The best salespeople not only close the first order, but
they continually grow the customer’s account until they become the primary
vendor of choice: That position gives them the right of last refusal on
quotations. The goal is to become the customer’s most trusted adviser, the one
salesperson the customer always turns to for guidance and support. So, here are
five critical B2B customer management strategies that increase profit, help you
become that all-important incumbent supplier and position your company for the
long-term.
1. Having a Plan via the Gap Analysis:
One of the best tools I’ve come to use in my sales career is that of the Gap Analysis. This simple tool is used to define the business you have now – and want to keep in order to defend market share – versus the business that remains to be pursued in order to increase market share.
It’s a tool that can be used on a macro level and a micro level. The micro level comes from defining the gap at individual customer accounts and across an entire sales territory. The macro level comes from defining your gap within your market. The gap analysis is the first step to defining your company’s market share.
Your salespeople can’t identify and close on new opportunities unless they delve further into the customer’s business. The Gap Analysis helps them do just that: Your salespeople should be able to define all the sales opportunities with the customer and what they need to do in order to close those opportunities.
Again, don't just focus on individual customers: Expand your analysis across your entire customer list and review opportunities by territory and within your entire market.
The above table is from: Market Share Analysis: Using a B2B Sales “GAP” Analysis to Identify Opportunities with Customers, Sales Territories and Your Entire Market
2. Using a Customer Value Scale:
Defining your customer's value to your business is essential to properly managing business at that customer's account. You want to define your top tier customers in order to better understand how to replicate success.
Every company must come up with a customer value scale – a grading
system that defines the value of each and every one of their customers. There
are several variables that should go into this grading system. First, you need
to define how much the customer spends. You can define this monthly, quarterly
or yearly. In this case, it’s not just about increasing customer retention, but
also about increasing retention within the account itself.
Second, define the types of products your customer’s buy: Are they buying high profit margin products or low profit margin products? Do they consider you for new business or are you a last resort?
Third, you must define your receivable financing costs with the customer: Are your customers staying within their terms, or are they extending those terms and increasing your costs to finance your receivables? High financing costs directly impact your profit on sales. Now, you can’t always force customers to pay on time, every time. However, you should know which customers help to lower your financing costs on receivables.
Finally, does your customer contribute to high inventory turnover rates? In this case, you want customers that take what they say they’ll take – in a timely fashion. When you increase your inventory turnover rates you decrease your costs of inventory financing, inventory obsolescence, damage, insurance and a multitude of other inventory costs.
The end result is that you should be able to grade each individual customer based on these aformentioned factors. This helps you identify your best opportunities for sales, while simplifying how and what your salespeople focus on.
You can learn about how to better manage your customers by going to: B2B Customer Management: Moving Customers up the Value Scale
3. Capitalizing on Competitive Advantages:
Simply put, if you have a competitive advantage – be it cost, performance, longevity of product offering, or cost-per-use benefits – then use it to your advantage. This is the key to getting more business and increasing profit. It’s the essential “what if” question: If we are able to give you this, can you give us this? Except, in the case of sales, it’s a little more discreet: If we give you a price reduction on product “x”, can you give us a first order for product “y”?
Displacing the competition only comes from your company offering a better solution. Unfortunately, companies get all caught up with protecting profit margins on individual product lines - all to the detriment of selling other products and increasing profit overall. Don’t allow yourself to be “penny wise - pound foolish”. If you have an opportunity to increase sales and profit by using a competitive advantage – and that decision will increase sales overall within the customer’s account – then don’t hesitate: Get the business.
The video above is from: Sales Negotiation Training: Cost-Per-Use Product Sales Strategies
4. The Fine Art of Deal Making:
Have you ever asked yourself why your smaller competitors are so much more competitive with their offers to customers? Well, most immediately point to their lower overhead, lower cost structure and the desperate nature with which they pursue sales opportunities. The most common explanation as to why you lose business to these smaller competitors is summed up in the following statement: “Well, they gave it away and needed to because they’re desperate.”
However, what if this wasn’t the case. What if your competitor was just better at making deals than your company was. What if all they focused on was making the deal make sense for both themselves and their customer.
Most companies fail to even consider the fact that their smaller competitors may be better at negotiation than they are. However, when you stop and think about it, all these smaller competitors are doing is using every resource they have to negotiate a better deal. Smaller companies have to be resourceful in order to compete with larger competitors. That resourcefulness allows them to become better deal-makers. In fact, you probably did the same thing when you first got started. However, over time, you got away from that entrepreneurial mindset.
Making deals doesn’t mean you give up everything in order to close sale. You can maintain healthy gross profit margins and still bend a little. Again, don’t be “penny wise - pound foolish”. Focus on what you have that will allow you to reduce your customer’s costs without simply lowering the price of your product.
Defending business at individual customer accounts comes down to identifying your competitor's offer and understanding its weaknesses. You can learn more by going to: Defeat Competitors With Three Simple Steps
5. Long-Term Growth over Short-Term Profit:
Don’t misread this criterion. The intention isn’t to imply that short-term gross profit isn’t important. Instead, it’s meant to define how each salesperson should be thinking long-term in terms of how they manage and sell to their customer. Salespeople must develop long-term growth objectives by customer and by territory.
The first objective is to make that all-important first sale. However, this can’t be done at all costs. As such, don’t sacrifice the customer relationship for short-term, high-risk returns. You may be able to get that customer to buy something they don’t want once or twice, but if you focus on selling them something they don’t need, and can’t benefit from, then they’ll eventually catch on.
Business-to-business customers have too many options in today’s marketplace. Your competitors are but a few online searches away from stealing business. If you take advantage of your customer – and they find out – you’ll forever be trailing from behind. Identify your long-term growth objectives by customer and then set a plan in motion to capture that business.
Your goals aren’t just to keep the business you have: Your goals must also be to keep that business and get more. That only comes from understanding which customers have the greatest potential, what your company’s competitive advantages are, how best to position the deal and how strong your long-term growth strategies are.
The following articles provide insight into similar approaches.
Five Things B2B Salespeople Must Know About Their Customers: Essentials of Customer Management
Sales Negotiation: Defend Price, Customer Scare Tactics & Managing Concessions
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