Dealing with competition is natural, but if a company is after your biggest client, then you need to play smart. Here are 3 Ways To Deal With Threats To Your Cash Cow
Many small businesses have a cash cow customer, that is, a buyer who generates a significant portion of the company’s revenues. Oftentimes, these customers renew contracts without much effort, generating a stream of reliable cash flow—until, of course, a competitor zeroes in on the client with the intent of taking the business away from you.
Almost every small business owner has felt the sinking feeling in the pit of their stomachs when they realize that a competitor is aggressively going after their most important clients. If these clients represent cash cows for your business, then failing to act appropriately could have serious consequences. Dealing with competition is a natural part of business, but if the other company has some advantages on pricing or features over your company, then you need to quickly defend your clients from this attack (on you). Consider doing the following three things.
1. Set a meeting with your client. The purpose of this meeting is not to try desperately to maintain the business or even to offer concessions on the spot. The main purpose of the meeting is for you to listen. Try to understand what drivers are leading to your client’s decision to consider other vendors. Are they unhappy with your prices, customer service or terms of sale? This information is critical for you to plan an appropriate response.
If you are close to the renewal period, you can offer some type of incentive in exchange for a speedy renewal. While it’s inconvenient and more expensive, in-person meetings have no substitute for these types of delicate situations.
2. Work harder. When a competitor is within striking distance that is when your company must reinforce its efforts to delight the customer. Inform your staff that the client is “in play” and that it’s up to them to perform beyond what is expected to ensure that the contract is renewed and the company can count on the cash flow they provide. This additional work must also extend to hedging against a loss by aggressively pursuing new customers. Being able to secure new customers sends a strong message that your company is fresh, strong and growing which is precisely the type of partner any cash cow customer company should want.
3. Build internal support within the client company. Hopefully this is something you have been doing for years, but if not, it’s never too late to start. The goal is to develop a network of champions for your company within the client organization. These could be people that are one or more degrees removed from the ultimate decision maker, but with whom you have regular contact. Reinforcing the positive relationship you have with them and asking them for support is completely acceptable. These are the people that will give you a wealth of insight into the decision-making process of the company.
