Your customers are safe! They will keep buying from you! Or will they? With a frightening increasing frequency hospital customers are defecting from their current suppliers as they attempt to reduce their cost structure. To prevent this occurrence from happening to you be vigilant about monitoring the following customer defection warning signs:
- Decreased Usage – While this could be a normal manifestation of decreased inpatient census or increased operational efficiencies that reduce product utilization it’s often a direct result of trialing or switching to a competitive product.
- An RFP Emerges Unexpectedly– The emergence of an RFP that you did not expect or help write should always elicit concern, angst and alarm. It’s indicative that your customer relations may be eroding, that a new player has emerged with a high degree of influence or the corporate objectives have changed.
- Customer Interaction Wanes – When scheduled customer meetings get repeatedly delayed or postponed it’s never a good sign. Check your status. You may no longer be as important as you thought.
- Decision Making Changes– Any changes in the way purchase decisions are made for your product, service or solution is cause for immediate concern. This often occurs when titles change but the people stay intact, when new people become involved or when roles and responsibilities get changed. Be sure you are well positioned with the new final decision maker and all of the influencers. Remember the person you didn’t know was even involved can be the one silent killer.
- Organizational Changes– Any change in the organizational structure can cause relationships and usage patterns to change and dramatically. New personnel additions often have their own agenda, vendor and product preferences. Do your homework when organizational changes occur. Do not assume a status quo situation. Be proactive and not reactive.
- External Influencers Engaged– Most often these are consultants. Are you positioned with them? Do you know their objectives? Do you know what they think of you, your product and your company? Keep in mind their goal is to decrease overall costs and improve work flow and productivity. While these changes can be positive for the hospital they should be watched carefully because they could be detrimental to you.
- Competitive Trial– Whenever a competitor is allowed to conduct a product trial it should be a cause for concern. It means someone within the hospital is open to a change from your product, service or solution. Your existing position may not be as strong as you believe it is.
- Payments Get Extended– While lengthened payment terms can often be explained because the hospitals financial position has deteriorated it may also be because they are getting ready to make a vendor change and you are no longer important enough to be paid promptly.
Parting Thoughts
Customer defection is always uncomfortable to talk about. No one wants to talk about the profitable customer “that got away”. To prevent defections remember to do (3) things constantly:
- Recognize the warning signs of customer defection.
- Prevent customer defection with a proactive strategy
- Remember your best customers are the “targets for your competitors.” Ask yourself if you’re vulnerable. Think like your competitor and strategize what you what you do to take the business away.
Protect your existing business. Your job may just depend upon it.
