Why What Your Customers Value Becomes Profit For You

Filed Under Business Development, Business Growth, Customer Relationship Management, Customer Service, Employee Development, Lead Generation, Marketing Tools, Profit, Sales

Peter Drucker, perhaps one of the most influential management scholars of our time, once said, “A business has to make money, and a business has to make customers.” And businesses do this each day by creating and marketing things customers are willing to purchase.

This is the crux of the economic equation

However, far too many businesses lose site of this important factor and approach the planning process from the perspective of their needs alone. And this is fine, as long as what is developed creates value for their customers.

The problem occurs when businesses try to maximize the value of a customer to their business alone. Sometimes they forget they still must create value for their customers or they won’t have any, and they may ultimately go out of business.

This is what I call dysfunctional value creation and in every situation when this occurs you will see a company basing their decisions on the value the customer can create for the company.

What happens when this occurs?

The value proposition becomes too one-sided. Customers become increasingly unhappy with the relationship and ultimately disloyal. The next time something goes wrong or your competitor approaches your client with an interesting proposition, because your relationship is not solid, they bail on you.

You see this happen frequently with advertising agencies when the account representative changes and the players higher up the food chain do not have a relationship with the client’s key decision makers.

Perhaps the client contact doesn’t like the new person or maybe, because they are new, they do not know enough about the client to sound informed and intelligent enough to work with them to grow their business.

Regardless of the reason, if the client doesn’t really feel you care and are trying to support initiatives they value, the relationship can be interpreted as one-sided.

Why does it matter?

Businesses need to balance the things they need to do to make money against what they need to do to gain and keep customers as the global landscape becomes more and more competitive.

Why?

Because without long-term loyalty relationships become vulnerable, unstable, and over time can be lost altogether.

Does this mean you have to deliver on every single one of your client’s petty requests? No.

However to continue to be competitive, the businesses partnering with their customers to enhance mutual value are better able to stabilize the business relationship and focus on long-term growth.

Technorati Tags: Customer Relationship Management, Marketing, Profit

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