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How to Find New B2B Customers for Your Business

Date posted: 9 March 2015   |   Posted in: Business Advice Articles

Table of Contents
1. How to Develop New Accounts
2. How to Specify Your Potential Customers
3. How Many New Customers You Need?
4. Which Are the Most Likely Candidates
5. Your Competitors as a Source for New Customers
6. The Profit Evaluation

1. How to Develop New Accounts

The problem of developing new accounts is a common one. A frequent lament of sales
managers is “we just don’t have enough new accounts to provide the volume we need.”
In most companies a five percent improvement in sales volume will have a most
favorable profit effect. It will equal or exceed, for example, a comparable percentage
improvement in costs of material and services, productivity, inventory management or
control of receivables.

How to acquire the accounts to provide such added volume becomes a matter of prime
importance to survival and growth. In a great many businesses, small and large, the
matter of new customer acquisition is approached in a haphazard, intermittent,
unplanned and uncoordinated way. The results are understandably often less than
satisfying, more expensive than expected, and generally inadequate from the standpoint
of contribution of profit.

Useful insight into the problem of getting new customers can be obtained by considering
the sales department as a purchasing function, spending company resources by
investing in customers and sales volume. The controls, systems, thought, and effort
devoted to finding the right source of materials, providing for the most effective delivery
performance at a favorable price, is a continuing and evident management concern
relative to its purchasing activities. Disciplines are established and controls are in place
to measure supplier and purchasing effectiveness. Alternate bids are secured and
potential suppliers critically tested for quality and service. Capital expenditures are
closely evaluated. Yet the problem of investing to get a new customer, one who is
expected to deliver profitable sales over an extended period of time, is often reduced to
a simple charge to the sales department of “more customers!”

In most cases the investment in customer acquisition is heavy, scattered, unmeasured,
and unplanned. The moneys spent in this type of effort consist of advertising dollars,
sales salaries and expenses, phones, samples, administrative time, and often
expensive engineering costs.

The alternative to the shotgun approach to customer or account development is usually
less expensive and substantially more productive. It involves some straightforward initial
analysis and planning inexpensive enough for the smallest business. It may likewise
involve a change in attitude and emphasis that says that the business of investing in a
customer ought to be a selective, investigative, consistent, and planned process, worthy
of the closest attention of the managing sales executive. Finding and developing a
worthwhile customer is a different objective from simply “more sales” or “more
accounts.”

The procedure involves ten steps, formalized to the degree necessary for the needs of
the enterprise. These are:

1. Specify
2. Quantify
3. Identify
4. Qualify
5. Convince
6. Service
7. Collect
8. Measure
9. Expand
10. Repeat

The first seven are initially critical. A substantial account that does not pay is no
“customer.”

2. How to Specify Your Potential Customers

The first step is to decide what kind of customer is needed. This involves a brief
customer “specification.” No one just buys steel or a machine tool or a truck. The kind of
steel, its characteristics, its yield are matters of instant concern. Are we trying to buy a
simple drill press or a numerically controlled multiple spindle processing unit? Does the
truck have to carry one ton or ten tons, and what is to be hauled? Good analysis of the
strengths or deficiencies of your present customer accounts can help in preparing your
customer specification.

The Customer Specification Might Read:
Must be within 100 miles. Must be potentially capable of repeat purchases of product “x”
totaling £50,000 per year. Must appreciate value of service as opposed to being strictly
a price buyer. May be an intermittent process operation where downtime is a critical
concern. Frequent changeovers. Quality conscious buyer. Pays promptly on terms.
Probably in the Standard Industrial Classification (SIC) or , (describe)
May currently be using product supplied by National or Atlas. Size indicator: at least 100
employees, reasonable in-house maintenance program, evidence of sales growth.
Objective: profit contribution rate of 30 percent.

Or the Specification Might Be Simply:
Companies in the meat processing industry, in Scotland and Wales (beef, lamb, pork, fowl) engaged
in slaughter and/or portion pack, handling over 100 head/day equivalent;

Or:
Independent distributors of products associated with the material handling industry in
major trading centers in the southeastern region, having a sales force of no less than
five, and carrying recognized domestic truck brands calling on local industry, particularly
food processors. Must have repair facilities.

3. How Many New Customers You Need?

How many this quarter or this year? “To provide the type of business required, two new
accounts with volume potential of £50,000 each are needed in each of the remaining
quarters of the year, plus five new smaller accounts in each quarter with a potential of
£25,000 to £30,000 annually.” Or, “Need an average of three new small machine
accounts each territory, each quarter, with potential of supply sales of £2,500 each per
year following installation.”

Comment: The new account is admittedly a necessary consideration for growth. Some
businesses, however, becomes so concerned with the new account syndrome that they
overlook the very real, often untapped, potential of existing accounts. By proper
attention to maintenance selling, accounts on the books can be upgraded, expanded to
new applications, and in effect become new for all practical purposes. The maintenance
aspect of selling is often minimized because the battle has been won – the customer is
on the books. Neglect gives your competitors the opportunity to develop a new account
by taking away one of your customers. In most cases, developing an existing account is
much less costly than acquiring a new one.

4. Which Are the Most Likely Candidates

Having specified and quantified the type and number of accounts wanted, the next step
is to identify and rough screen the most likely candidates in the most direct and least
expensive way.

A few days devoted to secondary research can prove rewarding. The precise method
depends on the scope of the project, the number of required new accounts and the
geographic area involved.

For the smaller local business, a business directory is an obvious, available, and well
organized reference for new accounts. In fact, a study of the directories for several cities
provides a fast, comprehensive, and specific source of information for the significant
trading centers in a region.

