Faust: What Would It Take For You To Fire Me?
Have you ever wondered how well you’re sitting with an important customer? I’m shocked at how many new clients of mine are in the dark with regard to their standing with their most important customers. Too many companies are unaware of how likely their top customers are to either retain them or fire them.
Scott Gabehart is one of the nation’s foremost valuation experts. Scott and I often work together to help owners determine what will most increase their business’ value for a future or impending sale. Scott says the valuation industry’s algorithms and research prove that the value of your company is reduced significantly by having too much business with one or a few large customers. To take that point further, you should know that savvy investors or prospective buyers will want verification about the solidity of relationships between you and your top customers. Here are a few practices to help reduce your risks of losing key customers and help increase your company’s value.
Rate Your Staying Power. Your first step should be to ask your sales team to assess the business’ relationships with your top 20% or 30% of customers. Be careful, however. Sales teams tend to be a bit optimistic about the security of customer relationships. Test each sales rep with this question: “How do you know we are XX% likely to keep this customer for the next XX months?”
Point blank, ask your customers, “What would it take for you to fire us?” Just thinking about asking this question strikes a bit of fear into most CEOs, but it may be the most important question you ever ask your customers. The answers you get may confirm that you are safe, or they may give new insight into how closely you need to keep an eye on the quality and satisfaction of the deliverables and results that you produce for your top customers.
Powerful Questions. Other questions that you or your sales team can ask top customers are as follows. “Why do you buy from us, and how do we compare to the alternatives—both the good and the bad?” Competitive awareness is one of the most valuable strategic insights. It gives you leverage and influence to win or retain customers. To become competitively aware, few questions are as powerful as “Why do you buy?”
If asking these questions causes you or your team to cringe, then consider using a third party to ask these questions of your top customers. Using a third party offers many benefits, but mainly, customers will tell a third party far more than they will tell someone from your own team.
Also, self-assessment pays for itself. Having conducted thousands of in-depth interviews for hundreds of clients, I have always found seven figures or more of incremental business for clients (with businesses $20 million or more) to gain.
Just how much untapped potential lies within your existing customer base? Call my office, and we’ll share the details on how to conduct this process. Next time you’re talking to a top customer, ask him or her, “What would it take for you to fire us?” Otherwise, you may end a customer relationship the same way you started it—fired with enthusiasm.