With the market in a slump, what should we do?

At the end of 2021, many entrepreneurs offered forecasts for the construction machinery market in 2022, and a significant number remain optimistic about this year’s prospects.

Economic slowdown, industry restructuring, and the impact of the pandemic have converged, intertwining economic, sectoral, and health‑related cycles to shape the fate of every enterprise. With this year’s downward trend in the industry now clearly evident, what should companies do in the face of a sluggish market?

Surviving is, of course, the top priority! In fact, some companies began preparing for this round of market adjustments as early as June last year, streamlining their workforce and cutting costs. This year, many firms have already started laying off employees and slashing non‑essential budgets. Beyond cost reduction, what else should we do?

When the market is growing rapidly, everyone is incredibly busy—juggling countless meetings, client visits, team‑building initiatives, and marketing roadshows—spending every day on the go and too preoccupied to pause and reflect. Now, with travel restrictions in place due to the pandemic and a sluggish market prompting cost cuts, it’s precisely the ideal time to learn and think.

Why has the industry reached such a worrisome state today? Everyone should ponder this question; otherwise, even if we weather this crisis and the market resumes growth, we will still face the same predicament.

A friend of mine used to subscribe to new IPOs frequently in recent years; whenever he was allocated shares, he could turn a profit, since newly listed stocks typically opened above their issue price. But lately, market conditions have changed: even when an investor secures an IPO allocation, the stock may still fall below its offering price after listing, resulting in losses. This shift has prompted many investors to focus on the underlying potential and financial performance of listed companies, rather than relying solely on “luck” as they once did.

The construction machinery industry is much the same: for a long time, our marketing efforts have focused on acquiring new customers and tapping into incremental markets, with the assumption that selling equipment would automatically translate into profits. But times have changed—new customers no longer guarantee profitability, and even after a sale, companies may still end up losing money. What adjustments and transformations should businesses undertake?

As companies enter the mature‑market phase, they should focus on their existing customers, grow alongside them, and build a loyal base by delivering value and enhancing the customer experience. Loyal customers not only make repeat purchases and increase their share of wallet but also tolerate product shortcomings and actively recommend your brand to others—fueling word‑of‑mouth marketing and reducing acquisition costs. A strategy centered on repeat customers fosters healthier, more sustainable business growth.

The rapid growth of the market has conditioned us to focus on acquiring new customers while neglecting existing ones. If we shift from a product‑centric accounting system to a customer‑centric one, companies can identify which customers are high‑value, high‑potential, or even unprofitable, and which generate repeat business and word‑of‑mouth revenue. We would then realize that the cost of acquiring a new customer far exceeds that of retaining an existing one. Only by transforming our traditional marketing approach can businesses escape the profit “quagmire.”

Today, many Chinese companies have turned their attention to the international market and the transition to new‑energy technologies—a forward‑looking strategy that, however, falls far short of what is needed. If we fail to overhaul our traditional marketing models, the cutthroat competition plaguing the domestic market could spill over into global markets and the new‑energy sector, leaving Chinese firms vulnerable to repeating past mistakes.

The probability of selling to existing customers ranges from 60% to 70%, whereas the likelihood of closing a deal with a new prospect is only 5% to 20%. Moreover, acquiring a new customer can cost five to twenty-five times as much as retaining an existing one. When a company delivers exceptional service, 90% of consumers are more likely to purchase additional products and services, and 93% are more inclined to become repeat buyers. Existing customers are 50% more likely than new ones to try new offerings, and they contribute 31% more to overall wallet share. Furthermore, 89% of businesses believe that customer experience is a critical factor in enhancing customer loyalty and retention.

The global economy has evolved through the agricultural and industrial eras, during which companies focused on products and sought to produce lower‑cost goods with greater efficiency. Today, the world has entered the service and experience economies, requiring businesses to shift their focus to customers; since people are driven by emotions, experiences will play an increasingly pivotal role.

Two years ago, while on a business trip, I stayed at a five-star hotel. The restaurant staff were exceptionally attentive; on two occasions, when I went to fetch vegetables and yogurt, they cleared away both my unfinished breakfast and my dishes without so much as an apology, then casually remarked, “Go ahead and get more—you’re not paying for it.” Not only did this waste my time, but it also resulted in food being discarded, leaving me with a very poor experience. Since then, I’ve never stayed at that hotel again. Clearly, exceptional service encompasses more than just attitude and speed; customer experience is human‑centered, and the dimensions used to assess it are far broader.

It’s time for change! Peter Drucker, the father of modern management, famously said, “The greatest danger in times of turbulence is not the turbulence itself, but acting according to the logic of the past.” When the market is in decline, the most perilous course is for companies to continue operating as they always have.