Thursday, March 12, 2009

New Products/New Marketings

Originally Published 2.11.09

Even the best companies suffer from customer attrition. In good times or bad, everyone who did business with you last year, will not do business with you this year.

Some customers move. Some die. Some switch to a competitor (the jerks!). Some skip annual maintenance and only call when something is broken or needs replacement. No one gets their business.

Unless your repeat customers increase their spending enough to overcome the losses from natural attrition, you’ll have to replace part of last year’s customer base just to stay even. But how?

One of the oldest marketing planning tools is the new products and services/new markets grid. Start by estimating how much business you can expect from your existing products and services and from your existing markets without making changes. Is it enough? Can you gain more business from the market by taking share from competitors? Can you take enough share to grow?

If not, consider new products/services, new markets, or both. A service company with a solid, strong customer base might add new products and services to its portfolio and offer them to existing customers. Some examples…

A pool builder who previously ignored service and maintenance opportunities, adds them.

An HVAC contractor adds electrical service.

A plumbing contractor adds in-ground sprinkler system installation and maintenance.

An electrical contractor offers security system monitoring.

The advantage of adding new products and services to your existing customer base is the customers already know and trust you.

What if your customer base is relatively new, small, or is in decline? Consider new markets for existing products and services. Some examples…

A service company opens a satellite operation in the next town, using a local number that’s answered in the main office to keep overhead low.

An electrical contractor who focuses on residential new construction moves into the residential service market.

And of course, companies can begin offering new products and services both within existing markets and to new markets. Most service companies are small enough that adding a market and/or adding new products and services is sufficient to ensure growth, if the opportunities are pursued.

© 2009 Matt Michel

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