Untapped Opportunity

Your customers: It’s kind of like one big soap opera. Jane leaves. Jane was great — lots of experience, knew her stuff, and she loved her sales rep. Jane’s replaced by Chip, who’s the son of Cliff, the owner. Chip’s name is fitting — he’s got a chip on his shoulder the size of Texas and won’t listen to a word you say about the cleaner he desperately needs to get that sticky, mysterious residue off his floors. On the other side of town, one of your customers is acquired by your competitor’s customer, and next thing you know, you have one less account — an account it took years to cultivate. And so it goes.

The point is, nothing about a customer base is permanent. It’s essential for salespeople to solidify relationships with current customers, as well generate new contacts. In a business climate where sales outlooks change at the drop of a hat, it’s reassuring for distributors to know they’ve got a whole group of potential customers ready to be tapped in to should their customer base suddenly erode.

“One of the traps that sales forces can get into is that they think things aren’t going to change. The fallacy of that is things can change,” says Michael Brizz, president of the Center For Professional Achievement, Chagrin Falls, Ohio, and a training consultant specializing in accelerating the productivity of salespeople. Brizz’s website provides information on the services and tools sales forces can use to elevate performance.

Mergers, consolidation, employee turnover and volatile economies are, in themselves, guarantees that there are no real guarantees. Thus, distributors need to constantly be prospecting simply to maintain their client base.

Some apply an exact number to the “customers-lost” equation. “Most companies will need to replace 10 percent to 15 percent of the existing business every year in order to stay even. Special projects, business closures and competitive activity will account for this 10 percent to 15 percent erosion,” says Eric Dedekam, vice president, sales and marketing, of Wood Wyant, the largest dedicated janitorial products supplier in Canada, based in Montreal.

To compensate, Wood Wyant requires each account manager to generate 10 to 15 percent more new business each year. “In our company, the role of new business is integral to the sales effort,” Dedekam adds.

“One of the challenges this industry has is that a lot of the long-time sales professionals look at their territory as an annuity, which means they over-service. You do generate strong loyalty, and customer retention is good, but growth becomes secondary. If you look at [this type of salesperson’s] territory, you see stable territories — probably profitable territories — but they’re not growing,” Dedekam explains.

And complacency is one of the most common problems for sales staffs. Excuses vary. Maybe “Things are going well,” or the rep feels he or she can’t steal other business because the customer is too closely tied to another supplier.

“There’s an attitude that people can get — people that have a route or a group of repeat buyers — that’s so difficult to change, and sales forces can become complacent,” says Brizz.

Others claim they’re too busy with their current accounts to aggressively seek new accounts, and that shouldn’t be an excuse either, he adds.

You Have a Choice
New business comes in two different ways: from a new customer, or from existing accounts. Each possibility is challenging and rewarding in its own way, but distributors agree, new business with existing customers is a far easier endeavor.

“We do a two-prong attack,” says Kevin Ervin, sales and marketing manager for Dee Janitorial Supply in Chicago. “A lot of new business we try to get from existing accounts. It’s much easier than knocking on a door.”

There are a few ways to grow business with existing customers, Ervin explains.

“You look at the items that a person is buying from you consistently, and you say ‘why aren’t you buying this, this and this?’ You already have the contact and the established business with them.”

When the opportunity presents itself, distributors also can walk through their customers’ facilities and take note of competitors’ products on the shelves, says Ervin. “Then you ask them why they haven’t tried yours.” But to do this properly, you must be prepared. “If you’re trying to increase what someone is buying from you, you have to know what they need to be buying from you.”

At Eastern Paper of New England, sales representatives are working closely with vendors to learn the ins and outs of products, and to get information on getting existing customers to grow their business, says Richard Renert, president of the Hamden, Conn., distributor.

“We’re looking at the vendor to help provide value-added services, such as different programs for the various markets: health care, building services, schools and education. Then we help the customer buy into the value-added training,” he explains. Partnerships with vendors provide Eastern Paper with valuable tools for selling. The sales rep then identifies accounts where he or she sees growth potential, and the manufacturer’s representatives accompany the sales staff on appointments with some of those customers, helping them to reach their goals.

Distributors need to be innovative and proactive in finding new ways to appeal to existing customers, says Scott Benfield, president of Benfield Consulting, Naperville, Ill.

“Ask more questions, find more buyers in the firm, find new product applications to go after. There might be new services the customer needs that they can go after.” Try brainstorming with current customers to find out what types of services are attractive, he adds.

A lot can be learned about customers by segmenting them, then performing a simple analysis, Benfield explains. “Assign customers to segments and compare the percentage of product group sales to the total amount they purchase. At the same time compute an average of all accounts within the segment and find the average product group percentage for the segment. What you’re looking to find out is where the individual customer has product gaps.” By comparing each account to the average, distributors can identify where the potential lies with each customer.

Salespeople can then question the customer about their choices and figure out what the competitive situation is.

