A challenge I hear from many salespeople and business owners alike is that there is never enough time to keep in touch with all their clients and prospects. This in turn leads to many lost opportunities and indeed lost clients.
There are just two areas salespeople and business owners need to focus their time on as far as sales are concerned.
The first we will look at is retention of existing clients. Our existing clients offer the best opportunity for future growth for a couple of very good reasons.
Firstly we have already earned their trust as an advisor/supplier and are therefore most likely to be offered the first opportunity of further work and secondly in many cases we are only getting a percentage of their work.
Some studies have shown that most of what we might consider to be “A” type clients are only in fact giving us slightly more than 50% of their potential business.
Secondly, and this may come as a surprise to many salespeople, the key reason for this is a lack of account strategies and planning, particularly in smaller businesses who seem to believe if we look after the client we will automatically get all their business.
So to maximize sales to our existing clients we need to develop an account strategy.
The first step in this process is to identify the services and products they are already buying from us then work out what other needs we can fulfill for them and build these into our call objectives.
Another step is to work out a call cycle. This will depend largely on what type of client you are dealing with. A trap for many of us is to categorize by turnover. It is therefore very important to look at a number areas when categorizing accounts, such as gross profit margin, lifetime value, wallet share, potential growth and so on.
All accounts, including those of prospects and customers, should be categorized to keep their call frequency as productive as possible. You must decide which accounts are most important to your company. Categorizing helps determine this. For every prospect or customer, there is a call frequency that will give you maximum return per call.
It is based on the belief that a greater portion of time should be spent on prospects or customers who offer larger volume potential. Less time should be spent on lower volume prospects or customers.
You will categorize your prospects or customers as A, B, and C accounts. A are major accounts; statistically they number about 15 percent of your accounts and give you 65 percent of your volume. The following 20 percent of your accounts are B, or minor accounts. They give you 20 percent of your total sales. Of the remaining prospects or customers, 65 percent are C, or marginal accounts. They give you 15 percent of your total sales. These percentages apply in most industries and are an excellent rule of thumb for determining account classification and setting sales-call frequency.
In most businesses, this simple analysis is rather startling. You will probably find that a small number of accounts produce the majority of your sales dollars, whereas a majority of your prospects or customers provide you with a small percentage of your sales. The classic statement that “80 percent of your business comes from 20 percent of your customers” is refined somewhat in the three account classification – A.B.C.
A good exercise would be to go through your database of clients and categorise them as
A, B or C. By understanding this you can then manage your time more effectively and look after the 20% of your clients who are indeed giving you 80% of your income and more importantly retain these very valuable clients through regular call cycles.
I will look at the second key area which is growth in my next article.
Quote of the Week:
“Sales is a contact sport”
Brett Burgess is a Sales Trainer and Programme Developer for Sales Impact Group.