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Protecting Your Good Accounts from the
Competition
They are your bread and butter accounts. You are counting on
them every quarter, year in and year out. You can't afford to
lose a single one to your competition. So how do you keep them
all to yourself? Find out in this week's article by Dave Kahle,
The Growth Coach.
We all know the feeling. Your key contact in one of your good
accounts sheepishly admits that they have moved some business to
a competitor. No problem with your service, it was just a price
issue.
Nothing is more discouraging. You've spent years developing this
account, building relationships, working hard at meeting their
needs, and then, in the blink of an eye, you lose the business
to a price-cutter.
Is there anything you can do to prevent this? Of course. Here
are four proven strategies that will help you prevent your
hard-earned business from disappearing into the hands of price
cutting competition.
Strategy Number One
Deepen your personal relationships with the key decision makers.
It is really difficult, though not impossible, for your friends
to take the business away from you. So, turn the key decision
makers into your friends.
Don't rely just on the business aspect of your relationship, no
matter how sound, to see you through. Make it a point to develop
personal relationships with the key people. Try to spend time
with them socially. Take them to a ball game, a concert, golfing
or fishing. Spend one-on-one time with them outside of the work
environment. Arrange to have them meet your spouse and family.
Get to know them more deeply than you would normally.
These efforts to turn them from business acquaintances to
personal friends is almost never wasted. As the relationship
grows, the natural tendency to keep doing business with you
grows proportionately.
Strategy Number Two
Close any open doors that may exist in the account. When I'm
coaching salespeople on how to get their foot in the door of an
account that is in the hands of the competition, I have them
look for open doors. “Open doors” are lingering issues that make
you, the established vendor, vulnerable to the competition, and
that are within your capability to close.
When you are on the inside, trying to protect your business, you
need to make sure that there are no open doors for your
competitors. For example, you may have a pile of returns that
are sitting on the account's shipping dock, waiting for a return
authorization from you. It may not be a big deal to you, but
from the perspective of a competitor salesperson, it may be an
example of your lack of attention to that account. And that can
be a little opening into which a competitor can wedge
themselves.
Make sure you take care of any lingering service-type issues
that could serve as opening for the competition. Lingering
invoice problems, ignored back orders, promises made that
haven't been kept - all these are potential open doors for your
competition. Clean them up.
Another open door has to do with your keeping the account up to
date on the latest products and services. Ensure that the
account is aware of all the product updates and innovations for
the things you are supplying. For example, the account may have
bought some machines from you. In the last six months, the
machine maker has introduced some updates to get greater
productivity out of those machines.
You make sure that you have communicated that option to your key
contacts. That prevents the competition from being the source of
information about something that you should have communicated to
your customer. If that happens, it makes you look bad, and opens
the door for the competitor.
The largest open door, however, is pricing. If this is a good
account, they probably have been doing business with you for a
while. And, since they have been doing business for a few years,
it's entirely possible that you have allowed the prices on some
products to rise above market levels. In fact, it may be that
you are getting significantly higher than market prices on
several products. That can be an open door if your competition
decides to attack it. You may be better served in the long run
to discreetly and strategically lower your prices on those items
that are head and shoulders above market rates.
Strategy Number Three
Hold regular “business reviews.” Gather all the computer
printouts your IT person can produce for this account. Put them
inside a three ring binder. Make a cover with the account's name
and logo on the front. Then, schedule a meeting with your key
contact and his/her boss, yourself and your manager. Go through
all the reports, describing your service levels, how many SKUs
they are buying from you compared to last year, their payment
history, etc. Then, all four of you go out to lunch together.
This regular (at least twice a year) business review establishes
you in the minds of your customer as a cut above just another
vendor. You are willing to measure and disclose your
performance, and to talk frankly about the business
relationship. You become more of a consultant in the eyes of the
customer. That's certainly worth a few percentage points.
Strategy Number Four
Bundle it up. Your good account is probably buying multiple
products from you. Probably, over the years, each of those
products has been evaluated and selected on its own basis,
without regard to other things that the account is buying from
you. Now is the time to change that.
Propose a “bundled” contract to the account. It looks something
like this:
You'll agree to rebate some percentage (three to five percent)
of the increase in the total dollars of purchases when compared
to last year. This accounting takes place at the end of the
year.
Here's an example. Smith Brothers, your good account, did
$200,000 with you last year. You offer a four percent rebate on
the increase in purchases. As a result, this year Smith Brothers
does $250,000 with you, adding five new SKUs. Your rebate is on
the $50,000. Calculated at four percent, you give them a check
for $2000. Your four percent rebate is really eight tenths of a
percent (.008) of the entire business. Well worth it in the long
run.
Not only does this encourage the customer to work with you to
find additional opportunities, but it also locks up the business
you have. Now, if the account was to switch some portion of the
total business, it will impact their ability to receive that
check at the end of the year. You have effectively locked up the
business, protecting it from a price-cutting competitor.
While none of these strategies are guaranteed, they each have
their place and customers for whom they will be effective. It's
always easier to prevent the loss of business to a price-cutter,
than it is to regain it after the fact.
Use any of these strategies and you will have enhanced your
ability to protect your good accounts from the competition.
About Dave Kahle, The Growth Coach: Dave Kahle is a
consultant and trainer who helps his clients increase their
sales and improve their sales productivity. Dave has trained
thousands of salespeople to be more successful in the
Information Age economy. He is the author of over 500 articles,
a monthly e-zine, and six books. Ten Secrets of Time
For more information visit -
http://www.davekahle.com
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