See double digit growth in as little as 6 months!
Small customers may not generate the sales volumes needed to support them as you would support your larger customers, but they usually generate higher profit margins and do not require as many resources. They may not merit a field sales visit, but in order to retain these higher profit customers you must still provide an excellent service proposition. In reality, most distributors don’t realize the “pot of gold” they have within their small customer base. Many of these customers have the potential to grow to become medium sized or even large customers. But because the resources are usually directed at larger customers in the short term, this potential is not realized.
An Integrated Approach
An integrated approach to managing your small customers is the most effective way to grow and retain them. An integrated approach is a marriage of both marketing and sales programs designed to address customer needs based on where they are in the customer lifecycle. This combined approach takes the form of specific campaigns that build on each successive contact. In this case, we will be discussing customers in a potential growth cycle. But first, you will need to segment your existing small customers into those that are most likely to generate more revenue and those that are not. This will allow you to focus more resources on only those customers most likely to generate more revenue.
Defining Small Customer Potential
An effective approach will enable you to find the “sweet spot” of small customers to focus on. Segmentation of your existing customer base will yield those pockets of small customers that have the potential to grow. A combination of firmagraphic data and past buying behavior are components of an analysis that will target the best customers to focus on.
Identifying Top Target Prospects
Segmentation will identify which customers are actively growing, and more importantly, which customers have the potential to generate more revenue than they are currently providing. The analysis will also identify those customers who do not have the potential, and could be actively directed to a lower cost service function, such as your website.
Now that the customers have been identified, it’s is time to create the specific campaigns needed to help them grow. The campaigns will be a combination of both sales and marketing “touches” and are designed to complement each other. Some things to keep in mind when creating these campaigns:
The first campaign should be designed to continue to define the potential of the customer.
Segmentation analysis has identified the customers as being most likely to have potential, but a direct discussion with the customer by an inside sales person will provide the final cut of customers to target.
Customers may prefer to use your website to search and order. A key campaign will be to encourage this behavior with online training presentations and marketing offers to support usage.
On-line product flyers followed up by phone calls or email offers are also effective to encourage customers to expand their purchases into other product categories.
Leverage the inside sales contact. This is one of the most effective ways to provide the level of service needed to maintain your smaller customers. They are already calling in to place an order, so a good inside sales person can take a few minutes to further develop the relationship by quickly probing for additional needs and potential.
It is always a good idea to create a campaign plan to keep you on target. See the example below.
|Target Customer||Small customers with the potential to purchase more than they are currently.|
|Problem/Opportunity||Small customers are not currently being focused upon, as the majority of the resources and attention is being spent on large customers. Small customers represent higher margin business and many of them have the potential to purchase more.|
|Solution Synapsis||Establish an integrated sales and marketing program of individual campaigns designed to grow small customers.|
|Goal||Grow small customers by a minimum of 15% over the next 9 months.|
|Resources Required||Marketing, Sales, and Finance resources will be required to implement this program.|
|Timing||Program in place to begin by September 1st.|
|Next Steps||Development of call guides, email templates, marketing offers, adn email newsletter.|
A lot of very valuable information will be acquired by inside sales, as they continue to have on-going customer discussions. This information is essential to both marketing and sales in enabling them to target on-going very specific campaigns to these customers. For example, a contact identified as a key decision maker will receive different touches than a contact identified as a design engineer. Marketing will have established key data for capture, such as job function, decision makers, job titles etc. and qualitative data will also be identified and should also be captured. This information can be captured in a CRM system if available, but can also be managed in an Excel spreadsheet if a CRM system is not available.
Measuring the success of your programs is imperative. If you want to be very scientific, you can do a split test by creating a control group of customers (these customers will not be involved in the campaign programs….business as usual here), and creating a group of customers who will be the targets of the campaigns discussed above. If your customer base is smaller, you will just need to track key statistics such as total sales revenue, profit dollars, average order size etc. If the growth campaigns are deployed effectively, you could see double digit sales growth in as little as 6 months!
Jonathan Bein, Ph.D. is Managing Partner at Distribution Strategy Group. He’s
developed customer-facing analytics approaches for customer segmentation,
customer lifecycle management, positioning and messaging, pricing and channel strategy for distributors that want to align their sales and marketing resources with how their customers want to shop and buy. If you’re ready to drive real ROI, reach out to Jonathan today at