As you embark on the process of predicting your next quarter’s or year’s revenue, getting inside the heads of your customers and prospects can be a tremendous help.
How’s their business?
The greatest influencer of their purchasing ability involves their success in their own market. Ask your customers and prospects two questions. 1.) How rapidly is your market growing (or declining)? 2.) How is your share changing, or how fast are you growing in your market? If the customer is growing faster than its market, it is oviously gaining share. This is good news for your business. Customers that are gaining share in their own markets are good customers to have.
What are their buying expectations?
Rather than being presumptuous and assuming they will purchase more than last year if their business is growing (or less than last year if their growth rate is negative), just ask. “What volume of purchasing do you expect this next quarter (or year)?" The answer may surprise you. They may have found ways to get by with lower purchase volumes. They may have inventory remaining from last quarter. They may have decided to do away with the product-line that your company sold into. Or, they may be purchasing the same volume, but they may have decided to purchase less with your organization.
What are their loyalties to existing suppliers?
In some circumstances, customers are loyal to existing suppliers because the costs of switching are high. In other cases, they rely on one vendor to produce a critical component that they cannot purchase efficiently from other vendors. Or the customer may have a vested interest in seeing your organization succeed because they rely on your production of some other product or service.
However, they may decide to change their purchase decision criteria this year. In other words, perhaps they valued service in the past, but suddenly price becomes their most important purchase decision factor.
Will they be purchasing differently this year – what are their purchase decision criteria?
Asking your customer for the factors they use in making purchase decisions will help you to assess which customers are in your sweet spot and which are vulnerable. It will also prove tremendously helpful in going after prospects. Ranking prospects according to how well their purchase decision criteria match your skills and competencies can be a tremendously valuable exercise. Business development professionals can spend appropriate amounts of time on the high target prospects, and less time with those whose needs are not a fit with your capabilities.
How do we gather these customer insights?
The most objective, and straightforward, method is to use a strategic research firm that is skilled in qualitative, primary research. Their benefit is their ability to gather the insights “blind,” without revealing the identity of the client, presumably as part of a broader industry-wide study. Conducting this work internally is certainly a possibility, but should probably be undertaken by an account manager as opposed to a market research person in your company. The difficulty for the account manager, though, is getting objective, honest feedback from prospects and customers whose best interests may be served by withholding some of this information.
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