Posted on: February 23, 2023
The rising costs faced by many businesses are prompting some to shop around. In doing so, they seek better value for the products and services they need.
At the same time, staffing and skills shortages in some sectors are prompting some businesses to divest clients who they can no longer supply profitably. This releases time and resources to focus on those clients who make more commercial sense for their business.
So, despite the depressing economic headlines, there are opportunities to win new clients in the current environment.
While winning new clients is appealing, you need to be sure they will be an asset and not a drain on your business. That means being clear that you have the business approach and operations to deliver what they want at the price they seek, but (and it’s a big BUT) in a profitable way.
A helpful 5-point checklist
If prospective clients are approaching your business in the current ‘shopping around’ environment, here is a checklist to help you assess whether you should or shouldn’t pursue that opportunity.
1 Why is the client shopping around?
Do invest time to find out why exactly the client has approached you. It is essential to be clear about what they have previously experienced for the price they’ve paid and how they want this purchase to change going forward. Price may be just one factor, so it is helpful to know what is behind this switch – customer service, product/service quality, or something else.
If the client doesn’t invest time to discuss this with you, you may want to decline the opportunity gracefully. It will be hard to avoid misassumptions or disappointing expectations further down the line if you don’t know what’s behind this client’s decision to switch.
2 What do we know about their current/previous supplier?
Do also consider their current or previous supplier. If you are both very similar, question how you will be able to satisfy this client profitably, given your operations and approach.
On the upside, there may be quick wins in your approach to add greater value to this client more efficiently. If that’s the case, be sure to communicate this to them in the selection process, particularly if you’re up against several rivals.
3 What are the risks in taking on this client?
Suppose your team is already stretched, or components of the client’s order present a challenge. In that case, you should factor this into your decision. There may also be conflicts of interest with other clients you support.
Consider all the potential risks now, so you don’t harm your business further down the line. You certainly want to avoid having an unhappy client who may vocalise their disappointment publicly.
3 Are we likely to make money on this work?
This question factors in the onboarding, hand-holding and learning curve you may need to invest as you supply this client. While you want to deliver a positive experience to the client, this may require additional support time. Exploring with the client…
- how they like to communicate
- what levels of support they seek
- what turnaround times they’re looking for
- how quickly they’ll be able to give you the information you need to do the job promptly and efficiently
… will provide you with a helpful steer here.
4 What is the broader opportunity here?
If your line of business lends itself to repeat purchasing, service/product extensions and up-selling, then you will want to build customer loyalty.
Consider then the wider opportunity here for each prospective client. If you are faced with many prospective clients and can only take on a few, look to those where your time and energy investment in nurturing their loyalty is more likely to pay off.
Be careful if you undercut the first job’s price, hoping more will follow in the long term. Clients appreciate price transparency and don’t like surprises when fees are more than expected.
5 Who are we up against?
It’s likely that in shopping around, the client has reached out to several potential suppliers. It’s therefore important to know who you’re up against. If the roster is large, the cheapest will likely be selected, and you’re in a bidding situation. That may be fine if your business offering can be delivered profitably for the lowest price. If you place more emphasis on customer relationship management and added value, you may want to reconsider your involvement.
Being clear on the competition will help you identify your points of difference and gauge your chances of winning.
There are opportunities to win new clients in the current environment. Given the time and effort that goes into winning, it’s important that your win is a good one for your business. That means ensuring the client will be delighted with your approach and the price you charge is good for them and you.
If you need help evaluating new business opportunities or pitching for business, please do get in touch.