Trying hard to get into a new client. Think it’s a good fit for us since we handle a lot of this type of business. Concerned about the margin, but I don’t feel comfortable jacking prices – especially on repeat business and commodity business, which this could be. Also aware that in trying to get into another similar account we did a lot of free work on a project that went nowhere. What should we do?
THOUGHTS OF THE DAY: Increase the value of each sale as you decrease risks. Educate potential customers on the best use of your products or services. Don’t wimp out when it comes time to negotiate. Know when a product life cycle is deteriorating.
Look at your team’s sales skills. Are they as efficient and effective as they can be, moving the right prospects forward as quickly as possible at the highest possible margin? If you’re not sure how to do that assessment, get some help.
Make it clear what kinds and quantities of business your company wants to acquire over the upcoming two to three years. And then work with each salesperson to build a portfolio of prospects that matches those goals.
Review the sales portfolio and results weekly – once a month isn’t frequent enough. If you review results weekly, you have 50-plus opportunities to adjust anything that’s off. If you review results monthly, you’re down to 11 chances to fix things within the year.
Develop rules about what makes a customer profitable or unprofitable and teach those rules to your sales force. Look at your customer portfolio, comparing longstanding and newly acquired customers, and customers by mix of products or services they buy. Focus on the best quantity/profit mix of customers.
Be aware that the most expensive part of customer management is usually the cost to acquire new customers. Once the working relationship and trust are built, it’s easier to talk to existing customers about what else your company can do for them, and they’re more likely to tell you about what else they might need from you. Once you have a customer, focus on selling that customer more things at higher margins. If you don’t have enough additional things to sell, fix the problem by doing R&D or by acquiring other products or services. Then build a program to work your way through every customer, to maximize what they buy from your company.
Figure out who are your strongest negotiators and get them involved, either meeting with prospects or coaching peers on how to handle negotiations. Know that it’s every customer’s job to ask for discounts and freebies. That doesn’t mean you have to cave in. Build negotiating room into your proposal. And practice saying, “No, but how about this alternative,” when a deal doesn’t make sense. Give salespeople permission to walk away from bad deals.
Beware when requests for discounts increase, competitive threats go up and/or quantity of good customers is in decline. Those could be signs that a valuable product or service is no more. And if so, you need to rethink your company’s reliance on that product or service.
Move sideways into more profitable territory by looking for ways to make your offer fresh, new and different. Add an extra service that no one else provides. Ask customers how else they use the product and promote unique ideas.
Look for additional customer markets that your competitors may not be involved in. Also look for markets that competitors are giving up on where you could be dominant and profitable once the competition falls away. Consider merging or buying in order to become a stronger competitive force.
BOOK RECOMMENDATION: “What Customers Crave: How to Create Relevant and Memorable Experiences at Every Touchpoint” by Nicholas J. Webb.
Andi Gray is president of Strategy Leaders Inc., StrategyLeaders.com, a business-consulting firm that teaches companies how to double revenue and triple profits in repetitive growth cycles. Have a question for AskAndi? Wondering how Strategy Leaders can help your business thrive? Call or email for a free consultation and diagnostics: 877-238-3535 or AskAndi@StrategyLeaders.com. Check out our library of business advice articles at AskAndi.com.