By Bridget McCrea
Even in the most uncertain economic conditions, focusing on your long-time customers is an important business strategy that no electrical distributor can afford to ignore
When the economy slows, business shifts, or sales targets are missed, one of the first reactions a distributor sales manager may have is to push his or her team to get out and “find new customers.” After all, if your current customers aren’t buying as much from you as they did, say, six months ago, the natural reaction would be to go and find new ones that will help fill the sales pipeline…right?
Unfortunately, that may be the wrong approach. In 6 Ways to Claim More Market Share in 2015, tED spoke with marketing expert Rodger Roeser of The Eisen Agency about the value of putting time and effort into retaining long-time, loyal customers.
“Have a separate and distinct strategy between serving and growing with existing clientele and attracting new ones,” says Roeser, who sees a lot of industrial firms making mistakes in this area. “You can’t market to current and new clients the same way. You really have to hone your strategy and give your target markets a ‘reason to believe’ that working with you (or, working more with you, in the case of existing customers) would be an advantage for them.”
Providing Extreme Customer Service
Now operating in a slightly-different economic environment than the one they experienced in early-2015, electrical distributors should need to pay even more attention to their best customers—even if those clients aren’t placing as many orders as they once did. In other words, rather than just taking a “get out there and find new business to fill the gap,” stance, sales managers should be helping their reps lock in their best customers when the economy is uncertain, difficult, and/or unpredictable.
“All distributors need to practice ‘extreme’ customer service in uncertain economic times, and should be focused on developing true value and a worthy mission that supports those efforts,” says Richard Trimber a business attorney with General Counsel PC in McLean, Va., and a former COO of both a manufacturing and distribution company. One of the best ways to achieve this goal is by providing ongoing value to customers that—thanks to the rise of B2B e-commerce—have myriad buying choices right at their fingertips online.
“Create a corporate culture that oozes customer service, and a team that really wants existing customers to achieve success and get the job done regardless of the current economic climate,” says Trimber, who sees the high cost of new customer acquisition as a particularly good driver for distributors that need a reason to dig deeper into existing accounts. In assessing the cost of getting a new customer versus retaining an existing one, for example, Harvard Business Review’s Amy Gallo estimates that new customer acquisition is five to 25 times more expensive than retaining an existing one. It makes sense, Gallo writes, because you don’t have to spend time and resources to go out and find a new client. You just have to keep the one you have happy.
Growing Existing Accounts
If you’re still not convinced that retaining customers is so valuable, consider research conducted by Frederick Reichheld of Bain & Company, which revealed that increasing customer retention rates by 5% increases profits by 25% to 95%. International sales consulting firm Forum concurs, and says that the “most highly-leveraged and least costly way to achieve growth is to grow existing accounts.” In recessionary times or uncertain economic climates, for example, customers are feeling increased pressure to get more done with fewer resources. This often means they are more open to consolidating their supplier relationships.
To get there, Forum tells sales reps to focus in on their most strategic customers, explore innovative pricing options (i.e., retention pricing options that reduce customer risk and strengthen its commitment to partnering), and leverage partners to help your own customers achieve business results (e.g., working more closely with your own suppliers to create new offers and opportunities).
“In uncertain times, it is most important to listen to your existing customers, understand their problems, offer insightful support, and do everything you can to help them survive,” according to Forum’s Selling in Uncertain Times: Strategies for Building Business in a Tough Economy.
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 email@example.com or visit her website at www.expertghostwriter.net.
Tagged with business, customer, customers, economy, partner, partners, strategy, tED