How Distributors Improve Customer Retention A common rule of thumb in distribution is that it…
Seasons greetings and happy new year!
It’s hard to believe that 2016 is right around the corner. That means it’s time to start putting your annual sales plan together if you haven’t already done so. If you’re like many distributors, you’re in the middle of wrapping up your hardest working quarter and month. December means a race to the finish line to meet your goals and continue to sell. Meanwhile, you’re not just competing against other distributors, you’re also competing for time with holiday parties, family events and vacation schedules. With all of the hard work you’re putting in, it may be hard to think about getting out of the gate as fast as possible in January.
For better or for worse, come January 4 (the first Monday of the new calendar year), your sales numbers will be reset to zero and it will be time to roll up your sleeves again. How will you beat last year’s plan? What will your new goals be? Will you count on growth from your current customers? Will that provide enough risk mitigation in your current plan if your customers face budget restrictions of their own?
We’d like to help you in your planning and provide you with 10 new years resolutions for your sales and marketing teams to start 2016 off fresh.
1. Build on Your Current Customer Segments
Your new sales efforts need to be based on prospecting at the top of your sales funnel. So why not prospect where you know you already have a distinct advantage? You want to create new prospect lists where you have a referenceable base and solid history of performance. It makes it easier to ask for referrals and demonstrate your particular areas of expertise. Of course this is a lot easier if you have a distribution-centric CRM system and an easy to use and configure business intelligence platform. That way, you can slice and dice your sales history to find the strongest segments and micro-segements to start your prospecting.
2. Reach out to Vendors and Associations
Once you’ve established the segments and industries in which you maintain your biggest advantages, reach out to the vendors and associations in those areas. It’s about more than just networking and developing new relationships. It’s about working together to create new competitive advantages for both of you. Vendors often need help in creating customer lists, profiling new territories and finding new ways to compete. They are behind a little bit in their data because you maintain the purchasing and in some cases, the end-user relationships. Also consider helping vendors and associations with content, training, email campaigns, speaking events and more. Make 2016 the year you show your vendors that you are their most important distributor.
3. Ask Your Customers For Help
Often, the best source of new customers is your current base of happy customers. How connected are your customers? LinkedIn is a great source of information in finding new prospects. If your clients don’t have rich social media profiles, you can get new introductions the old-fashioned way by just asking them. Most people want to help out, so take a considerable amount of time in January to extend your network through you current customers. When you get an introduction, track that information in your CRM system so you remember the connection. It can also be helpful to copy both the new introduction and your current customer on your email to make the new prospect feel more comfortable. And don’t forget to send a nice thank you note or small gift of appreciation to the customer who introduced you.
4. Broaden Your Reach in Each Account
How many contacts do you usually work with in each company. Run a list for all of the customer contacts you work with, either as an organization or in specific territories. Again, this is a lot easier if you have a solid CRM system coupled with a leading business intelligence tool. Then, make it your goal to target at least five contacts per company. Why? For starters, the more people you target, the higher your odds are of selling at least one of them. Perhaps more importantly, the more people you talk to in one company the more likely it is that they will talk about you and how you can solve their shared problems and help them meet their goals.
5. Improve Your Social Media Tactics
It is surprising how many distributors still do not use sites like LinkedIn or Twitter for sales and marketing. Make it a goal this year to find and follow more customers and prospects through social media. Watch them for updates, comments, questions, groups they participate in and more. These behavioral clues will give you new things to talk about and tip you off to ways you could better serve them. Analyze the mutual connections you have to generate more interest all the way around your network. Join their groups and create some visibility by posting resources, support answers, articles and more. Just be sure that you are providing value and not just trolling for sales.
6. Work With Non-competitive Companies
Try to find companies who work with the same customer segments you do but do not compete with you directly. We realize that at some level, every company is an economic competitor try to get their share of wallet from each customer. But if you can find a company that compliments your product offering, has a great customer base and is willing to trade leads and information, you’ll be better off in the long run. There are many non-competitive companies out there who work with your customers on services, training, technology, marketing, installation and more.
7. Improve Your Thought Leadership
An often overlooked value add for your distribution company is your thought leadership. You do more than just provide products. You provide ideas, training, answers to questions, insights and information about new trends. The difference in 2016 is that instead of just providing those ad hoc as you sell products, you should reach out to your networks, social media and association events and provide those ideas through articles, speaking engagements and other proactive means.
8. Improve the Frequency of Customer Orders
Your best and most valuable customers have a quality that is more than just order size or ability to pay — they have order frequency. How regularly does a particular customer place a sale with your company? Frequency is an element that improves the efficiencies of your entire business while at the same to adding some predictability to your sales can cash flow as more frequent purchases help us predict future purchasing patterns as well. We all know that the longer it takes for a customer to return to your business, the less likely that customer will return at all. Measuring revenue, DSO, net profit and more is only important if the customer is going to place another order and continue placing orders on a regular basis. Frequent customers with high quality are great. We suggest segmenting your customers based on a combination of quality and frequency to get a well-rounded look at your customer base.
9. Track and Target Competitors
If you aren’t yet tracking competitive information inside of your CRM system, 2016 is the time to start. A robust CRM system allows you to track your competitors so that you can see which competitors are involved with which customers and which deals. That in itself is useful; however, creating a full profile of each of your competitors gives an edge to your sales people. Don’t limit your list of competitors to the usual suspects. Many distributors think only of other distributors who sell similar products in their specific geographies. Today, competition is coming from all angles, other distributors, online sources, Amazon Supply, big box retail, manufacturers selling direct and more. Once you know which competitors are involved with which accounts, you can proactively respond to changes in the marketplace (a competitor leaves, drops a brand, has a service issue, etc.) with targeted information to win business away from that competitor.
10. Commit to Constant Improvement All Year
Creating a repeatable and measurable process is key to increasing the success of your entire sales team. A CRM solution allows you to systematize your process so everyone follows the same processes, has access to similar resources and assets like brochures, emails and internal experts. Your CRM solution allows you to create, follow, track and improve the behaviors you need to succeed. Some sales trainers call this “the cookbook.” You need to know which and how many activities create success. In other words, you need to know how many calls lead to how many appointments, how many appointments lead to how many quotes, how many quotes lead to how many closed sales and so on.
To Learn More
Here are some resources to help you achieve these new resolutions:
- Learn more about the importance of order frequency in our Green Paper, “Turning Good Customers into Great Customers.”
- Get tips on how to maximize your vendor relationships.
- Download our Green Paper, “Five Steps to Unseating Your Competition,” to learn more about tracking and targeting competitors.
- As you commit to constant improvement, don’t forget about the importance of coaching your sales people to success.
- Be sure to sign up for our best practices webcast series to learn more all year during 2016.