Raise ‘Share-of-Customer’ –Farquharson/Tedesco
In the 1989 comedy "When Harry Met Sally," Harry and Sally are longtime friends who struggle to maintain a platonic relationship. Throughout the film, both insist they could never work as a couple but, because it's Hollywood, they're married before the end credits roll. What Harry and Sally really wanted was right under their noses the whole movie!
We know what you're thinking: "Is this Printing Impressions or Entertainment Weekly? I expected a column on print sales growth strategies, not a film review!"
This film does offer an important sales lesson: Sometimes the best option is right in your own backyard. Leverage the strength of your existing customer relationships to create and capitalize on new business opportunities with the people who are already doing business with you. The business concept at play is increasing your "Share-of-Customer" (SOC).
Print salespeople that implement intelligent SOC grab strategies will position their businesses for a happy and healthy 2011. Read on for a discussion of how to increase your average SOC, and how the results can be stunning.
For commercial printing businesses, SOC is defined as the portion of each customer's print budget that is currently being spent with your business. For example, if your client did four jobs last month for $10k, $15k, $20k and $55k, respectively, and you only got the $20k job, your SOC is 20 percent ($20k/$100k = 20 percent).
That's a No-Brainer
Why focus on increasing your Share-of-Customer? Let us be blunt: Duh!
The buyer mentioned above already knows you. It's much easier selling repeat work because the hard job of qualifying the lead is already done. Think of how much work is required to travel through the "suspect | prospect | quoting prospect | trial customer | repeat customer" funnel and compare it to the easier task of nurturing someone who's already used to paying your bills.
What happens next month when you get the expected $20k job and the $15k job? Your SOC increases to 35 percent. If your customer is concerned about spreading his/her work around, going from 20 percent to 35 percent SOC is barely noticeable to the client. But to you? Your sales with that customer will increase 75 percent!
That will be noticeable, especially if you can duplicate this performance across your client portfolio. Land the $55k job, as well, and you're at a 90 percent SOC, which is as close to 100 percent as most clients will let you go.
Hopefully, your eyes won't glaze over, but let's demonstrate the real financial impact of a small Share-of-Customer increase for the hypothetical Purdy Good Printing Co., which generates $10 million in annual sales, 80 percent of which comes from its top 20 accounts. Let's assume Purdy commands a 25 percent SOC, on average, with these top 20, and works like the dickens to strategically increase its average SOC to 30 percent during the course of a business year.
We start by determining the total revenue in dollars commanded by Purdy's top 20 customers:
$10 million x 80 percent = $8 million
If Purdy's current top 20 customers representing $8 million of revenue give one quarter of their business, on average, to Purdy, the shop has a 25 percent SOC. If the SOC were 100 percent, then total business for Purdy would be $32 million.
Before licking your chops, slick, the $32mm figure is only important for the next calculation. Therefore, a 5 percent jump in Share-of- Customer (from 25 percent to 30 percent) can be calculated using this equation:
$32 million (at 100 percent SOC) x .05 (5 percent) = $1.6 million
Now, add this $1.6mm to the original $8mm from your top 20 customers, and add the remaining $2mm from the bottom 80 percent. Your company now has $11.6mm in sales.
This is an overall increase of 16 percent for Purdy by concentrating on top clients with whom you're already doing business. See the power of a small increase in SOC?
Now that you've increased your company's sales 16 percent, you can paint the town red. Or, if you want to focus on making more money, start cold calling for business. Bet you won't mind this activity, knowing you're going to make your annual numbers. In fact, cold calling may even become fun!
Here are some basic sales tips to help you increase SOC:
Make Your Efforts Personal. People want to look good to their bosses, coworkers and industry peers. If you make your customers look good for selecting you as a business partner, they'll want to help you increase your SOC. Of course, prioritize convenience, safety, peace of mind and problem solving, but always keep an eye on boosting clients reputations in ways that are important to them.
Plug the Sieve. Business success begins with the fundamentals. Think of your business as a sieve. Opportunities flow in every day, and some leak out the bottom. Whether they pour or drip out depends on the size of the holes in your sieve. If you're operating without systematic follow-up procedures, these holes are probably huge.
Creating a diligent, self- contained, follow-up system will allow you to pick up a significant amount of printing work that used to slip through the cracks. Rather than make 10 cold calls, how about calling one or two customers who you haven't spoken with for two weeks? Out of sight means out of mind, and loss of SOC. Don't let it happen to you.
The Devil's in the Details. Even the smallest of details can cause irreparable damage and missed opportunities with current customers. Encourage your CSRs, estimators and production support people to go the extra mile for your customers. Gently advise them to fix any potential problem areas.
If a buyer tells you that so-and-so is a little slow returning calls, pounce on that information and make changes to their future customer experience. Make your team better. Your SOC improvement depends on it.
The key to a healthy 2011 for your commercial printing business may lie just under your nose. Don't make the same mistake Sally did—capitalize on the opportunities all around you. PI
—Bill Farquharson, T.J. Tedesco
About the Authors
Bill Farquharson is the president of Aspire For (www.AspireFor.com). His Sales Challenge can help drive your sales momentum. Contact him at (781) 934-7036 or e-mail email@example.com. T.J. Tedesco is team leader of Grow Sales, a 15-year-old marketing and PR services company. He is author of "Playbook for Selling Success in the Graphic Arts Industry" and five other books. Contact Tedesco at (301) 294-9900 or e-mail firstname.lastname@example.org.
Bill Farquharson is a sales trainer for the graphic arts. Email him at Bill@AspireFor.com or call (781) 934-7036. Bill’s two books, The 25 Best Print Sales Tips Ever and Who’s Making Money at Digital/Inkjet Printing…and How? as well as information on his new subscription-based website, The Sales Vault are available at BillFarquharson.com.