Wednesday, 18 November 2009

Eyes Wide open or Eyes Wide Shut?

The exact meaning of Eyes Wide Shut is debated. In the context of this blog post, I'm going to use the expression as a way of representing our perspective on counterfeit customers.

Counterfeit customers are customers that really aren't...well...customers.

The Reality
We've all done it. We've been assigned a new customer quota for the month/quarter/year. We immediately begin to think how we can manipulate the system to hit our quota. Our real goal is to silence sales management and we know we can do this by hitting our new account number.
Does this really help anyone? Eyes wide shut. In many cases, sales management has lost sight of the challenges of adding new accounts. They think all we need is a phonebook and a phone. End of story. Dinosaurs. Eyes wide shut.
Oh sure, the new account activity blossoms for a few months. But check back a year later. Everything is back where it was before the new business development machinations. Maybe even worse. Eyes wide shut.
This is a dysfunctional prospecting environment for both the sales professional and sales management. It produces smoke and mirror customers. It creates a lot of activity, but not any long-term gains. Eyes wide shut.
Counterfeit Customers
In our enthusiasm to hit our new account quota we kill anything that moves and call it dinner. Unfortunately, our kills don't come close to satisfying our appetite and there are never any leftovers. Are the following really new customers we want or need?
Cherry Pickers.
Customers that buy from us because we're the only company that has what they are looking for. No cross-selling opportunities exist here and loyalty is zero.
Convenience Buyers.
These customers view us as nothing more than a convenience store. In their world, our prices are out of sight, but they'll buy the minimum from us because we're handy, for now. They?ll always be small; they?ll always complain about price.
Give-Me-Credit Buyers.
This, of course, is a big problem during a recession. We're nothing but a bank to these customers. They want us to help them finance their business. Our credit department will be calling us for collection assistance.
High Maintenance, Low Volume Buyers.
These customers embody every aspect of Paretos 80/20 rule when it comes to investing too much time on small customers.
Accounts That Matter
We can differentiate between counterfeit customers and accounts that matter with the five-point test below. Checking all five of these boxes allows us to claim a customer as an account that matters.
1. The customer has made at least three purchases. One order does not a customer make.
2. They pay their bills according to the credit terms we've given them.
3. They purchase a broad spectrum of our products and services.
4. Not only does our employer make a decent ROI (i.e. net margin) on the customers purchases, but the commission income makes it worth the sales professionals time.
5. We are viewed as the incumbent supplier by the customer and are connected to the right decision makers.

Conclusion

It's important to evaluate our accounts. How many of them meet the five criteria above? This will give us a feel for both our number of accounts that matter and how much legitimate business development might be needed to fill the gaps.
We all sleep better with our eyes restfully shut when we have accounts that matter instead of counterfeit customers.
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