Pull The Fat From The Fire

A Case Study

Scenario – Acme Tool and Die’s customer profile follows the Pareto principle, i.e., 20% of their customers account for 80% of their revenues.  Keeping these key customers is of paramount importance to all of Management, especially the Sales and Marketing functions.  The sales manager responsible for Company ABC (one of the key customers) is reporting that their chief competitor has gained a foothold, and that they are potentially going to lose the business.  The salesman learned from Company ABC’s buyer that news of the 6 month slippage of Acme’s next product was on the Internet, and that this is the main factor in Company ABC moving toward the competition.

In a board room meeting to discuss this issue, the President made it clear that she expects Marketing to “pull the fat from the fire” since the buyer learned of the slippage on the Internet.

Marketing’s response

  1. Since it came as a surprise that the slippage information had been “leaked,” Marketing set up a listening process, targeting their brand, the names and model numbers of their products, along with their competitors’ brands, products and model numbers.  This should remove any future surprises, and allow for more pro-active responses.
  2. Working with the responsible salesman, the Product Manager met with the buyer to explain:
    1. The reason for the slippage (greater functionality has been added)
    2. The future plan (life cycle) for the product, going out three years
    3. Their perspective on how well Acme’s product fit in the current and emerging needs of Company ABC
    4. The Product Manager and CFO structured a pricing program for Company ABC which gave them the opportunity to buy the new product at the price of the current product (the price of the new product is going to be 20% higher due to the added features) provided they place the order soon.  As part of the agreement, ABC will be a Beta test site and act as a reference, if the product performs as advertised.
  3. Marketing, drawing on internal and hired resources, began blogging about the market place needs, establishing Acme as thought leader on the future path of the industry and market.  This program extended to speaking at the annual trade show, as well as a number of webinars.
  4. Recognizing that the marketing/sales dynamics are changing, Marketing called for a complete review of the sales funnel along with an independent review of their actions to increase the customer base.

Bottom line:

Company ABC agreed to buy the new product when it became available.  Marketing successfully pulled the fat from the fire.

Lessons learned:

Information (true or false) today spreads unbelievably fast.  As a result, companies (and people) are reacting faster.  Acme later found out that Company ABC had all the information they needed to make a purchase from their competitor, and were days away from pulling the trigger…and that they had obtained 90% of that information over the Internet, including references.

As the recession recedes and people continue doing more with less, they are doing so by using available information.  As part of their 2011 plan, Acme is revamping their web site, engaging in using more social media tools, listening on a daily basis to what is being said about them, their competitors and their customers, and implementing a more powerful customer relationship program.

What is the probability that some of your key customers are about to leave, and that you will be asked to pull the fat from the fire?  Will you be successful?  Will you be surprised?  What else should Marketing be doing?

RHM 3/3/2011

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