If your ship is leaking customers little by little, you better find the crack and plug it. A leak can turn into a flood quickly, especially if the cause of it is a disruptive new technology offered by a competitor.
Maxwell Wessel, vice president of innovation at enterprise software company SAP and an investor with Washington, D.C.'s NextGen Angels, says customers, especially low-profit ones, can hold the answers to your company's problems.
"Most businesses aren't listening to the right customers. Most businesses spend their time listening to their most demanding customers--not only because those customers tend to be the most profitable, but also because our listening techniques direct us towards the customers who speak the loudest," Wessel writes in the Harvard Business Review. "And we end up ignoring--sometimes not even hearing--other customers who may become equally valuable in the future."
Below are the listening practices Wessel suggests you use when a disruptive competitor presents itself.
Perform customer exit interviews.
If you aren't doing exit interviews with former customers, you're missing out on a trove of valuable information. Why did they leave? What product or service replaced you? "The customers who opt to buy different products instead of your own are those who can tell you the most about the appeal of those products," Wessel writes in HBR. "Those customers can articulate where you fell short and where others did better. Often, to identify who these customers are, you need to set up different types of listening systems." He suggests putting people in stores to observe purchases, emailing former loyal customers you haven't heard from in a while, and starting an open conversation with people about your company's failure.
Engage your less lucrative customers.
You are probably having lots of conversations with customers every day. Most likely, the customers are those that drive your profits, but this group only gives you one side of the story. "When it comes to disruption, you need tools to engage those in other segments of the market. You need to identify who's on the margin of your business and actively open channels for communication with them. Start advisory groups and user communities intentionally populated with people who only engage with your core products peripherally," Wessel writes. "They won't feel as invested as your best customers, so you'll need to make sure you do the work to get them involved and contributing feedback. Unfortunately, if you don't do the work, you may remain stuck in the echo chamber associated with daily business."
Assess the scope of the disruption.
Wessel says your company's history can be a powerful tool in measuring your competitors' threat level. "If the customers that are leaving today had left 10 years ago, what would have been the impact on your growth? If they'd left 20 years ago, how much profit would have been lost? Would you even be in business today? This type of listening to economic indicators can both help you understand the speed and scope of your disruption as well as position the significance of the threat to your executives," Wessel writes. "There is no better tool than a rational and realistic description of risk to get large companies to move."