 |
| Bob Schultek Author of The Gauntlet |
When your business with one customer exceeds 25% of your annual sales, then you have a “gorilla” customer and you’re probably feeling vulnerable. You’ve earned the business by serving them well, and if they offered you more, you’d likely be pleased to expand the relationship, but be wary.
Loss of a gorilla customer can be devastating, and typically that loss has nothing to do with your performance. The 3 top reasons these customers depart are:
- There’s a change in your contact(s), and the new person(s) cares nothing about your relationship;
- Your customer is acquired by or merged with another large entity, and they no longer need you;
- The customer decides to consolidate suppliers or move the work in house.
Here are some warning signs that your vulnerability is growing:
- You discover that you are consistently compromising the profitability of your business to serve your largest customer;
- So much of your company’s time is consumed serving your most significant customer that there is no time dedicated to pursuing new business; or
- You’ve stopped offering uncommon, “against the trend” advice to your key customer because you are afraid to lose them, even though this helped you originally earn their business.
To reduce your sense of vulnerability, be honest with yourself and prepare for the possibility that you could lose this customer at some point:
- Strengthen your strategic position with other key customers;
- If your contacts change, personally deliver the message that you’d appreciate the opportunity to continue earning their business, but don’t want them to feel trapped by an inherited decision. Then proceed to ask them about their impressions of what you do well and what you can improve;
- Be ready to act promptly if the worst happens. Build two contingency plans, one for a mild revenue decrease and one for a major reduction, with specific potential cost reductions, including manpower;
- Beware of adding debt and aggressively seek to reduce the amount you have.
If a key customer departs, when the time is right, advise your employees; though the news is bad, a surprise communicated later will be worse. Losing a gorilla customer is painful, but it can be an important step in eventually moving your business to the next level.
How prepared are you for the possible loss of a key customer?
Is your business experiencing
any of the vulnerability warning signs?
any of the vulnerability warning signs?
