Growth Opportunities from Existing Customers

We all want new business, but increasing sales from current customers offers these distinct advantages.

Columns From: 2/18/2013 Modern Machine Shop,

Editor's Commentary

From the monthly column: Competing Ideas

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Wayne Chaneski

When I first began to write this column, I focused on the services manufacturers can provide to customers, especially existing customers. I believed then and still strongly believe today that the customers we already have present the best opportunity for increased sales.

While we all want new customers and recognize their value in growing our businesses, new customers present challenges. There is more risk involved in dealing with someone with whom we lack familiarity. Without a track record, we are forced to learn as we go and will inevitably experience growing pains.

Dealing with existing customers offers some distinct advantages, such as:

• Expedited quoting and approval. We already know the players and, most importantly, the “real” decision makers. We understand what these customers require in the areas of price, quality and delivery. We also understand the little extras they expect as well as the things that may not be so critical.

This knowledge gained from past experience gives us a high level of confidence that our quotes will be competitive and we will get the work. This confidence is even higher when we quote for the same or similar parts we have produced for this customer in the past.

• Easier resolution of problems. On any job, there is the potential for problems, and such problems can more often than not be traced back to miscommunication. With existing customers, the risk of miscommunication decreases. Based on prior dealings, potential problems can often be identified and resolved before becoming real problems. When problems do occur, there is a greater chance of a speedy resolution being reached through compromise rather than a win-lose outcome.

Anyone can handle a job when it runs smoothly, but relationships are strengthened when problems are encountered and resolved to everyone’s satisfaction.

• More sharing of information. It may seem like a cliché, but the phase “information is power” holds true in the customer-supplier relationship.

Customers we have dealt with for some time have a vested interest in us and are much more likely to share information, even when it may not be what we want to hear. As noted marketer and author Zig Zigler once said, “When customers complain, business owners and managers ought to get excited about it. The complaining customer represents a huge opportunity for more business.”

We are much more likely to get this valuable feedback from existing customers. New customers, or even those we deal with infrequently, may not feel the need to provide us with certain information. For them it may be easier (non-confrontational) to simply cease doing business with us, as they have invested little time and effort in the relationship.

• Greater opportunity to offer ideas. Credibility is built with long-term relationships, Continuous improvement suggestions related to parts or the processes used to make those parts have a greater chance of being considered by the customer, especially when presented in a win-win format. For example, better quality, faster delivery and lower price for the customer; easier to make, faster to produce and lower production cost for us.

We do not always get the opportunity to offer suggestions to new customers as they may not have the time to evaluate them nor the confidence to adopt them.

• Timely payment of invoices. In most cases, customers will pay the suppliers they rely on faster than other suppliers. Long-term customers are likely to view us as importantly as we view them. These customers recognize our value as partners and will usually treat us well when paying for our products and services.

So with all of the advantages associated with our current customer base, our business growth efforts need to start here. This begins with frequent visits to existing customers. If the customers are not local or visits are difficult to arrange, telephone calls can substitute for some visits. However, a certain number of face-to-face visits are a prerequisite to increasing business with any customer.

Our main tasks during these visits are listening and observing. We need to listen to everything the customer has to say about the business. Are sales strong? Are new customers coming onboard? Are new company-wide initiatives in place?

We also need to observe what the customer is doing. Are employees busy? Are there new supervisors or managers in place? Are new products being made? Is new equipment on-site? Are there changes in the way things are being done?

Listening and observing are strategies for achieving the main objective of any customer visit: identifying all opportunities where we can be of assistance, then turning those opportunities into new business. 

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