How To Balance Existing Customers And New Prospects

Your current customers are your best single source of new business. They know you, they know your product, they have demonstrated their willingness to purchase. What’s more, you know them, you’ve learned about their needs, and you’ve invested a significant amount of your time in the success of their business. You should work to protect that investment and encourage it to grow the same way you manage your investment portfolio, making adjustments periodically to maximize the return on your investment.

Your current customers are also your company’s most profitable customers. The heavy start-up costs have been absorbed and written off already. The current customers have passed the credit checks, had their account data fed into your computer, been educated about your billing practices, learned how to use your customer support and service staffs, and otherwise incurred the typical back-office expense necessary to start doing business with a new account.

They’ve probably also passed the most expensive stage of incurring initial selling costs. You’ve used the get-acquainted offer, the short-term trial contract, and the sales promotion expense to bring them into the company. You’ve done your basic research, invested your time in preparing the initial proposals, tracked down the decision-makers, and made all the follow-up presentations to make the first sale. Once you’ve done these things, you generally don’t have to do them again. You can skip or abbreviate at least some of these time-expensive tasks.

You can concentrate on keeping the current customer happy and increase your business with them while you go about developing other new accounts. As you’ve probably guessed by now, you have to do both tasks to build a successful account list or territory. There is no rest in sales unless you decide you’re not going to grow your business both ways. And if that’s your decision, you’ll have plenty of time to rest—in the line at the unemployment office.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Customer For Life? Maybe!

Your goal for every customer should be to turn them into a customer for life, a popular concept that’s made the rounds in the last few years. Bowl them over with your service. Become such an integral part of their company that you have your own desk in their office. Know their needs so intimately that you develop solutions before the customers even discover the needs themselves.

Out of all your customers, you won’t have very many with that kind of relationship, but when you do, you’ll profit from it. I’ve been fortunate enough to have a handful of such customers with whom I’ve done business both when I worked for other companies and after I started my own. A few of them have represented millions of dollars in income over the years. You can enjoy the same kind of long-term relationship with your best customers if you practice just one thing: never stop selling them.

They may become your friends; in fact, I hope they do. They may come to rely on your service or products to the exclusion of all others. They may tell you that they’ll always be your customers and sign long-term contracts to prove it. But if you take them and their business for granted, you’ll regret it someday.

You’ll also be sorry if you rely on them as your sole or main source of income. Having one dominant customer is a dangerous situation because there are too many variables outside your control—and theirs. “For life” is a long, long, time.

Situations and people change. What was the foundation for a wonderful relationship two years ago may not mean anything today. Your relationship with your customer for life has to develop and change the same way your relationship with your spouse or significant other evolves over time. That’s the only way the relationship will stay vibrant, alive, and satisfying to both of you.

So never stop selling them. Every time your company comes out with a new product or service, pitch it to your current customers first. If it’s really a “new and improved” model, don’t you owe it to them? If there’s a limited supply, shouldn’t your best customers get first shot at it? That should be one of their rewards for being a loyal customer.

And always look for ways to add value to their current purchases from you. If your company sees fit to offer an inducement to new customers, shouldn’t your best current customers get the same deal? It’s a real slap in the face if they don’t. And if the new business incentive is a small price to pay for a new account, it’s an even smaller price to pay to keep a current one. That’s one of the management dilemmas behind sales promotions.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Continual Selling Cements Customer Loyalty

The best way to make sure the long term customer knows you’re not taking them for granted is to make it a practice to continually sell them. Advertising works best when it’s presented constantly over time. The message and the medium are important, but the repetition of the message—the frequency with which a customer sees the ad—is paramount. Good customer relations are built the same way: continual selling.

As you practice continual selling, watch out for a few pitfalls. In most businesses, long-term orders are encouraged. A contract to deliver the product or service in increments over a period of several months is generally considered more valuable than a series of contracts to deliver the same volume written one month at a time. The security of the long-term contract is often so important that the vendor will grant a discount or other special terms to the customer who signs one. Salespeople recognize the value, too, because they know that it’s much more efficient to sell one contract than twelve.

