By Bridget
McCrea
Opening new
sales channels. Exploring new geographic territories. Tapping into new customer
bases. If any or all of these goals are on your distributorship’s “to do” list
for the fourth quarter, now is the time to sharpen your pencils and come up
with a plan of action for getting that new business – and keeping it.
Maybe a
customer is pushing your distributorship to expand geographically or perhaps
one of your suppliers is offering joint marketing opportunities for new
customer segments. Whatever the driving force is, here are six tips you can use
to launch your expansion effort and keep it moving in the right direction:
- If
you’re expanding geographically, put some seasoned “feet” on the ground in the
target market. Don’t try to open a new branch in an unfamiliar location
with a brand new manager. “Get someone in there who already knows the market
and its nuances,” suggests Jeff Rogers, vice president and sales manager at
Holder Electric Supply, Inc., in Greenville, S.C. “So much of what we do as
distributors involves relationship selling. That’s extremely tough to
accomplish when you don’t know the market inside and out.” To overcome that
challenge, Rogers says staffing the new location with one or more employees who
are familiar with the market, the target niche, and/or its customers can “make
the expansion process much smoother.” - If you
don’t have the talent on staff, look around at other distributors. The
employees mentioned in tip No.1 don’t necessarily have to be homegrown. In
fact, Rogers says he’s seen distributors break into new markets by hiring
managers and employees from companies already operating in the target towns or
cities. “The assumption is that those individuals already know the
marketplace,” says Rogers. “Sometimes that’s the strategy you have to use to
find your ‘lead dogs’ and ensure a successful transition into a new geographic
region.” - Do your
homework and market research before setting up shop. Some electrical
industry trends are national in scope but others are limited to specific
markets. Take solar, for example. “It’s huge on a national basis,” he explains,
“but power is cheap in our area and no government money is being pumped into
solar efforts, so we really aren’t seeing a movement in that direction yet.”
Take the time to explore the key trends in your target market before setting up
shop, Rogers says, and you’ll avoid early missteps and limit losses on the
front end. - Divide
your sales efforts across four key business quadrants and then tackle them
individually. When approaching new market opportunities, Rogers and his
team focus on four quadrants: old products, new products, old customers, and
new customers. Old business from old customers is the easiest target because
it’s uncomplicated and familiar. However, this is also the lowest margin
business. Peddling new products to old customers can be an easy sale, but
getting prospects to think past their “typical” orders may take some extra
effort. Selling old products to new customers takes more elbow grease and
depends on the development of new relationships, while new products to new
customers – the highest margin opportunity – is the most difficult and
rewarding. You can overcome that hurdle by “educating yourself before you ever
get in front of a customer,” says Rogers, “and by combining that knowledge with
real-life examples and demonstrations to illustrate a product’s value for your
new customer.” - Always
have your ear to the ground for new end market opportunities. When helping
distributors assess new markets, Shelley Wald, president at lighting
manufacturer WAC Lighting in Port Washington, NY, reminds them of the cereal
companies that completely missed out on the early stages of the “cereal bars
for breakfast” trend. “It was outside of what traditional cereal manufacturers
considered to be within their ‘spaces,’ so a lot of them ignored it,” recalls
Wald. “Now they are scrambling to catch up.” The lesson for distributors, she
says, is that missing out on early-stage opportunities can be costly. “There
will be a lot of recovery work to do if you’re not in touch with marketplace
trends,” she adds, “particularly if they require you to break out of your
traditional space.” - Use
technology to your advantage when tracking trends and identifying new
opportunities. Good business intelligence is easy to come by these days
thanks to the web and social networking sites. A few hours spent reading
through industry blogs, Facebook pages, Twitter feeds, and online news feeds
can pay off when assessing new markets and territories. Customer websites (for
information on changes in their business environments and their own expansion
plans), and supplier websites (for marketing information, new product releases,
and general industry trends) are both good sources of intelligence that
electrical distributors can use to make smart expansion decisions.
—
McCrea is a Florida-based writer who covers business, industrial, and
educational topics for a variety of magazines and journals. You can reach her
at bridgetmc@earthlink.net or
visit her website at www.expertghostwriter.net.