Have you ever had a two-by-four moment? By that, I mean an “a-ha” experience. It’s like someone hit you with a two-by-four and all of a sudden you have clarity about the situation. You see things in a brand new way.
Recently an executive of a leading U.S.-based distribution organization had a “two-by-four” moment when he reviewed their Customer Loyalty results. His company is pursuing a growth strategy, with the goal of increasing profitability and sales. In an effort to better understand the market position, the VOC initiative included a measure to gauge share of wallet. On first glance their results are extremely positive. They have the vast majority of their customers’ business.
But, wait a second. There is a small portion of business that is going to the competition. That share of business going to the competition is increasing. Furthermore, when you translate the amount of business that is going to other organizations into lost sales – here it comes – they are missing out on hundreds of millions of dollars in potential revenue.
The two-by-four moment: They left money on the table by not pursuing all potential business with new customers.
· When acquiring new customers they targeted the core business, obtaining about 90% share on average.
· Over time, their share of wallet eroded as the customer grew relationships with other providers (e.g. down to 80% SOW within five years).
Are you maximizing relationships with your customers?