But there’s a downside risk in long-term contracts, too. The salesperson often believes, either consciously or subconsciously, that they’ve secured all the business they’re going to get from that customer, so they stop selling them until contract renewal time comes around. In some cases (which are all too frequent), the customer won’t even hear from the salesperson again until it’s time to renew. This attitude not only impairs the relationship with that customer, but it blinds the salesperson to many good opportunities in the interim.

I’m sure that your company has a continuous stream of new products, repackaged lines, sales promotions, and maybe even a price change or two. The first place you should prospect to sell these is among your current customers. They’ve already shown their willingness to buy from you, so keep the boiler stoked by continually feeding it new fuel.

Your customer’s needs may have changed or new ones arisen since they signed that long- term contract. The contract itself may have left some money on the table or there may well be a “contingency fund” in the customer’s budget held back just for last-minute opportunities. You’ll never know unless you constantly offer them additions to their contract.

Another advantage of continual selling is that you are trying out new ideas on the customer all the time. That gives you frequent feedback on what the customer likes and doesn’t like, needs and doesn’t need. Whether you sell any add-ons or not, this is very useful information when it comes to renewal time.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Successful Contract Renewal Strategies

If you’ve been selling for any period of time, you’ve learned that contract renewals, even with your very best customers, are far from automatic. That’s why you should develop a renewal strategy that’s as complete as your plan for selling a new major account.

First, when you start working on that renewal, try to move the decision date earlier every time. There’s a real pragmatic defensive reason for this. Just as you monitor your competition, they’re constantly monitoring your accounts, too. And they’re probably just waiting for the opportunity to get in there with your biggest account at renewal time. Can’t you just see them lurking in the shadows?

The best way to foil their attack is to preclude it by locking up the renewal early. If you wait for the prospect to tell you it’s time for renewal, it’s too late. You should be the proactive party in the transaction.

Do your estimate (or re-estimate) of their spending potential, study their needs as you now know them, and put that proposal for the renewal on the table as early as you can. You’ll stand a good chance of getting an early renewal at the best and will have set the standards for the competition at the worst. It’s generally better to be defending your position than assaulting someone else’s.

And when renewal time rolls around, make sure you set your sights high enough. Don’t let your expectations be limited by the size of the last contract. Human beings have a bad tendency to categorize each other. In sales, you tend to sort your current customers into boxes—and the size of the box is not based on their total potential as a revenue source but on what they spent with you the first time you sold them.

This system of classification is even worse when you take over an account that had been handled by someone else, like your predecessor in the territory. There’s a particular danger of improper classification, by the way, with some computerized sales automation systems since they can’t take into account what should be, only what has been. And many time management systems  encourage you to rank your prospects by dollar volume and allocate your time accordingly, so the error can be compounded.

If you sort your customers into boxes based on their previous spending with your company, you’re putting yourself into a box, too. And that box limits the potential for growth in your commission check. You should have no more pre-conceived ideas about your current customers than you do about new prospects. You must not let past spending be the sole determinant of the size of future proposals.

Remember, too, that the stereotyping process works both ways. Just as you’ve classified the account based on its past spending, the buyer has probably classified you based on the size of the proposals you have offered. If you’ve been selling them small deals, you’re grouped (mentally at least) as an unimportant vendor. If the amount they spend with you “moves the needle” on their income statement, you’ll be in a much larger box.

I recommend periodic reviews of current account potential along the lines of the initial research on prospective new accounts described in The Dynamic Manager’s Guide To Sales Techniques. There’s no law that says you can’t do that same kind of research into your current accounts. In fact, you would be doing the customer a real service if you took the time to analyze them that way.

Start with a fresh needs analysis as if you were getting ready to pitch a new account—then add the knowledge you’ve gained during the term of the current contract. Has the competitive scene changed? Has the customer made any changes in their business? The list of questions is endless but they should all give you a clearer map of the route to a sizable renewal.

Then look outside the box and estimate their revenue potential. If there’s a discrepancy between the estimate and their actual spending, you may have identified an opportunity.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Don't Miss the First Westchester Digital Summit

The inaugural Westchester Digital Summit will be held on Tuesday, May 14, 2013, according to organizer Chris Dessi, CEO and Founder of Silverback Social.  The event has been named by Forbes as on of the “Four Lesser-Known Conferences That Deserve Your Attention in 2013.” The summit will be a global gathering of the most innovative minds in the digital economy today, bringing celebrities, global digital marketers and the most compelling industry personalities impacting the digital world today to Westchester County Center in White Plains, New York.

