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Look to Reduce Customers' Costs as Well as Your Own

Jul 11, 2008
Have you ever lost a customer because your offering didn't work very well for that customer? Most people have.

Undoubtedly, you were given several chances to improve the effectiveness of your offering before the customer cut you off. Had you been focusing on that customer's total costs from the beginning, you might have avoided this costly loss of business.

The typical cost-reduction thinking often stops at the shipping dock. If a company's offerings cause customers to incur avoidable costs, most companies aren't aware of the issue so they don't work on making those improvements.

Naturally, if a customer has to reject a lot of what has been sent because it cannot be used, that sort of issue is addressed. The full opportunity of going back to square one to determine what the specifications should be in combination with redesigning the customer's process for using your offering is seldom done.

What can you do to reduce your customers' costs while improving your own? Here are some ideas to consider:

1. What services can you provide less expensively than customers that would reduce your costs of working with customers?

2. What activities do you do that most customers don't need and actually increase their costs?

3. What supplies can you provide to customers that will reduce your purchasing costs and theirs?

4. What training can you provide to customers that will reduce their costs and yours?

When a company reaches out to reduce the total cost of using its offerings by the customer, great things can happen. Customers are more successful so they can buy more, and market share grows. Let's look at an example of how this was done.

Xilinx designs and provides programmable semiconductors that can be used to help operate electronic products. The company's customers are usually firms that make subassemblies or total electronic products which have fairly short usage periods in the market.

The costs of such electronic products decline rapidly with increased volume manufacturing. Often, the first reliable manufacturer will garner the bulk of the industry volume.

As a result, time to market from when product design begins is critical. Xilinx's base technology helps this by allowing a company to customize semiconductors with software, reducing the time needed to create the product design by simplifying the semiconductor design task.

Realizing that its own engineers could do this programming faster than many customers, Xilinx began offering this service as well as its products. Xilinx's combination of the product enabled by the service can cut months from development time, and save many millions for the customer while improving effectiveness of the ultimate electronics.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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