Increasing sales to current customers
Increasingly companies are realising that it is easier and cheaper to sell more to their current customers than to try and gain completely new customers. There is however a subtle difference between selling more of the same to the same customers and trying to cross or up-sell products and services to current customers. This article discusses some of the challenges that Customer Champions have unearthed while working with its clients in this vital area of maximising the value of your current customer base.
Knowing your customers
Much has been said, and indeed spent, on Customer Relationship Management (CRM) solutions that are going to help companies deliver increased customer loyalty and profitability by selling more to current customers and selling to new customers. In a B2B market many companies are only now just being able to list their customers, let alone provide accurate and up to date customer contact details, or customer purchase history. Too often there is still an environment of “knowledge is power” and sales / account managers are retaining customer contact details on their own personal databases rather than centralising this valuable commodity. Once the basic information is in place this then needs to be supplemented by understanding what customers want from their supplier today, and in the future. It is the combination of understanding customers and using CRM tools that will deliver differentiation as well as the ability to cross and up sell.
Customer Trust is Key
Today the focus is on product bundling in order to cross or up sell. But the starting point to sell more to current customers has to be to gain customers’ trust in the company. Trust is something that is built up over time, and is based upon the company delivering against customer expectations. With strong competitive market forces in power, customers are bombarded with marketing messages from a whole host of organisations, many of which have no relationship whatsoever with the customer. Naturally, customers tend to defer to suppliers that they know and trust, particularly in a time of a highly competitive market. The often over used saying of “no one ever got fired for buying IBM” is becoming truer and truer. IBM’s own marketing is built around being a trusted reliable partner who will not only help customers through any growing pains today, but will still be there in the years to come. If an organisation is going to be able to sell more to its current customers they need to be able to convince them that they can be trusted to deliver in the future as well as today.
Trust is often developed through effective communication and good customer relationship management i.e. delivering what was promised, when it was promised, at the cost it was agreed at, but vitally keeping customers informed of any variation and actions that will impact that. It is about customers believing that (trusting) their suppliers have their interests at heart and are doing everything possible to help them. Based upon Customer Champions’ experience, some two-thirds of issues that arise from customers can be identified as originating from poor communication or poor customer relationship management, which consequentially results in a loss of trust.
Effectively listening and acting upon feedback
The foundation to selling more to current customers and selling to new customers is to be able to listen and act upon the feedback. The challenges to this are summarised in the following diagram. The findings are from a Customer Champions experience of dealing with many large corporations around the world. Companies were asked to assess themselves in their ability to move from measuring customer feedback, all the way around the cycle to implementing change, and communicating back to customers.
- Measurement (95%)
The vast majority of organisations measure customer reaction to their services and products.
- Internal Communication (50%)
Only half, in their own opinion, successfully communicate the findings of this feedback to employees in their company.
- Action Planning (30%)
One in three believes that they can interpret the findings in order to identify the key areas they should action.
- Action Deployment (10%)
A mere tenth deploy corrective countermeasures in order to improve their competitive positioning.
- External Communication (5%)
Less than one in twenty companies believe that they communicate back to customers what they learnt, what they plan to do about it, and what they have done about it to date before re-surveying their customers again.
The cycle then commences again with renewed measurement of the customer experience.
The objective of completing the cycle has been to increase the level of customer satisfaction by indicating that as a company you have listened to, understood and acted on what the customer has been telling you, therefore supporting the potential to sell more to current customers. The reality is that the vast majority of companies ask the questions on how they are performing but don’t necessarily understand the answer, and certainly hit barriers in trying to act on what they think they have heard, a crucial customer relationship management failing.
It is through the completion of this cycle that companies will deliver to the customers what they have asked for. This is a fundamental building block for trust and good customer relationship management, which in turn then offers opportunities to cross and up sell.
Shifting value propositions
Obviously the completion of the cycle is not the only factor impacting trust. For example, customers have to believe that what companies say they can do, they are fundamentally set-up to do. If you have spent your previous marketing budget on positioning your company as a low cost commodity supplier, and your customer brought into that proposition, will they believe that overnight you are now able to deliver higher value services? The skill sets of the individuals, the services, and the company culture that were appropriate for a low cost commodity supplier will not be the same for a higher value service. Yet many companies struggle to change these aspects of their business whilst attempting to move up the value chain. Customers see this, and instead of agreeing to be purchasers of additional goods and services, they begin to look elsewhere for a supplier who can deliver the basic services they want today: the very opposite of the company’s intention, which was to sell more to those current customers. Many organisations want to deal with suppliers that they perceive as similar in market positioning to themselves e.g. Tier 2 companies prefer to deal with Tier 2 suppliers, and therefore avoid the potential of being a “small fish in a big pond”.
The reasons for customers becoming your customers in the first place will also impact the success of your strategy. If companies joined you because you were offering the lowest price, it is highly likely that they will move to another supplier who can offer a lower price. Moving up the value chain, and thereby increasing the overall cost to your customer base, will see natural erosion of the customer base that bought purely on price. If customers joined you because of “added value”, these are more likely to remain loyal, and more likely to be positive recipients of cross and up sell propositions and enable a company to sell more to its current customers. There is a direct relationship between how difficult it was to obtain a customer, and how loyal they will remain to you – “easy come, easy go!”
The change of proposition in order to achieve cross and up selling has to be one that is wholeheartedly grasped by the whole organisation, and not just seen as the latest sales & marketing tactic. It is employees away from the sales force that will deliver goods and services to customers, and who will therefore deliver the trust that customers require take part in “on-the-ground” customer relationship management and provide the organisation with the positive image it needs if it wants to sell more to current customers. Companies need to ensure that all employees individually know how what they do impacts the customer, both positively and negatively.
In some organisations the scope of this culture change and awareness needs to be widened to include third party companies such as suppliers, distributors and alliance members. I always remember the occasion when in Auckland airport I was trying to get British Airways staff to help me with a Qantas ‘problem’ (Qantas are a partner of BA in the OneWorld alliance). However, “they weren’t allowed to access each others’ computer terminals, so I would have to wait” – so much for the OneWorld alliance delivering. They had cross-sold me additional flights through the alliance, but the experience has in fact turned me away from being a loyal BA customer.
Align yourself, not alienate yourself, to the customer
Inside many organisations today we treat customers as objects, we target them, we segment them, we manipulate them with loyalty bribes and we cross and up sell to them. In each case it is based upon what we do to a “them”. If companies are to succeed they need to align themselves to their customers, so that customers can “opt in” to a relationship that provides value to both parties. CRM as a tool will not do that alone; companies need to take customers with them, and what better way than understanding them in the first place.
The initial starting point must be to place yourself in the shoes of your customer. By doing this you will gain a comprehensive insight into how your customer views you, and what he needs you to do to help him improve his business. Do this and you have a classic “win, win” scenario.
In other words, focus on the Relationship in CRM; get to know your customer better, then you will have the opportunity to cross and up sell, in short, you will create the right environment to sell more to your current customers.
Take the next step
To discuss how placing yourself in your customers’ shoes could improve your company’s performance, get in touch with Customer Champions.