With an impressive roster of speakers and presenters including Brett Prescott, Global Marketing Strategy at Facebook, Shripal Shah, Senior Vice President & Chief Strategy Officer at The Washington Redskins, Josh Glantz, VP & General Manager of Publishers Clearinghouse Online, Brandon Steiner, Founder and Chairman of Steiner Sports, Geoffrey Colon, Vice President Social @Ogilvy, Sandy Carter, Vice President for Social Business and Collaboration Solutions, IBM, Michael DiLorenzo, VP of Social Media, Rue La La; Rick Burnes, Product Marketing Director, HubSpot; New York Times and Wall Street Journal best-selling author Gary Vaynerchuk; and digital media impresario, author and educator David Kidder, the innovative summit will bring attendees face to face with the digital change makers of today.

The Westchester Digital Summit will feature a panel discussion led by powerhouse media personalities Dari Alexander, Fox News Anchor and Author; Ed Butowsky, Managing Partner, Chapwood Investments; Jeff Pearlman, author and Sports Illustrated contributor; and Mike Edelhart, CEO, The Pivot Conference, SVP and Chief Digital Strategist Shripal Shah of The Washington Redskins where they will tackle how digital marketing is changing the face of traditional media.

Silverback Social is producing the summit in conjunction with Zanzarella Marketing Consultants. Embracing the drastic change in the way that we, as a culture, aggregate and disseminate information, Silverback CEO Chris Dessi was inspired to organize an event that could offer marketers the proper tools to engage with their clients like never before.

“Through my public speaking endeavors, I have been asked to share my techniques for efficiently engaging in social media at some of the biggest and most celebrated conferences in the country and I see first hand that they are all concentrated in cities. No opportunity exists in suburban areas like my hometown of Westchester,” Dessi explains. “I took it upon myself to create this opportunity for the many local business owners and entrepreneurs that truly stand to benefit from having this caliber of knowledge and insight right in their own backyard. This was the inspiration for the summit, and it will change the face of business in Westchester forever.”

The Westchester Digital Summit will begin at 10AM on Tuesday, May 14^th, and will continue throughout the afternoon with panel discussion and keynote speakers.  General Admission Tickets are currently $215, with student admission beginning at $35 and sponsorship opportunities available.

The event will take place at the Westchester County Center, located at 198 Central Avenue in White Plains, NY.  Tickets can be purchased at westchesterdigitalsummit.eventbrite.com. 

Dave Donelson distill the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Building Repeat Sales

Creative selling isn't just for new accounts. A good creative seller will base the renewal proposal on a fresh idea for the long-term customer as well. Since you know their business intimately now, your ideas for them should be real barn-burners.

Idea power works on renewals the same way it works on new prospects. It more firmly establishes you as a resourceful ally of the customer. It separates you from the competition. It moves you and your proposal farther up the decision-making chain. And there’s that key advantage of idea selling, which is its focus on value rather than price.

A typical contract renewal usually starts with you and/or your sales manager deciding how much more to ask the account to spend. That amount generally is determined by the budgeted revenue increase your company has imposed on your sales manager and has nothing to do with the customers or their needs.
So the two of you look at what the customer spent last year, what prices they paid for what inventory or services, and you put together a proposal for the same thing with an additional item or two plus some unit price increases. Sound familiar?

When you pitch this insightful piece of work to the customer, Mr. Big’s going to consider it with two things in mind:

1. “Since this is the same thing I bought last year, am I satisfied enough with it to buy it again?
2. And if I buy it again, can I get a lower price?”

Then he’ll pull out the proposal which your competition has given him and compare the prices. Since they’ve had a year to study what Mr. Big bought from you, they’ve undoubtedly offered their version of it at a lower price. Even if they haven’t, Mr. Big is going to tell you that they have.

Being the saint that he is, Mr. Big will also inform you that he wasn’t entirely happy with what you sold him last year and has to have a better price this year to justify buying the same thing again. And since you can’t prove either point otherwise, you have to negotiate the renewal on price.

