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MarketIntellibits
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September,  2006
Volume II   Issue 13

"Look in the Mirror"
by Jack Miller


Why do you lose orders?

According to some sales people, it’s always about price. If you believe that,
look in the mirror.   If the only way you lose an order is due to price, isn’t it
likely that the only reason your competition loses an order is also due to
price? If that’s true, then the only way you win is price.

Or are you really better than that? Do service and quality get you the order
when price is equal? Perhaps that’s the objective of your sales and
marketing effort: to be the preferred supplier, to gain the right of last refusal.

Maybe.  But do you really know? Do you know what aspect of service or
quality is so important? It’s probably not the same for all customers, but are
there one or two aspects of service or quality that predominate? Most likely
Pareto’s Principle, the 80/20 rule, applies and there are a few critical factors
that matter most.  You might think you know which factors these are, but if
you haven’t asked – in a controlled, structured manner – chances are, you
really don’t know.

The more important question, though, is why do you lose a customer? I
remember asking a paper merchant this question a few years ago. His
answer surprised me. He said the main reason they lose customers is that
they make too many mistakes. Wrong size. Wrong quantity. Wrong product.  
I suppose I shouldn’t have been surprised, but I still wonder how many
merchants would give that same answer.

There’s a very important point here: it’s likely you lose because you don’t
execute the basics, not because someone comes up with something better.

The corollary should be obvious: it’s most important to focus on executing
the basics, on customer retention.  It’s often said that it’s easier to  keep an
existing customer than to gain a new one, and that loyal, repeat customers
are the most profitable, so make sure you have the basics down before you
invest too much on creative, new customer programs.  This is certainly true
when the business is commoditized and there is limited opportunity for new
product development and innovation, but it is true in any business. In fact, in
a specialty business where innovation often comes through joint
development efforts with existing customers, customer retention may be
even more important.

Do you know why you lose customers?

Make sure you understand this, and then,  look in the mirror.

That’s where you’ll see the opportunity, because  it’s likely that your
competitors lose customers for many of the same reasons you do. It’s been
suggested that printers might switch suppliers as often as once in three
years. If that’s true, then one third of the market shifts each year, and at any
given time, there’s a lot of opportunity.

Make sure you understand the three stages involved when a  customer
makes a change in suppliers:
•        what triggers the decision to make a change?
•        what process is used in selecting a new supplier?
•        what criteria are considered in this process?

Is the change triggered by too may mistakes as in the case above? Or is it
poor service or quality? Or something else? Is there an opportunity for
differentiation here?

How does the customer decide on a new source? Who has the greatest
influence? What sort of samples do they look at? In what environment?

Finally, what is most important? Price? Performance? Availability?
Environmental considerations? In paper, for example, do printers buy
opaque grades because of the opacity, or because of the brightness?

If you ask these questions, the answers might surprise you. If you need help
getting these answers,  call Jack Miller at 203 925 0326  or email
jack.
miller@market-intell.com

To read The Tonnage Disease, click here.


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Copyright 2006, Jack Miller



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