When a company is in turnaround mode, the focus is establishing a solid financial footing. After all, if the cash runs out, so does the dream of building a successful company. But how does this situation come to be in the first place? While there are many critical business mistakes that can lead to trouble, I find losing track of your customers and the marketplace is probably the most critical mistake of all.
I recently worked with a small food company to help them right a sinking ship. There were many issues that created the problem:
- no financial controls to make sure money was spent wisely
- no accountability to budgets
- no monitored business metrics to understand if the ship was on course and what changes needed to be made
- little insight into profit and loss for each product
But one item really stuck out to me: there was a huge amount and variety of inventory filling up the warehouse. Some of these products had been sitting in the warehouse for over a year!
So how did this mountain of uneaten deliciousness get piled up with no place to go? Simple: customers didn’t want it. When I asked about what drove the decision to launch a particular product line or extension, the answer was usually “the owners thought it was a good idea” or “other competitors are doing it.” What I didn’t hear: “customers really want it.” In addition to all the financial mistakes, there was a big marketing mistake compounding the problem – there was little focus on the consumer needs and almost no way to build an understanding of what their consumers wanted.
Digging deeper, I found that there were no customer research projects of any kind done. With the exception of a few phone calls there was no research done consumers, distributors or other key decision makers when developing these products. Not even a taste test to identify key attributes of the product! A key requirement in launching any type of new offering is understanding your market and gaining insight on your potential consumers. This may sound fundamental, but it easily gets lost in the day-to-day of running a business. The connection with your customers is gone, almost going unnoticed.
In today’s world of competing offerings and messages, it is critical to stay close to your customers. With all the low cost tools offered available today, there are no excuses for not staying in touch:
- Simple, inexpensive tools like Survey Monkey for quick market research
- Twitter feeds to update followers
- Facebook fan pages to get unsolicited feedback and keep conversations going with their customers.
- A simple email feedback button on your web site.
You don’t have to have an elaborate, expensive customer survey or focus group to get feedback, but those are good tools as well. Just make sure you pick the right medium for the right objective.
Don’t lose touch with that key group of people that are critical to the success of your business: your customers. It could mean the difference between strong profits, smooth running cash flow and a fired-up work force or scrambling to make sure you have enough cash to pay workers and keeping the doors open. It may seem fundamental…and it is.
If you have any cool, creative ways you keep in touch with customers that any company could use, we would love to hear about them.