Oilfiled Services in a lean market
When prices are good, oil and gas service companies receive plenty of inbound calls and achieve nearly full capacity, it really is a case of make hay whilst the sun shines. Certainly in the past year the junior and mid cap oil companies have struggled to get investment and this has had a knock on effect for the service companies. The negative impacts can include reduced business and prices. How can you ensure you get more than your fair share of the business that is out there, and ensure you are positioned for further growth when the markets rebound and drilling is back to 2011 levels?
This was the challenge that I worked through for a large oil and gas service company that not only maintained but grew market share by 2% and I am happy to share the process we followed.
Identify why your customers use you
Undertake research with your customers to understand the top three reasons they use you. Keep doing these things, if they make business sense. Remind your customers what you do well and thank them for their loyalty.
Identify your competitors
As part of the research understand why people use your competitors. Put an action plan together to reduce any gaps between you and your competitor, or at least neutralize that advantage. Look at the costs, you probably can’t do everything, but make sure you communicate improvements you have made. Is there something that is keeping the customer awake at night that neither you nor the competitor is solving today? Solve it.
Review your pricing
In tighter markets people often look to reduce their prices to increase business, this can devalue the market and can make it a pure pricing play, not recommended. Definitely review your prices, but look at them in context of the whole value chain. In my specific example, the basic cost of services was at a premium, however the reliability of the service, the speed of delivery, and therefore reduced downtime and reduced additional costs to the customer meant the total cost of the service was lower than the competitor. Give your sales team the tools to be able to demonstrate the value, such as total cost of service savings, to your customer.
Measure the effect
The key metrics were captured before we put this plan in place, during and continued to be measured over the following sales cycles. This is probably data that you already capture, but track when you put the next part of the plan in place and the impact it has. You will be amazed at how running customer research, before you even do anything with it, will have an impact because you are demonstrating you value the customer’s business and you are listening. Once you demonstrate you have listened and then demonstrate you are doing something about it, I am confident you will see a positive impact on your business, that will help you through the lean times and set you up to win more than your market share, when the market returns.