We're seeing it in earnings outlooks and I'm hearing it regularly from my clients: business is getting tougher and headwinds have arrived in the chemical industry. This impacts chemical manufacturers as well as the businesses in their ecosystem. The reasons are numerous: continued impacts from US-China trade wars, softening in the automotive market, and declines in oil and gas production chemicals while at the same time production capacity has grown significantly. The effects are many: lower volumes, declining margins and excess capacity in the 2nd half of 2019 and into 2020.
Competition is getting… well... more competitive.
When the market is good and demand is strong, the sales process is easier, and companies can position their sales based on product and price and simply the ability to supply. As demand softens, competition increases and its tougher to sell on the basics, which are often very replicable by your competitors.
When market conditions get tough, what should you do?
1. Get closer to your customer
Create more opportunities for engagement, not less. Call, visit, engage. Find out what’s driving their business and what they are concerned about… and address the challenges and opportunities that you see. Act like the trusted partner you want them to value.
2. Sell on value, not on price
It’s a natural reaction: when markets get soft and the sales process gets tougher, the first inclination is to lower prices to maintain business. A customer will almost always tell you that price is what matters. But we know that price is not the real answer. Sure, it’s a component of winning and maintaining business. We also know that customers are looking for many things from their suppliers: Reliability, Quality, Services, Support… to name a few.
What is your customer’s why?
WHY do they buy from you or from your competitor? Why is their business changing? What does your customer really need and value in its supplier? Understanding a customer’s why is critical to a successful sale…. Allowing you to retain both volume or share AND maintain margins.
Get clear on your product benefits and customer value proposition.
What benefits do your products and services bring to customers? How does buying from you make their business better? Know it and articulate it… in what you say AND do.
3. Get leaner I’m not talking headcount, I’m talking processes, whether it be sales and marketing, supply chain and logistics or manufacturing. Streamline your processes to create value for you and your customer. Make it simpler, quicker and easier to do business with you.
4. Get creative Try out something new and innovative in how you:
Engage and motivate your customers AND your employees
Deliver services and solutions
Position your company and your products in the marketplace and with that customer
Get creative in your business. When business gets tough, leaders may want to cut budget or time allocated to innovation: in product, services and approaches. Arguably, this is the wrong time to cut creativity and innovation. Tough situations often require new solutions. Creativity doesn’t have to be costly. Accelerate those innovations and test them in the market – getting rapid feedback to allow you to respond and adapt – ditching those ideas that don’t work and developing those that do.
5. Be present
Often companies and business leaders draw inward when markets get challenging. Rechecking the business plan and having internal debates and dialogues about “what’s going on with customer XYZ?” are necessary. They are also simply theoretical discussions unless you bring in external input. And while you’re having those internal discussions, you’re not…. present and external and engaging with your customers. So, have those internal dialogues and meetings but keep them brief… and make sure you’re having plenty of external discussions as well. Be present with your customers. They shouldn’t wonder where you went and why you disappeared into your own corporate structure. They should know that you’re listening and available for them.
They are also simply theoretical discussions unless you bring in external input.
6. Create success
…and a mindset for success. Growing up, when things got tough in school or sports or, once we launched our careers, at work, my siblings and I would inevitably hear from our dad: “PMA: Positive Mental Attitude”. Sales and business success are as much about mindset as they are about the offering. Use your attitude and mindset to create success for yourself and your team: 1 step and 1 day at a time.
Is your business caught in the headwinds? Let’s discuss how Progressio can help you chart a new course.