Take Your Eyes Off Of The Yellow Brick Road and Follow The Car

A recent article in Strategy + Business which tells us to Follow the Customer, Follow the Car makes a great point: when customers are scarce resources, you need to focus on your current customers, do more with them, and not churn your customer base.

A prime example of how to succeed is given by the Japanese auto companies who adopted “follow the customer” as a core strategy decades ago. When demand for new cars declined in their home market, they emphasized products that accompanies the car — insurance, loans, inspections, maintenance, parts, and accessories — with revenues that remain stable in recessionary times. This allowed them to survive the recession, and then grow when the market rebounded.

This strategy doesn’t just work for the automotive industry. In the last recession in Japan, it worked just as well for other machinery industries as well. Construction machinery, plant machinery, and aerospace are all prime examples that can benefit. In a recession, people want to keep their assets running longer, and anything you can do to help your customers maintain their hardware longer is a stable, and profitable, industry for you.

And if you’re in sourcing, that means you can expect to be sourcing more parts and services, and anything you can do to reduce these costs will benefit the company immediately.