Such listings display products and services offered for sale, the nature of the services
offered (like wholesaling, retailing, or manufacturing), the specific location, phone, and
zip code reference. If the listings are regarded as definitive of what is sold, they likewise
are definitive, with a little deduction, of what such firms buy for resale or as original
equipment manufacturers, or for use in their businesses. For example:
Acme Rat Exterminating Products; Rentals, Service, Parts – Rat Poison, Roach Spray,
Ant Bait, Bird Repellent, Rat Guards, Animal Traps, Chimney Screens, Sprayers (all
types), Electric Fly and Mosquito Killers, etc., including map, address, phone, and
brands handled.

Under “Mailing Lists” the yellow pages also give substantial listings of sources who
provide listings of various types, often very specific as to
Standard Industrial Classification (SIC) number, address, and names of relevant
contacts. Purchase of one or more lists across the developed specification provides a
fast way to be selective.

All things considered, like today’s average cost of £100-£300 for an in-person industrial
sales call, the time and money devoted to even modest preplanning data research is
well spent.

Lists that can be bought generally key on SIC numbers that, depending on the number
of classification digits, give names, size indicators, etc.
Other useful and readily available secondary sources of names are directories of
associations, clubs, laboratories, manufacturer, Chamber of Commerce releases, mail
order catalogs, and the like. The limit is only imposed by the extent of creative
imagination of the researcher. The various desks in the federal and state offices and the
public and university libraries are extremely helpful. Often license, permit, and
registration data are available and useful.
Basic usage information to identify industries using forgings (by SIC number) was
developed from a government report, “Census of Manufacturers.” The scope of
companies in those SIC groups was obtained for a specific geographic area from
“County Business Patterns.” A specific mailing list was then obtained from a directory
publisher for specific SIC groups in those area. A rough screening of the list eliminated
obvious unlikely prospects (Qualify). Two hundred phone calls were made to the
remainder, asking the specific question, “How much do you buy of this type of forging?”
Eighty-seven users were identified, large users were coded, and a program of selective
selling on twenty-two accounts (some unsuspected users) was undertaken.

5. Your Competitors as a Source for New Customers

One of the better sources of new accounts among existing users of a product or service
is your direct or indirect competitor.

Examination of the sales literature, catalogs, and trade releases of a competitor often
reveals a pattern of distribution, a listing of good reference accounts, and often the
details of best applications. Review of competitive advertising likewise points up many
useful areas of concentration, selling methods, and coverage of what competitors
regards to be their major markets.

Placing yourself in the role of a buyer of your own product or service is useful in
identifying a competitor’s influence points, likely user references, other applications that
might not have occurred to you. Your own representatives can be helpful. In other
words, shop around for your own product and see who else touches and end users in
the distribution process. Each is a potential source of useful information. A frank
discussion with some of your good customers will produce names of their competitors
who might become your customers as well. Even on a limited local basis such efforts
are most rewarding.

Your purchasing agent can be a most useful source of qualifying information because
the agent talks to salesreps who talk to your competitors. In the field of selling, detailed
attention to your competitors’ activities can be as equally rewarding as attention to your
own customers from the standpoint of identifying new customer opportunities,
advantages, deficiencies, and needs. The cost is reasonable – an open eye or ear.
When the list is reasonable – identified, broadly qualified and manageable the personal
contact or specific qualification phase begins. This takes time, but the effort will be
spent on a modest group of targets that have been screened against your broad
specification, qualified roughly at minimum cost and have a high probability of
productivity.

Good mailing lists tied to selected group targets can help identify new accounts. By a
proper offering (i.e., to conduct a free survey, to provide a sample, to solve a specific
problem, to offer a study result, to provide a modest prize for best new application, etc.,)
a user response can be obtained. From these responses you can qualify the potential of
prospective new accounts.

Learning more about your end users can also uncover buyer habits and identifying
characteristics indicative of a larger group. For instance, return warranty or registration
cards could give you this information from comments or answers to a few basic
questions about the product by users. This information can be matched to a larger
group, expanding your viewpoint.

Look also for customers among users of alternative products or services to yours. For
example, users of plastics are currently converting to die casting for various reasons.
Gray iron castings can often be converted to stamped parts or forgings. Automobile
buyers are acquiring motor bikes and supermarket shoppers are buying less at the store
and eating out more at fast food restaurants. Such habits may bring back some lost
customers or make you volnerable to pressures from the indirect competition.
Convincing a potential user to try your product or service is the next step after you have
found and qualified your prospects. This step is the pay off for all your efforts and
investment to attract qualified customers. Convincing the potential user to try your
product or service is often similar to qualifying customers according to your
specifications.

You search in a specific market area for customers that are stable companies with solid
needs for your products or services. They will do repeat business and pay their bills.
And you are able to come to terms and do business with them.
Keeping customers involves giving service, getting paid, measuring account profitability,
expanding customer buying, and then repeating all the steps to get and to keep good
customer accounts.

Remember, treat old customers the way you service new ones and you may not need
so many new ones.

6. The Profit Evaluation

How did you do against the measure you set for yourself? Is the trend better? Are your
customers delivering the quality of volume that you want? Tracking your progress is
very important.

There is more to getting new accounts than just chasing the volume they produce.
Obviously the quality of the volume is more important. Measure your required standard,
not just for the amount, but for the profit yield of the volume and the trend for the future.
The new customer development method proposed here emphasized the who, what,
why, when and where of volume rather than merely the how much. This takes thoughtful
planning, detailed research and screening and some expense but you do get profitable
results.

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