But what if you had followed the Creative Selling System to set up your renewal pitch? You’d be presenting a new idea to Mr. Big rather than the same old thing. And since your idea is based on the intimate understanding of his needs you have gathered during the last year of servicing the account, it should be right on Mr. Big’s target. Can he compare your new proposal with the competition’s? They’ve come in with last year’s model while you’ve presented a completely redesigned, up-to-date, forward-looking alternative. Which looks better?

How about comparing the new proposal with the old contract? If he says he wasn’t satisfied with the old deal, he’s playing right into your hands. Once again, what you are offering isn’t the old deal—it’s something new. He can’t compare prices—it’s apples to kumquats.

Idea power is awesome.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Don't Lose The Customer On The Phone!

We like to think that things like the quality of our company’s products or service and the fairness of our pricing are the most important factors when it comes to building customer loyalty. To a certain extent, that’s certainly true. But there are several other things we do (or don’t do) in our operations that can sour the customer’s feelings toward us and, all too often, drive them into the welcoming arms of our competitors. Most of those things seem like such small items that we can’t imagine losing a customer over them. But customer relationships can’t be taken for granted because even the smallest molehill can turn into a mountain if we’re not careful.

There are several areas of business operations where mountains are likely to grow. One of the first places to look is your telephone, often one of the first points of entry to your business for your customers. When the customer calls, does it sound like you’re glad they did? Or does the way you answer the phone send the message that their call is an intrusion? If you answer the phone with a supposedly neutral statement like, “Dave’s Guitar Shop,” you’re making the customer work to justify their call to you. If you just add something a little friendlier such as, “Can I help you?” it makes the customer feel wanted. This applies when a real live human answers the phone, of course.

If your customer’s first telephone interaction with your shop is with an automated attendant, some different rules apply. Since most people detest dealing with machines, it’s essential that you make their experience as painless as possible. Here are some guidelines for setting up your automated telephone answering system:

• Make the welcoming message cheerful and short.
• Offer an immediate option—like “press zero”—to speak to a real person, then repeat it after the other options.
• Keep the number of choices to a minimum. If your customer has to wait to hear, “Press twelve for the parts department,” you’ve lost them.
• Label your choices by functions the unfamiliar new customer will recognize, like “parts,” “machine shop,” and “estimates,” instead of “Charlie,” or “Susie.”
• Don’t make them press more than one number before they’re connected to a human.

If you absolutely must use a voice mail system, make sure it’s customer friendly, too. Everyone’s greeting should be pleasant and promise a return call as soon as possible. At the end of each message, repeat the option to “press zero” for an operator.

Whether you use a voice mail system or have someone who takes messages, make it an absolute rule that every customer message gets returned that same day—although within an hour is even better. Even if you have to call back to say you can’t talk to them now, make an effort to acknowledge the call.

The degree of customer-friendliness of your telephone system is easy to test. Just take a page from the manual of the retailers who employee “secret shoppers” and call your shop from outside to see what it sounds like. Put yourself in the customer’s shoes and ask yourself if the person that greets you—recorded or live—sounds like he or she is smiling. Listen to the entire greeting and ask yourself if you feel welcome. If you have an automated attendant, press every option at least once to see what happens. If you end up in voice mail purgatory—where you don’t know if the message you’re leaving is for the right person—you know you’ve got a potential problem.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Is Your Shop Customer Friendly?

When was the last time you looked around your shop to see if there are any customer-aggravating items? How about signs that explain your policies to customers? Do they read like they were written by Joseph Stalin? It’s really not necessary to scold your customers when you tell them where to park, make them stay out of the service area, or keep their hands off your tools, although it may seem like you have to sometimes. “No Customers Allowed”  sounds pretty nasty, especially compared to a sign that gets across the same message by reading, “Employees Only, Please.”

You sound a lot more customer friendly (and professional), too, when you explain why you have the rules you have. Add “Insurance Rules” or “OSHA Regulations” to the “Employees Only, Please” sign and you’ve made your policies sound a lot less arbitrary.

When it comes to rules, it’s not a bad idea to review yours every once in a while. Look at things like your hours of operation, availability of merchandise, deposits, and return policies to see if they serve a real purpose beyond irritating your customers. Do you close so early in the day that customers don’t have a chance to pick up something they need after they leave work? If a customer has to take off work, it’s an additional cost to them of doing business with you. The same holds true for when you open—can they drop off an item for repair and still have time to get to their job? Saturday and Sunday hours are customer-friendly, too. And if you want to really do it right, offer to accommodate customers by appointment at other hours when you’re not normally open.

