Lesson 1
If you’re really in B2B, then you’ll know all of your customers pretty well because they’ve been ordering with you for a while and should continue to order for quite a while. The reality is that many vendors, for whatever reason, not only dislike administrative tasks like database maintenance, but also view their customers as their customers, not their business.
action point
Make sure your business maintains an up-to-date registry of top decision makers and key influencers. If necessary, give the database a non-threatening title, such as Christmas Card List.
Cost: £nil
Lesson 2
Who are your most important customers? Are the customers who spend the most with you? Are they the ones that give you the highest margin or the highest profit? Or are they the organizations you currently do business with but could do so much more?
action point
Make it clear to sales teams exactly what kind of customers are important, what kind of mix is required, and why. You may need the large accounts to pay overhead, the high margin accounts to contribute to profits, and the growth potential accounts to fit into the growth plans you have. Not to mention the inevitable customer turnover. Once this is done, the Director of Sales can manage how time, effort and resources are spent, making sure they are in line with their plans.
Cost: £nil
Lesson 3
We all need to sell more to stay put due to the nature of customer churn. Faced with the pressure to produce Growth Plans, we must always take into account the “hierarchy of risks” map. This hierarchy is divided into three stages.
Low risk is selling more to existing customers.
Medium risk is selling your existing range to new customers and selling new stuff to existing customers.
The high risk is selling new things to new customers.
The safest route to take is to sell more to your existing customers and the easiest way to do that is through Windows of Opportunity.
action point
Take the list of your most important customers (the Christmas Card List), perhaps also using Pareto’s 80:20 rule to further refine the list by placing the names in the left-hand column. Then at the top, list the products or services you offer. These can be Nuts, Bolts and Washers; Valves, Pumps and Actuators; o Public Relations, Writing and Consulting. Now, in front of each element of the matrix, put the estimated level of penetration (or shared portfolio) that you have with each client in front of each product or service that you offer. Show this as an approximate percentage, 100%, 80% or 30%, something simple that everyone can understand. You may need help from sellers on this. Better yet, use delivery drivers. They often get to see inside customers’ stores and know who is buying what from whom. This is your Window of Opportunity.
Cost: £nil
Lesson 4
So far, this exercise has cost you nothing but time, effort, and the embarrassment of not having this vital data on hand in the first place. We should now have in a single spreadsheet a list of the key decision makers and influencers on your most important customers, cross-referenced with who buys what and how much of their spending they have. This list needs to be prioritized a bit more.
action point
Take the customer list and add a column for Annual Revenue. This can be for the past year, or the last twelve months, or even the last six months annualized. Now sort the list with the highest-income customer at the top.
Cost: £nil
Lesson 5
Adjusting the list based on windows of opportunity can have a big impact on the direction of the business as a whole. It’s better to take the full penetration figure rather than the individual scores for each market segment, as this next stage doesn’t want to get too complicated.
action point
Create a new column titled Overall Penetration and stick to simple percentages like 50% or 75%. Now divide the revenue by the percentage figure and the result should be the potential of the account. Sort the spreadsheet again, with the highest potential, shown under Bills, at the top. This should be a list of your softer goals.
Cost: £nil
Lesson 6
We have already covered customer churn in this exercise. Some churn is inevitable (mergers, acquisitions, and bankruptcies all contribute), but in general, at least two-thirds of customer migration can and should be caught before it happens. If you have a 15% churn rate, it should be possible to reduce that number to just 5% in a few months, thus putting an additional 10% in the revenue forecast.
action point
To do this, you need to listen to your customers. Discover its little things. Find out if there are personality conflicts between your sellers and your buyers. Find out what is stopping them from giving you all their business; pass it on to other buyers of your goods and services within your organization. And find out what problems might be driving them to look elsewhere.