Mulling over the Minnows

Smaller Customers can sometimes fetch you more than what you anticipated

While the U.S. and the world economies are still trying to come out of the economic crisis, companies have been trimming their work force. The luckier employees who still have their jobs intact now spend much longer hours at work, making up for the reduced work force. It has not been easy for the business owners either. A survey conducted by Grant Thornton International (http://www.gti.org/Press-room/stress2010.asp ) found that 76% of the business owners have reported increased stress levels over the last year, majority of them citing economic climate and increased work load as the reason for it.

In such a global environment, it is only natural that the companies now look at their investments and try to adopt newer ways to reduce their excesses, introduce more efficient processes and improve their ROI. Among the frenzy of changes, one of the knee jerk reactions for businesses would be to scale down their services/expenses towards their smaller customers while focusing primarily on their larger partners. Jennifer Walzer ratifies this in http://boss.blogs.nytimes.com/2010/03/11/can-we-afford-to-continue-serving-small-clients/

But is it really that simple? Can one just sift away the minnows? Consider also this:

Smaller companies are nimble. They adapt to changes much better. They spend their resources carefully and efficiently. Small companies can therefore weather the bad economy better than some of the larger ones. This means they probably would continue to remain as your customer even when economy conditions are worse.

Peter Bergman in his blog: http://blogs.hbr.org/bregman/2009/03/why-small-companies-will-win-i.html makes a very interesting point. According to him one important factor that makes it possible for smaller companies to thrive better, especially when economy is bad, is trust. According to him, customers prefer smaller companies because it is  easier to trust them. This factor could actually fetch the smaller companies new opportunities from their large competitors. This might be an important factor and you could expect your smaller customers to actually grow. And you grow when they grow.

In tough economic conditions, you cut marketing expenses and look at organic growth for your business. You might just not have enough resources to aggressively pursue larger customers. But it might not be a bad idea at all to reach out to smaller customers, sign them up one at a time and earn their trust. These small customers can then be the catalyst to spur your organic growth further within their community without you have to significantly increase your marketing expenses.

Therefore, take another look at your smaller customers. Runs some numbers and see if they really are consuming 70% of your resources while fetching only 30% of your revenues. You may be surprised to discover the opposite. Not to sound cliché, but you could admire the mammoths but please also give some credit to the ants – after all they are still around with us.

The above post was written by Sathish Subramanian of Vembu Technologies. Vembu Technologies is a backup software vendor whose product, StoreGrid, powers the online backup services of a large number of service providers across the globe. Besides remote backup, StoreGrid is also used for on premise backups of workstations and servers at various companies & universities.

Vembu Home is the only FREE consumer backup solution for free local backups and optional Amazon Cloud backups. Get your FREE COPY now.

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