Most customer relationships are built on good communications, of course, which raises a couple of other questions:  Do you call the customer when their job is ready or make them call you to find out if it’s finished? If the work’s not going to be done when you promised, do you call to warn them? It takes a little time and effort on your part, but the customer who gets such a call generally recognizes the thoughtfulness. Besides, it demonstrates that you respect the value of their time and, by proxy, appreciate their business.

While I’m ranting, whatever happened to saying “thank you” to customers? From the almost total absence of that phrase in most businesses these days, you might think it had been put on something like the FCC’s list of forbidden words. Another phrase seems to have replaced it, the one you hear when the cashier at the grocery store hands you your change and receipt and says, “here you go.”  What the heck is that supposed to mean? Even worse, when the customer takes the change, their inclination is to say “thanks,” which sounds as if they are expressing their gratitude to the store! What’s wrong with this picture?

If you want to make your shop truly customer friendly, make it a practice to thank the customer every chance you get. “Thanks for calling,” “thanks for letting us work on your car,” even “thanks for coming in” are the right words to use when dealing with the person who keeps you in business.

These may seem like little, picayunish details when compared to major factors like how well the product works after the customer gets it home, and they are—individually. But when you add them up, which is what happens when the customer comes into your shop time after time, they grow. Add enough aggravations, and the next thing you know, you’ve built that proverbial mountain out of a molehill
.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

How To Lose A Customer - Method #3

You can’t please everybody. Some days, in fact, it seems like you can’t please anybody. The paint color is a shade lighter than the customer thought it was going to be. There is a squiggle in the upholstery seam that only the customer can feel. The shelf is higher on one side than it is on the other—you can’t see it, but the customer can. How do you handle impossible, irrational complaints? (No, a slap upside the head is not a viable solution.)

The first step in handling a complaint—rational or otherwise—is to hear the customer out. Listening is the most important skill in customer relations, so remember the first rule: you can’t listen if you are talking! Let the customer talk first. Don’t pounce on what they say by trying to give them an answer before they’re finished. A remarkable number of complaining customers just want someone to listen to their problems, so learn to offer that particular small service automatically.

Is the customer always right? No, but they should never be told flat out that they’re wrong, either. Soften it a little by using phrases like

• “I can see why you feel that way…”
• “Let me look at that again…”
• “I understand what you’re saying…”

Then make an adjustment if you can, or explain—politely and respectfully—why you can’t. It’s tough to generalize because complaints can vary from the frivolous to the catastrophic, but the key factor in the customer relationship is the way you communicate with them about it.

You may have to shave your profit on a job to make the customer happy, but it doesn’t really happen all that often. There are people who try to get something for nothing, but if we start by assuming that the customer is trying to take advantage of us, we’re never going to resolve the problem to either their satisfaction or ours. In fact, the damage to our relationships with good customers far exceeds any loss we’ll experience by giving in to the unfair demands of the single crooked complainer.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

How To Lose A Customer - Method #2

When you are in a service business, not every job goes as planned. That’s why, depending on the kind of work you do, you give your customers an “estimate” instead of a firm price before you begin. If you’re smart, that estimate is in writing, and if you’re even smarter, you ask the customer to sign it before you touch their job. Even then, though, misunderstandings occur and customer relationships can become strained. No one likes to get a bill for more than he expected.

It happens all the time: a manufacturer raises the price of a key component after you’ve figured the old price into the job; you remove a panel only to discover a crack in the supports underneath, one thing leads to another and before the job is done the man-hours you originally estimated turn into man-years. You can’t just absorb these unexpected costs, nor should you. But you can’t just pass them on to the customer either, at least not without his prior approval.

Your future relationship with your customer depends in part on the way you tell him his bill is going to be higher than he thought. Your goal should be to convince the customer that you’re not trying to pull a fast one. Express regret that you have to deliver some bad news, then give them the details—and the more details you include in your explanation, the higher your credibility will be. You don’t have to be defensive or apologetic, but let him know you share his pain. If you’re open, honest, and above all timely, you’ll keep that customer.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.