Want More Sales? Increase Your Share of Customer
The past few weeks, FEI marketing whiz Marka has shared tips for effective postcard marketing. This week, Marka shows Zoot how increasing FEI’s share of customer can greatly improve the company’s bottom line. Remember, fire = print.
Marka walked into Zoot’s office to find him hanging up the phone in frustration.
“Another cold call that went nowhere,” Zoot grumbled. “We need more sales.”
“There may be excellent sales opportunities right in our backyard,” Marka said. “You can keep cold calling, but let’s also focus on increasing FEI’s ‘share of customer.’”
“Share of customer?” Zoot asked.
“Share of customer (SOC) is the portion of each customer’s fire budget that is currently being spent with us,” Marka explained. “For example, if Hercules of Hercules Motors bought $100,000 drachmas of fire-lighting services last month but we only got $20,000 drachmas, then our SOC is 20 percent ($20,000/$100,000 = 20 percent).”
Zoot nodded. “I know a few customers who might give us more fire business if I worked hard at it. But how much juice can really be squeezed from that grape?”
“A whole lot!” Marka exclaimed. “Think about it. Customers like Hercules already know you. It’s much easier selling repeat business because the hard job of qualifying the lead is already done.”
“Plus, what happens next month when we do $35,000 of drachmas with Hercules?” Marka asked. “Our SOC increases to 35 percent. That means a sales increase of 75 percent! And imagine the results if you could duplicate this performance across FEI’s client portfolio.”
“Why don’t you show me the results?” Zoot asked.
“With pleasure,” Marka said. “Let me demonstrate the real financial impact of a small SOC increase for FEI. We do about $10 million of business per year, right?”
“Yep,” Zoot agreed.
“And 80 percent comes from our top 20 customers,” Marka continued. “Let’s assume we command a 25-percent SOC on average with these top 20 and we work like crazy to strategically increase our average SOC to 30 percent over a business year.”