Posted by: pauditore | September 21, 2009

The New Lean Reality, Lean Customers: Small Business Needs to Understand Customers More Importantly Now Than Ever!

Customers will have higher expectations in the future from all business small and large, and the recession has created a mindset that will demand more business value from your products and services than ever before. I call them the lean customer. How will you adjust to this new reality and maintain your competitiveness, employees, pricing and unfair advantage in the market? Understanding the voice of your customer will be king and adjusting to the new market conditions will be seminal to your success. In my view, we have endured more than a recession, we are experiencing a global economic restructuring and survival depends on strategy, innovation and knowing your customers; your lean customers.

In the New Lean Reality

  • The way people do business will be leaner
  • You can’t expect revenue streams to return to normal
  • Lean business is king and people like lean businesses
  • Agility and the ability to adapt to new market conditions is seminal
  • Customer focused businesses succeed over the competition

During my vacation I had the opportunity to spend time with three small business executives, the CFO of Charles River Apparel, the owner of The Last Stop and the owner of the Sunbanque Tanning Salon in my home town of Gloucester, MA. All three businesses experienced very significant drops in revenue during the recession, and in some cases as much as 30% overall. A revenue drop of 30% is catastrophic for any small business and in today’s environment one executive told me he thought small business owners were in a “schizoid state of mind these days,” meaning that they did not know what to expect in the future from their customers or the market. Schizoid, paranoid or not they should be concerned about their market and customers overall, but more importantly they should be concerned about what expectations their customer base when they return, because there will be no normal return to business.

I recently joined the Institute for Study of B2B Marketing (ISBM) at Penn State’s SMEAL College of business and attended the annual meeting at State College. I can tell you that almost every company that attended was in a paranoid state about their customers and what their demands would be after the economic restructuring has ended. Liam Fahey, a fellow of ISBM and author of an impressive suite of books on competition including, Outwitting Outmaneuvering and Outperforming Competitors, made a statement during the conference that I would like to share, Dr Fahey said “We are all caught up in the now and are not looking at the future and strategizing about what to do in the future.” This corresponds my last post about Peter Drucker’s “understand the future that has already happened.” The future that has already happened is that many customers, (not all of them,) are going to consume your products and services differently than they did before the economic storm.

Lean Customer Behavior

  • They may consume less of your product and/or services and many will never return to previous consumption levels.
  • Many will begin the quest for a sustainable brand as global weather deteriorates.
  • Some will be looking for more value/less cost and may consider competitors.
  • Some may eliminate the need for your product and/or services completely.
  • They will seek price that is equated with value, the staunch consumer.
  • Many will consolidate travel to one location for multiple products and services.
  • Some may collaborate with others and share best practices

Nothing is forever, and change is certain. This sea change in business is both an opportunity and a challenge for small and large business alike. Understanding your customer’s needs both stated and unstated is the key to survival in these market conditions. Be careful in understanding customer needs, in my view, it is important to understand when customers needs/demands are going to take you down a rat hole.  What I mean by that is, when you are convinced by customers, suppliers and/or friends that you need to add products and/or services that go beyond your core competency, they may not provide you with sustainable profitable growth. A bad decision here may kill your brand and eventually marginalize your competitive advantage and will often challenge your business model.

The Personality of Fish: Climate Change & Lean Consumers

In my last post I talked about the sad state of fisheries management worldwide, this week its global warming. I guess the good news is that we have a new administration in office that actually believes the world is warming and the oceans are rising. During my visit to Woods Hole on vacation I spent the night with some of my old scientist friends and asked them directly about global warming and its potential impact in our life time. What they said was that global warming is happening, however, it had been incredibly over hyped by Al Gore and his movie, The Inconvenient Truth. By over hyped, they meant that Mr. Gore and company had indeed taken many of the worst case possible case scenarios from the computer models instead of the most probable, or those with medium or low predictability. Global warming models were created to predict the impacts of global warming such as, sea level rise, slowing of seminal ocean currents such as the Gulf Stream and global rainfall. According to my scientist friends these models predicted a low, medium and high level of predictability for such events; however, like most models there are always unpredictable parameters that can’t be quantified.

When asked about Katrina, they said, “well wasn’t there one called Camille in 1969 that broke the wind speed record, and then there was also Andrew.” Their points were well taken, but they did agree that there is a strong correlation between CO2 and global air temperature rise. And that we are in a global warming period and that Artic sea ice is certainly melting much faster than anyone expected. There is also a very strong possibility that climate change may occur much faster than expected and early indications are that we may have significant global warming impacts within a decade vs. what was predicted to happen in a century. This is certainly the case with Artic sea ice.

Net/Net

For the fist time our administration will not classify Artic Satellite Imagery as top secret and will push a sustainable agenda across all government agencies, and begin to enforce compliance with new regulations within our industries. The great news is large corporations are now on board with sustainability efforts and I am involved with communications efforts around SAP sustainability technology and solutions. Like it or not, being sustainable is already and important part of your company’s brand experience and many of the largest companies mandating sustainable products and supply chains from their partners and suppliers. Sometimes becoming more sustainable is so simple you can’t see it, and there is no question about its impact on the bottom line. Until next time great selling and marketing in the millennium.

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