Growing revenues and market share despite the recession

In this tight economic climate many clients are reducing their spending. So how in that context can my exhortation to use the tight economic environment to grow market share be achieved? It’s not easy, but the following may stimulate some ideas.

Rather than putting all your effort into winning the few new clients that are around think hard about how you can grow your revenues from existing clients. After all you already have relationships there, and hopefully have a track record as a good reliable supplier.

And a key technique starts from putting yourself in the customer’s shoes and remembering that many companies are at the moment quite desperate to reduce their costs. If you can help them do that you’ll be a hero! So here’s an approach that might work.

To reduce costs they need lower overheads and lower costs (which usually translates into getting better prices from their suppliers – i.e. You). Rather than wait to be asked to reduce your prices, why not get on the front foot, put yourself in their shoes and think about how you can help them in their goal with the help of the following example.

In a previous Managing Director role, I discovered that a key client had analysed their procurement processes and discovered it cost them £70 simply to purchase an item costing £1000 from us, and they were using 200 different suppliers to deliver thousands of units of the service we supplied!

So now apply this knowledge to your business, and look for opportunities. This doesn’t work for all businesses, but it does for most.

There are two key questions:

  • How much more or less profit would you make if your client paid 10% less per unit they bought from you, but bought twice as much?
  • Could they buy twice as much from you?

If you already have most of their revenues for one product, what about if they bought a wider range of products and services from you?  Most customers only buy from most suppliers the one or two key products they know that supplier provides. Often they could buy a wider range but just haven’t thought about it.

So if this idea is working for you, you have a great pitch opportunity.

Proactively approach your supplier, suggest you can reduce your price by 5% (leaving room for negotiation) and save them a lot more in internal procurement costs (feel free to use the £70 per transaction benchmark – It’s pretty credible and they probably won’t be able to prove any different)in return for them putting all their business of the sort you do through you.

That leaves you with the minor challenge of actually doing it, but my purpose is only to provoke you with ideas that have worked for me, seem credible to me and might work for you, not to run your business for you. Nevertheless I hope the above has provoked some thought! Good luck!

Bob Bradley

Bob is a specialist in running high value added service businesses, having run five such businesses as General Manager, Managing Director or Chief Executive. His last employed role was as Chief Executive of a £16M, 200 person family owned business having previously been Chief Executive of an AIM listed company for which he raised £5M funding and which he grew from £4M to £12M in three years through two acquisitions and organic growth, and a corporate PLC subsidiary where he was Managing Director responsible for delivering £10M profit on £45M turnover through 450 staff.

Bob is now following a portfolio career providing entrepreneurial business leaders with mentoring and coaching around business leadership, business growth, merger integration and exit planning.

Core to his portfolio is MD2MD. Having experienced for himself the value of having a strong sounding board of fellow Managing Directors he founded MD2MD in 2004 to provide groups of business leaders with a confidential environment within which they can support and challenge each other to raise their game as leaders and by doing so improve the success of their organisation.

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