To learn more about how to form stronger relationships with your customers, turn to page 43 in the June issue of tED magazine to read Create Customers For Life in the Sales Spotlight this month.
Is your distributorship a firefighter who handles the problem of the day, or does it give customers the kind of long-term value that keeps them coming back for more?
Electrical distributors that want to build long-term relationships with their customers in today’s selling environment generally have two things working against them. First, their next competitor is always just one screen tap or mouse click away. Whether they’re looking for better pricing, searching for more readily-available inventory, or unhappy with the service your distributorship provided in the past, customers don’t have to go very far to find a replacement supplier.
The second—and perhaps biggest—obstacle is the outside sales rep who spends too much time chasing down the “next, big sale” instead of working to cultivate long-term, lasting relationships with customers. By ignoring the overall lifetime value of those customers—and overlooking the time, effort, and resources that go into finding and securing new buyers—these reps are doing their organizations a real disservice.
“Some salespeople do a great job of selling until the prospect turns into a customer. Then, after the product or service is delivered, they drop out of the picture, moving on to close new sales,” Ken Dooley writes in Proven strategies to create long-term customer relationships, loyalty. In most cases, this happens because reps set their sights on their next prospects before finding out whether a new customer is satisfied with the product and/or service.
Other culprits include the fear of hearing complaints during a follow-up meeting; simply not knowing enough about the product or service that’s being sold; or forgetting that every product or service may still require advice from the seller before it fulfills a customer need. “Top salespeople separate themselves from the ordinary by conducting after-sales checkups after delivery is made,” Dooley writes. “They recognize that service excellence gives them a competitive edge.”
Five Times the Cost
Putting time and effort into keeping existing customers on board, happy, and buying more from your distributorship is also a lot cheaper than convincing new ones to buy from you. In fact,
OutboundEngine says that:
- Acquiring a new customer can cost five times more than retaining an existing customer.
- Increasing customer retention by 5% can increase profits from 25-95%.
- The success rate of selling to a customer you already have is 60-70%.
- The success rate of selling to a new customer is 5-20%.
- U.S. companies lose $136.8 billion per year due to “avoidable” consumer switching.
These are just a few of the obvious signs pointing to the value of building lifelong customers in any business environment. “Nurturing customer loyalty is essential for B2B companies since it allows them to build long-term relationships and, eventually, have access to more opportunities with their clients,” OroCRM points out in B2B Customer Loyalty Program: Successful Strategies for Businesses.
“Unlike B2C, B2B customers represent a much greater pool of potential business engagements, which may be also incredibly unique,” OroCRM continues. “Customer loyalty also morphs into referrals resulting in greater brand awareness, new customer acquisition, and new cross-sell/upsell opportunities.”
Firefighter or Long-Term Confidant?
Having worked with numerous B2B companies in the industrial space over the years, Steve James, a freelance marketing consultant in Vancouver, B.C., says long-term relationships may start with a single sale, but they must be nurtured and cultivated over time in order to keep a distributorship’s brand front and center.
“Businesses must know that the original purchase is simply a ‘taster’ for what is to come,” says James, “and that people want your services; they don’t need them.” In many cases, those buyers lean on their electrical distributors for help putting out their day-to-day fires—a reality that can make the “one-off” sale both convenient and enticing. In other words, it’s up to the distributor to turn those firefighting sessions into long-term relationships.
“For B2B businesses, no one really thinks about ‘the big picture’ in their businesses. Instead, they’re focused on solving everyday problems (not unlike your own distributorship),” says James, who tells electrical distributors to find their customers’ pain points and solve them in a way that makes a true difference to their organizations. “Then, give those buyers a reason to keep in touch and get more business problems solved, including the kind of shifts that are large-scale and transformational.”
Baking-in a Long-Term Value Proposition
To electrical distributors that want to start developing stronger long-term customer relationships, Paul Donehue, president at sales management consultancy Paul Charles & Associates, says the best approach is to sell yourself first, followed by the organization and its products/services. “The ‘order takers’ of the world are in danger of extinction,” Donehue points out, “hence the importance of selling oneself first, and then using those ties to build solid business relationships that are built on trust and mutual respect.”
Calling both inside and outside sales reps “the ultimate differentiators” for electrical distributors that want to build longer, better, and stronger relationships with their customers, Donehue says it’s up to those reps to help bake in their distributorship’s long-term value proposition. Ignore this fact and all of the marketing, advertising, customer service, and follow-up in the world will just go to waste.
“It’s critical for sales reps to establish themselves as value-added experts who are interested in, and who understand, their customers’ business needs and priorities. They need to position themselves as experts who can provide good ideas or advice,” says Donehue. Well known for having deep technical, product, and application expertise, independent electrical distributors are particularly well positioned to leverage these strengths when building long-term customer relationships.
“If reps can successfully establish their value—and the value offered by the organization—and build solid business relationships, then buyers will share more information with them,” Donehue says. “Once they truly understand the customer and its needs and priorities, your reps can use this information to create and present a more compelling value proposition for your distributorship.”
In the second part of this article series we’ll give you some solid strategies that your company can begin using right now to start building better and stronger long-term customer relationships.
Tagged with best practices, sales