The looming supply disruption as a result of coronavirus, along with tariffs and other factors, offers historical opportunities for companies to build—or destroy—customer goodwill.

A Tale of Two Companies

Consider the fate of two companies: Company A and Company B. Both are relatively successful, and both are faced with an extended supply disruption.

Company A responds to the shortage by trying to maintain its traditional customer management processes with diminishing product availability. The VP of Sales is careful to be transparent, informing the customers of its supply shortages and assuring them that it is doing everything possible to secure increasingly scarce supplier allocations.

The company's sales reps try to prioritize each of their customers. Soon, the company is overwhelmed with conflicting priorities, with each sales rep trying to hold inventory for his or her customers, leading the company to adopt the default option—first-come first-served—as its response to the shortage.

That is essentially no customer management strategy at all, and it is a recipe for a long-lasting pool of customer ill will.

Company B, on the other hand, has a prioritized strategic plan for supply shortages that it developed as an essential part of its risk management process. When shortages materialize and increase, the entire management team becomes a crisis management steering committee, systematically and strategically guiding the company through the crisis.

The company emerges from the crisis period with profits preserved and customer loyalty increased.

In fact, the management team used the supply disruption to build long-term customer loyalty and, with it, sustained profit growth and market positioning advantages.

Five Rules for Growing Customer Loyalty

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image of Jonathan Byrnes

Jonathan Byrnes is a senior lecturer at MIT, where he has taught for 30 years. He is the founding partner and chairman of Profit Isle, a profit-acceleration SaaScompany with proprietary analytics. He is the author of Islands of Profit in a Sea of Red Ink and a co-author of the upcoming Choose your Customers: How to Compete Against the Digital Giants and Thrive (McGraw Hill).

image of John Wass

John Wass is CEO of Profit Isle, a profit acceleration SaaS company with proprietary analytics. He is a co-author of the forthcoming book Choose your Customers: How to Compete Against the Digital Giants and Thrive (McGraw Hill).

LinkedIn: John Wass