Yes, you read that correctly. Trying to please or even delight your customers might just be running your company into the ground.
Let me explain.
It is important to make your customers satisfied with you. You certainly won’t stay in business long if you get them upset!
Making them happy though relies on a few key things:
- Do you know who your customers are? By this I mean not only who might have an interest in your product or service, but those who might be willing to pay for it AND are ready and able to do so. This is often a much smaller group than people think.
- Do you know what your customers really need? This is the bit that gets many businesses, especially small and new ones. In order to be ready to support their customers many businesses try and be all things, and to provide all services they can think of rather than sticking to a few key ones. This is a sure-fire way to go bankrupt!
- Do you know what you are capable of? What capacity do you have to supply? What capability does your business have? This means skills, but also hours in a day (you might want to read my last article on Takt….)
- Do you know what you actually want to deliver? This is a tougher question. There are many things that you could do, but what makes economic, financial, operational and market sense? You can’t do everything that you might be capable of and still satisfy the market, and your time with family, friends and sleep. With customers often demanding very short lead times, even to immediate satisfaction, you need to be specific. That might mean actually saying “No” to a customer request from time to time. Politeness and that other tact is a good choice here…
To make customer delivery possible, many businesses stock extra inventory of goods, or prepare a massive array of services, just in case they get an order. This “buffering” seems great if you are worried about making a customer wait, but how much is that really worth to you? This “customer centric – don’t ever disappoint the customer” approach might just be the problem. No efficiency expert worth the contract will ever tell you to just stock more stuff to be profitable.
If you have 100 different products that each cost $10 to make, and you store only 20 of each one, until you sell even the first one, you have now spent $20,000. If you add spare parts that cost $5 each, you now have $30,000. For a small business this can be the difference between making payroll commitments this month or not.
The maths also holds for services businesses in retail, administration, consulting, finance, and other businesses. To be successful you really need to think about the business you are in, what is practical, what you are resourced for and what is your customer really needing.
To be honest, the best approach I have found is a bit old fashioned. Try talking with your customer rather than just building a strategy on a PowerPoint slide!
Involving your customer in a simple, straightforward conversation regarding what you are planning and how you can practically help them might cost you a cup of coffee (or a zoom subscription), but unless you are into lots of that special civet cat filtered coffee, I’d suggest it won’t be $30,000 and might just give you the insights needed to really have a business centred on your customers.
