In times of slow growth, looking for new customers isn’t always the most profitable course. Sometimes it pays to “go hunting on the farm.”
There is a long-standing belief that salespeople are naturally “hunters” or “farmers,” but what do you do in a mature market where there seems to be little to hunt and no new fertile ground?
The key is finding pockets of profitable, micro growth opportunities to explore. It takes some effort and analytics, but it’s worth it. Companies whose sales forces routinely excel at finding latent demand, among other strategies for sales growth, tend to grow revenue faster than their peers.
Here are three steps you should take to build the insight needed to grow your business with existing customers.
1. “De-average” customer sales trends.
An account’s historical growth rate is useless information. What you need to know is exactly where there could be growth tomorrow, and you need to know it at the micro level. There are two methods I regularly see succeed in all industries, though they are by no means the only ones to try:
- First, map tiny territories inside your larger sales territory. For multilocation customers, know in which zip/post codes their business is growing. Measure your share with those customers in those tiny territories, and go after growth where you are underpenetrated (versus your average share across the territory).
- Second, keep an eye on each customer’s plants or distribution points. Regularly ask where your customer plans to add capacity or more salespeople, and prioritize your new proposals there.
2. Know the next product to buy.
Sometimes business-to-business sellers are so accustomed to exacting requests for proposals (RFPs) that they don’t prioritize bringing new ideas to customers. Take a page out of the consumer retailer’s handbook. One easy analysis that can come out of any customer relationship management system is the basket of products customers similar to yours are buying. Again, go micro: check to see which individual products or services are missing from your customer’s basket. Outside the RFP process, talk with your customer about new options. It could be a rich source of profitable growth, possibly up to 20 percent.
3. Investigate SKU swaps or repricing.
At an even more micro level, SKU swapping and repricing can lead to 3 to 5 percent improved account profitability. When customers are buying highly specified products, getting them to switch or pay a little more may seem an impossible task – but that doesn’t mean you shouldn’t try. I spend a lot of time in the chemicals industry, where producing to a detailed spec is a basic requirement. There are always a few customers, however, who have been willing to explore switching or have accepted a revised price when when sellers present compelling data, such as the following:
- Your company is losing money on that specific SKU to that specific customer. If you are consistently unprofitable, that’s clearly not good for you, but it is also not good for your customer who may need security of supply. If another SKU is available with appropriate specifications, see if it’s possible to switch. If not, work to obtain a net price that is fair for both of you, or agree to strip out extra services the customer may not value.
- Your customer isn’t buying an SKU that its own customers may value more. Is there a profitable product you have that could provide incremental benefits down the value chain? If so, bring it to your customer’s attention, and calculate for the customer what it could do for his or her profit.
In today’s world of flattening or low average growth rates, salespeople should embrace “hunting on the farm” as the new normal.
This article was originally published on the Selling Power Blog.