To succeed in tough markets, you need to be adaptive and responsive. What’s important in “normal” conditions – to you and your customers – is likely to be different today. Successful B2B companies win in tough markets by challenging their priorities and business norms and adapting to meeting their new reality and their customer’s current needs.
This Part 2 of Winning Business in Tough Markets: Know Your Own Business’s Options. We kicked off a couple weeks ago with this article. Followed by Part 1: Knowing Your Customer’s Reality.
The global pandemic has impacted businesses and markets everywhere. Markets, companies, employees and financials are stressed. Every week, we’re greeted by announcements of energy and chemical companies (amongst others) cutting spend and shifting resources. This is not the first down-cycle we’ve experienced, nor will it be the last. Applying successful lessons and strategies from prior tough markets can help you survive and thrive in today’s business climate.
One of the keys to succeeding in tough markets: Understand your own business’s true priorities and imperatives.
Yes, cash is king. This is true now, more than ever. And chasing cash can have business leaders and their teams respond in ways that weakens their position short-term and long-term. Those oftentimes knee-jerk responses can swing between two extremes: “My Way or the Highway” to “Anything for a Sale”. I’m sure you’ve experienced both.
In “My Way or the Highway” – your business team – sales, finance, credit, supply – gets dogmatic about what you can and can’t do for a customer. “Can I change payment terms?” No. “Can they adjust contract volumes?” No. “Can we…???” No, no, no. Oh, occasionally, there’s a yes. As in, “Yes, we can do that, but it’s going to cost you.”
The opposite extreme is also dangerous. In “Anything for a Sale”, the word “no” is rarely uttered. Instead, “yes”, “of course”, and “anything you need” are the responses heard most often. After all, selling products and generating revenue today is all that matters. Or is it?
The reality is that both “yes” and “no” are the right answers, but not to the extreme, and not all the time.
Winning companies figure out what’s really important to their business and what options and trade-offs they have. Taking time to understand your options and alternatives is critical.
Do you know what’s most important to you and your business?
In the short term, your priorities and options could include:
- Moving inventory to make room for new products
- Shortening leadtimes
- Selling more or less than the agreed (contract) volumes
- Changing your return policy
- Swapping products and delivery locations
Mid-to-long-term options could include:
- Reducing volumes today in exchange for more business later.
- Shifting to consignment inventory held at the customer site.
The key is get your entire team thinking about what is doable for you, valuable to you and to your customer, and what you’re willing to trade to make today’s customer requests and market needs fit with your business priorities and imperatives.
A chemicals executive I spoke with recently did just this. In the last month, his business has extended contracts for three major customers up to 3 years. Why?
“These customers needed something today, and I needed to secure their business longer-term. If I waited until their contracts were up in the future, I risk value destruction due to shifting market demands and pricing declines. Doing this now, we are both satisfied – for today and for the future.”
Understanding your priorities, identifying options and executing with your customers. That’s thinking long-term in the short-term.
Progressio Global helps chemical companies win business and achieve profitable growth by understanding their customers’ why. Looking for help in today’s difficult markets? Let’s talk about the proven strategies to help your company and your team align with your customers and markets, win business faster and achieve more profits.