Guard your business and your customers
BY RICH SCHMITT
Management specialist
As I have mentioned in recent columns, now is not the time to stop selling. I guess that is a double-negative, so let me say it another way. You must continue marketing and selling in this down economy. You might even want to step it up a notch.
Some companies got out of practice during the boom times since real aggressive selling was not required. That’s understandable since there was lots of work to be had. Customers needed loads of material and came to your counter or called your inside/outside sales team to order it. While there were still challenges and competition in the up-market, there was a ton of business to go around.
Now we’re in a period of less business and wholesalers are fighting to get their share of the available business. I have talked to wholesalers in recent months who are reducing the impact of the down economy on their business by taking market share from their competition. For example, the economy is off 15% but they take 5% from the competition so the net impact is down 10%. The share-losing competitor is seeing the impact of the economy (down 15%) plus their loss of share (5%) for a net business loss of 20%. Some of the share-losing wholesalers are resigned to the business erosion. They are writing it all off to the economy and that is exactly what the share-takers want. The share-losing wholesaler had his pocket-picked and the assailant, the share-taker, didn’t have to pull a gun or start a fight.
Fact #1
Your “friendly competition” will not give you the straight scoop regarding their level of business. (First, you should not be sharing any market information with your competition. I am not an anti-trust attorney but I think there might be problems with these sorts of discussions. Further, I don’t think you should give anything to your competition that might help them to compete against you.)
Sure, you have known some of these guy for years and probably shared insights in the past but now is the time to end that practice. One of my favorite quotes of all time is from comedian Lilly Tomlin who said, “When the going gets tough, we’re all in this alone.” The going is tough and you should not assume that the data or insights from competitors will be accurate. One of the share-takers that I know was telling me that his business was off a little but he was pretending that business was off a lot more so his customers didn’t resent his success. He also wanted to false-track his local competitors so they didn’t discover he was eating their lunch. Why get into a fight when you can enjoy their lunch while they nap?
Fact #2
Out of sight is out of mind. You must stay in front of your trade customers. They forget about you darn quickly even when you are out there marketing to beat the band. It is even easier to forget about you when you are invisible -- especially if your competition is in their face. As I discussed last month, you should not be extravagant or flashy but basic snail-mail fliers, fax fliers, e-mail fliers and catalogs are more important than ever. They are important reminders to your current customers and an absolutely critical part of introducing yourself to new customers.
Further, you need to continue -- or, for some wholesalers, to start -- doing counter, inside and outside sales promotions. These are great reminders and often can function as “order-starters” when customers are on the fence.
Fact #3
Marketing to a dead horse will not produce results. Some of your trade customers are in big trouble. Their waterhole has dried up and they are not on a course to find another. Some are bailing out into other professions, some are hustling for other kinds of work while others are paralyzed and hoping things will turn around. You should stay in touch with these guys because the economy will right itself eventually and you will want their business.
In the short-term, however, your marketing efforts must be focused on buyers who need your products now and have money to pay you. I know this sounds like common sense but a surprising number of this industry’s salespeople are still out there in their decade-old rut calling on dead-horse accounts. (I’ll bet some are even submitting call reports for contractors who are out of business but that’s a topic for another column.) Their call cycle and their assigned accounts have not evolved as the situation has changed.
I have heard that account attrition numbers for our industry are traditionally around 5%. This means that 5% of your accounts will go away every year and to simply stay even, you must find new accounts or grow existing accounts. I would guess that the attrition number in this economy is higher. Quietly taking share often involves the least risk but that will probably not suffice. So your challenge is to identify new customers in your current niche and, probably, new niches that you can reasonably serve to replace the lost business.
As a reminder, the desirable “new niches” are selling to new types of customers who need your current products and are located in your current geographies. You will, as always, pay your dues learning about the needs and idiosyncrasies of new types of customers but you already know the areas and products. This approach tends to involve less risk since you only use the word “new” once. On the other hand, new geographies, new products and new types of customers involve much more risk to you since there will be much to learn and bigger dues to be paid.
So your task for this month is to review all accounts and account assignments to insure that your efforts are focused on the highest potential customers. Accounts that are not being actively called upon are candidates to become house accounts. (As you know from past columns, I am a proponent of call planning and call reports. The one caveat is: You should not impose this extra work on your sales team if you are not going to read them and use them in providing guidance to your team. It will not be popular in any case but it is unacceptable to force it upon them then ignore the information. If you do this to them, I think they have a right to be offended.) For a sample call plan/call report form, e-mail me at rich@go-spi.com.
Fact #4
Unless you are in a very unusual market, a good chunk of business is being taken from your market by out of town and, sometimes, out of state internet or 800 number companies. Their convenient website and their great catalog are stealing good business right out from under your watchful eyes.
It didn’t matter as much when there was lots of business, but it is time to reassert your presence in the communities you serve. You participate in the community, you provide jobs and you contribute to community charities. That commitment to the community should be worth something to local customers who are buying outside the community but they won’t give you credit unless you tactfully remind them. In many cases, you probably offer better service since they are shipping in material that you have in stock locally. You may be able to offer better pricing (though I wouldn’t unless you are forced to) since some of these internet/800# companies trade on convenience and not price.
Now is the time to get your website spruced up and get your catalog updated so you can push those interloper companies right out of your market. Start thinking about every type of local customer who might be buying product that you stock out of one or more of the national or regional internet/800# company’s catalogs on their desk and go after that business. I wouldn’t be shy about reminding those customers that they are sending the business out of your community and, sometimes, out of the state. It is critical to remember that you must be at least as convenient and reliable as the “outsider” providers are because their local loyalty will disappear if you do not take care of them.
Fact #5
A lot of owners and managers have gotten out of the habit of calling on customers. When customers were flocking to your locations, it was easy to start believing that your company was at the center of the universe. I have some tough news: Don’t start believing your own press. Now is the time for owners and senior managers to get on the road again. In many companies, customer visits by the management team have eroded as the execs became too busy and there was enough business for everybody. In addition to re-establishing relationships with customers of all sizes and shapes, these visits also allow the management team to observe the situation in their market, first hand. The old adage “Believe none of what you hear and only half of what you see” rings true in up markets. In down markets, I would suggest that you believe even less of what you see since some customers and maybe even a member of your sales team might be painting a less than accurate picture of the world.
Finally, it is critically important to tell your current customers that you appreciate their business and want to work to deserve more of their business. During the executive visits I always recommend humbly asking, “What would we need to do to deserve more of your business.” The fact that you are asking and willing to do more might allow you to take some market share from the other wholesalers in your area. Even though their business is off, customers do respond to suppliers who are reliable, who pay attention to them and who are appreciative. (For a reprint on customer visits, e-mail me at rich@go-spi.com.