Hey...where'd our customers go?

Your sales numbers are down - now what?

When sales in an established business start to plateau or - dare we say it - shrink; one of two things could be happening:

(1) Fewer customers are now buying from you as a result of (a) economic conditions which are not favourable to the spending of disposable income, (b) increased competitor activity (thanks to better product offerings, more aggressive advertising spend and tactics, more stores in better areas), (c) your own diminished marketing spend which means that your diminished share of voice (SOV) results in diminished levels of market share (SOM).

(2) The customers who are buying, are buying less than they did before because (a) of unfavourable economic conditions, (b) a strong play by a competitor who are taking a bigger slice of the spend, (c) your products are less desirable than they were before (due to a lack of innovation) and / or less accessible than they were before (i.e. you might have closed a few important stores or your supply chain might be under pressure), (d) you've out-priced yourselves, (e) your promotional efforts suck.

In both cases the problem lies in the behaviour of customers shopping in the category.

BTW - in business terms we tend to wrongly label customers as either belonging to a company or to a competitor, but this ownership-assignment of customers is nonsense. Nobody can 'own' a customer...obviously...you need to wake up every single day and go to work with the understanding that your job is to win a customer over... from scratch... every single day. It's work that never ends.

Now, let's get something straight here - customers are also odd. They do weird shit; they're unpredictable, lack loyalty, they say one thing and do something else completely unexpectedly. What this means is that the future prospects of any business are really in the hands of raving lunatics. They can't be controlled or coerced to do anything they don't want to do in the moment, which is exactly why all successful brands spend the vast majority of their time and efforts in creating fantastic magical illusions in the marketplace as their #1 priority (things that we collectively call 'advertising'). Understanding and accepting the complete absence of mental stability in customers is the very first step in truly understanding how to deal with this terrible peril.

Unless a business is fully market-orientated (as apposed to being shareholder-orientated; or product-orientated) changes in consumer demand will inevitably take them by surprise. And surprise is most certainly what you don't want when the sales numbers disappear, because fixing that 'surprise' will take a long time...time which you might not have.

To flatten the wild sales graph fluctuations that mad customers might create on annual reports the best approach to take is to proactively aspire to building a big, powerful brand / brands; not too many, cause building brands properly costs a staggering amount of money, but ones that you know you can grow into a dominate position in your category over time. Strong brands sooth customers and give them a sense of trust and consistency that they crave. Weak brands can't manage the customer zombie army very well and get screwed as a consequence.

And building / maintaining a strong brand means that you need to be investing constantly in product innovation and marketing. We tend to think that these practices are primarily meant to increase sales, but actually they are vital just for a brand to simply maintain its sales performance too.

If you want your brand to outperform your category - give us a shout.

So now what?

If fewer customers are buying from you or the same number of customers are buying less, you need to start off by diagnosing what the real problem might be. There is real danger here in just assuming what the problem is and then wasting precious time and money resolving something that has no impact on the real problem.

In tough economic times the risk is that a company might assume that its slow sales numbers are due entirely to economic pressures that are out of its control when in fact the real issue is partly the economic context but primarily something else that very much is in their control, which they are overlooking or neglecting.

Explore deeper than the obvious, be honest with yourself, understand what tools are best suited to inspiring customer demand and review what has possibly changed in that domain. Listen to alternative perspectives, challenge your biases and most importantly...think and act strategically about how you are going to make a strong comeback.