More sales with existing accounts is agreeably the least costly way to get new business, but new accounts will always be critical for growth. Wood Wyant has come up with a sales philosophy that addresses both. The company has devised what it calls the Top 10+10 selling approach, where each salesperson develops a list of the Top 10 accounts in their area in terms of growth potential. They also have a list of the Top 10 prospects. The sales professionals then focus their efforts on these accounts, ensuring that they’re growing business with their best customers, but that they are also working to cultivate potential new customers.

“The importance of that is at no time should an account manager have less than 10 meaningful prospects at one time,” says Dedekam.

The company’s belief is that salespeople should spend 25 percent of their time on new prospects, 25 percent on their Top 10 growth customers, and the other 50 percent of their time servicing existing customers.

There are a number of methods Dedekam’s sales staff uses to put together their list of their Top 10 prospects, many of which are quite traditional.

Business directories and the yellow pages are a couple ways to uncover new prospects, as well as talking to vendors and the customers with whom you have good relationships, Dedekam suggests.
“Another one is taking the time in the evening or on a weekend and just driving through your territory. Look at the buildings, then find them on the Internet and research them.”

Is It Really Stealing?
“Stealing” business is unavoidable. There are just too few fresh business opportunities. So distributors need to “stay warm” with potential accounts.

“Ask them if their current supplier is giving them the level of service they want,” says Benfield. “Keep putting the idea of new and different services in there for them. It’s what I call ‘flanking.’ It’s not a head-on attack. Price would be the frontal assault and the frontal assault is the worst way to win a war.” Keep calling on the account, Benfield advises, because if the competitor screws up, you’ll be in the perfect position to snap up that business.

It’s well known that landing new business isn’t easy. (It often takes six or more sales calls before a customer makes a purchase.) So it’s important to be sure that business is worthwhile before investing too many resources. Be sure to qualify customers before putting time, effort and manpower into a sales call, Benfield cautions.

Benfield worked with one smaller distributor who did a good job of just that. The sales manager developed a list of potential contacts, then sat down with the outside salespeople and asked them to list the information they would want to know before approaching a new account. The company then came up with a questionnaire based on the responses. The questionnaires were assigned to the clerical staff, which was charged with calling the accounts and completing the forms. The sales reps were then able to follow up on the leads armed with ample prospect information.

It’s also important that distributors analyze what they’re currently doing to attract new business, and revamp their operations as needed. Referrals are one tool that few businesses have a handle on. It’s the most undervalued tool in securing new business, contends Brizz, whose company concentrates heavily on helping its clients use customer referrals to the fullest.

“Smarter organizations will leverage referrals,” says Brizz. “Most sales organizations are pretty weak at it.” It’s five to 10 times more profitable to prospect via referrals, he adds.

“There are a couple of things that are important to establish. The foundation for referrals is good service, so one of the ways you get referrals and find out how you’re doing is make sure you’re getting feedback from your customers — what they want, what they don’t want, and what they’ve found of the most value with the service you’ve provided,” he says. This gives distributors information they need to tweak their service. “And it becomes a beautiful platform for referrals. You’re getting them for the best reason,” Brizz adds.

Marketing Tools
Traditional marketing tactics are still popular.

“I think we do a little bit of everything,” says Linda Silverman, vice president of sales and marketing for Maintex Inc., City of Industry, Calif. From cold calls to leads from supplier partners and existing customers, Maintex’s marketing efforts run the gamut. Direct marketing, trade shows and mailers are just a few of the things the company entertains to churn up new business opportunities. They’ve also recently started a new marketing method — mailers sent to a list of prospects that are then followed up with an inside sales call.

Many distributors are also testing out less traditional, more technology-driven marketing methods. Silverman says her staff has benefited from more sophisticated contact management software, which reminds them to touch base with a customer on a set schedule.

Ervin maintains an e-mail list of customers and routinely sends out e-mails with specials on products — in addition to the industry-specific pamphlets and brochures he creates.

Then there are fax-outs, weekly and monthly specials and zip-code targeted promotions, says Dedekam, whose company is also investing money in making its website useful to those who want to download the product photos, minimizing the expense of four-color catalogs.

All of these marketing methods have the ability to pique customers’ interest; however, an in-person sales call will always be the most effective approach, says Benfield.

A Tighter Squeeze
Tough economic times make finding new business that much more important. Customers will always need toilet paper and cleaning chemicals, but they do begin to put certain expenditures on hold. That business has to be compensated for. New customers can make up for cutbacks in budgets.

“When the bigger ticket item purchases get delayed, it goes to new business development; you’ve got to continue to fill the pipeline,” says Dedekam.

In a tight economy, distributors need to make themselves invaluable to their customers, advises Brizz.

“In times of difficulty when the customers are facing greater challenges, what the suppliers need to do is come up with innovative strategies to help the managers manage their costs — things like order size and inventory.

“Have a conversation with your customer about the challenges they’re under and explain things that could be helpful,” Brizz continues. “What people remember in times of challenge is the people who really stepped up to the plate.”