Winning Advice – #2 Acquiring Customers
Acquire Customers was number 2 of 5 on the recipe for business success given to me by a dealer mentor when I first purchased my dealership in 1997. It was second in importance behind “Hire Quality People” on a 200 word, handwritten blueprint, drafted by this senior peer. Although his dealership’s track record for growth, market penetration, and sales often placed this dealer group among the best of the best, this key to success had the least number of words of all 5 of his key points. He summarized this action step in 20 words.
The succinct message was simply this:
2) Acquire Customers
a. Aggressively sell to get a customer base.
b. Aggressively try to retain at least (industry) margin.
c. Monitor Sales & Margins.
Even though this was an area that his business excels in; that was it, 10% of the 200 word total! That said, when you think about implementing each of these as a strategy for building a business and acquiring customers, maybe his real key to success is taking a “keep it simple” approach.
“Aggressively sell to get a customer base.”
The elements to successful selling have changed with the internet and all the social outlets. Today polls tell us our customers want you to educate them, not sell to them. So, if you don’t know your product or service you will have a hard time selling it. Personally knowing a little more background on the sales processes of this dealer group, educating had already been a part of their process for decades by the time this was drafted 17 yrs. ago. Many of their sales staff had worked their way into sales after spending (sometimes years) in other supportive roles as they learned about the products, the applications, and specifications. He also believes in providing outstanding customer service that was second to none in his industry and that no person is above any job when it comes to seeing the customer is taken care of.
One thing that still lives at the core of sales process is people still buy from people; something easily forgotten in emails, texts, and the social media interactions. His sales staff is expected to be involved in the same local associations & organizations their customers are in so they foster and build meaningful relationships.
“Retaining a margin”
This was a message directed to the front line people engaged in selling. Many businesses are still afraid of being too transparent when it comes to showing actual profit. The easiest way to hide this in sales is to structure everything around the published (list) price. In this structure, most of the employees selling have an idea of the actual cost, but any discounting or negotiating on price is structured from the published or list price. This can be effective and I have seen it work very well, but the person selling the product or service usually does not know the final margin at the end of the transaction.
As far as I know from day one, this dealer has sold product based on a profit margin. As he built his business all of the departments in the business know what the net costs are of the products or service they are selling. They all know where the margins are expected to be in order for the business to remain profitable and they manage to those margins. They know the tipping point where a good deal becomes a bad deal. Without some level of transparency in your numbers, it is impossible for your employees on the front line selling your products and services to know if they are helping or hurting your business when they complete a transaction. Establish and then retain profit margins on every transaction.
“Monitor Sales and Margins”
If the previous directive of retaining margin was a message for the front line employees, this message is for the management. Someone has to continue to monitor the big picture. Are trends changing? What is happening in the economy? Where are new pressures developing in our market? Are overall margins increasing or decreasing? It is the crystal ball statement. To be prepared for the future, you need to be constantly assessing what is going on in the market. Running your company on Auto-pilot in this area of your business will eventually run it off a cliff or into the side of a mountain, neither of them have a good outcome. If your goal is to build a business and acquire customers for the long term, you owe it to them to monitor your sales and margins, so your business is sustainable and it will be there for them long term.
When it comes to Acquiring Customers, how does your business approach it? Do you apply any of these principles and practices to your business? As always, we appreciate any comments in the space below.
Chris Steinlage Kansas City Business Coach
Photo by 10ch via Flickr