Understanding who your key customers are and who to prioritize isn’t always easy but, in a challenging market, it is even more essential.
With many industries facing materials shortages, delayed product lead times and increasing input and output prices, keeping existing customers close has been a key objective for all businesses throughout the pandemic.
Strong customer knowledge is of course a prerequisite for any effective sales team looking to retain existing clients but many manufacturers and distributors still struggle to identify exactly who their most important customers are and which merit the most attention, particularly in times of crisis when competitors are on the prowl.
Below are some of the key things you should consider when you are trying to discover your perfect customer:
1. Measuring ‘best’
Ask any sales director who their most important customers are and chances are they will have an immediate gut feel.
Ask another director who may have been in the business for a longer or shorter period of time, however, and you could well get an entirely different answer.
The fact remains that there are multiple ways of ranking and segmenting customers and it’s not always the most obvious metrics that are the most telling, particularly for businesses who have a more sizeable customer base.
2. Money talks
Perhaps the most obvious way of categorizing customers is based on the revenue they generate and their purchase frequency.
In smaller businesses that may only have a handful of longstanding customers, prioritizing clients based on total spending makes obvious sense. However, for businesses with a much broader customer base, focussing on revenue alone can be misleading.
Customer profitability should always be taken into consideration alongside overall spending, particularly in the manufacturing and distribution spaces where margins can be especially tight.
What’s more, the overall cost of servicing a particular client should always be a factor too. Your highest-spending customers may also be the most price-sensitive, demanding of your time, and the hardest sell.
Conversely, customers with more modest spend may be easier to deal with, swifter payers, and more price receptive.
3. Seizing opportunity
Despite the many challenges of the current economic climate, opportunity does still knock for manufacturers and distributors and identifying which customers offer the best scope for future sales growth.
This is particularly applicable for newer customers who may only be purchasing a small part of your product portfolio at present but could be persuaded to increase their basket of goods in the future.
Indeed, the clients that merit particularly close attention are those specifying a broad range of your products.
Regular, repeat orders of multiple items are the ‘meat and drink’ of core revenue streams and such customers can be hard to come by – and even harder to replace.
Prioritizing customers from a sector perspective can also prove highly fruitful, particularly at a time when there are new trends emerging that present growth opportunities.
Take businesses who sell into the jan/san space for example.
The sector has provided huge growth opportunities for players who have been able to quickly adapt and supplement their product portfolios and with pandemic measures likely to be in place for some time to come, it remains a growth sector where opportunities abound.
Length of custom is always a key means of identifying key clients too. While it is natural to want to attribute extra resources to keeping longest-standing customers happy, they may well have the biggest demands and operate on the tightest margins. Conversely, newer customers typically represent a stronger growth opportunity for organic growth and can be easier to satisfy.
4. The technology premium
No matter how your business prioritizes its customers, sales enablement technology can act as a major driver of client retention, delivering valuable metrics about historic customer interactions and buying patterns that can inform the best way to conduct client relations in the future.
The beauty of the sales enablement platform is that it is equally adept at helping sales teams to identify growth possibilities – such as the opportunity to cross and upsell – as well as flagging risk factors alike, including when customer spend in a particular area has dropped uncharacteristically.
For example, if you were using a CRM tool such as Salesforce, using a platform like sales-i inside your existing Salesforce solution could also help you generate more revenue from your investment in the software.
It can also be picked up at any time by sales professionals at all levels to give a comprehensive snapshot of historic customer activity – a particularly important consideration right now with so much volatility in the labor market.
Of course, all customers merit the very best customer service your business can offer but some inevitably bring greater challenges, opportunities and risks.
Knowing where to focus your business development and sales efforts is a vital step in keeping your most valuable customers close and away from the attentions of competitors.