Less than 20% of companies target new customers in recession
UK businesses remain focused on holding onto existing customers rather than actively going after new business in the recession.
Only 17% of respondents to a new syrvey said that their companies placed a greater emphasis on customer acquisition, with the overwhelming majority either focusing on both goals equally or more strongly on customer retention.
The survey of senior executives across manufacturing and service industries was carried out on behalf of behaviour change consultancy, Huthwaite International by independent research company, Vanson Bourne.
“There is no doubt that protecting the current customer base is essential to business survival and a cost-effective way of underpinning your existing commercial foundations,” says Huthwaite International sales director, Annalize Cuthill. “Yet in fighting their way out of tough times, this is precisely when companies should also be focusing on securing new business as the foundation for profitable growth – both within existing customers and, critically, with new customers.
“As markets shrink, it is an instinctive reaction to adopt a ‘what we have we hold’ approach. At the same time, businesses must not ignore new opportunities to sell to less loyal customers demanding best value, at expense of weaker competitors currently struggling to survive.”
Sales and service excellence
As customers, more than 90% of respondents confirmed that they would buy more from a supplier as a direct result of receiving high-quality service beyond their expectations.
Yet many vendors appear to fall at the first hurdle in delivering even an adequate level of support, as 39% cited poor customer support as the principal source of frustration with suppliers, both in business and consumer markets.
“As this survey confirms, there is undoubtedly a strong direct link between sales/service quality and both attracting and keeping your customers,” says Cuthill. “Customer loyalty is hard-won today and requires something more than simply meeting expectations. In fiercely competitive markets, creating rather than just adding value is the key to profitable customer acquisition, retention and development.”
Sales through service
In Huthwaite International’s view, this level of excellence can only be achieved if the organisation puts sales at the heart of its business approach, rather than treating it as an individual, even isolated, department. Yet as the survey showed, companies are far from recognising the importance of such an enterprise approach, as only 27% of respondents confirmed that staff outside the sales department see themselves as contributing to the sales process.
“At a time when fewer sales people are getting in front of the client, is it even more important to recognise the important role that service personnel in regular contact with customers play in building real value for the business,” believes Cuthill. “At one level, staff must understand the key role they play in delivering outstanding service – going that ‘extra mile’ in giving customers something beyond their expectations.
“However, from the vendor’s perspective it requires something more,” she adds. “To be truly effective, service personnel must use their unique understanding of the customer to look beyond service and start helping more in real value creation. This means actively pursuing a broader range of more proactive interventions, from providing outstanding service, through recording and reporting sales intelligence for lead generation to, ultimately, capturing and creating tangible sales value.
“And further, by identifying customer needs and offering solutions which have a tangible sales value – rather than, as often happens today, passively given away for free as ‘part of the service’ – staff companywide can play a key role in achieving ‘sales through service’. Importantly, the degree of intervention by service personnel can be seen as a continuum, so vendors can take their service people only as far along it as they are willing and able to go. By avoiding the most common trap – that of trying to turn service people into out-and-out sellers – the usual resistance that, in practice, dooms the initiative to failure, is avoided.”
The value of training
The survey also found that only 4% saw a lack of training to handle the demands of a tougher trading environment as a key contributor to why selling had become harder over the past two years. “To succeed, product and service providers must recognise that securing profitable new business requires a high level of sales and negotiating skill – which can only be delivered through effective training and supported directly by the rest of the business,” says Cuthill.