationships with you are more likely to spread the business around among your competitors, and will also be more likely to bolt to the competition for a lower price. If you create “We” relationships with your customers, one relationship-building encounter at a time, you will go a long way towards making up for—and maybe even surpassing—the effects of the soft economy.