"SWOTTING" at new sales
The key to finding new customers is to have a targeted plan
by Joan Adams
Selling wisdom says that if you want to increase your sales, the starting point should be selling more to your existing clients. This is a reasonable approach because your current customers know you – value your products and services – and choose to buy from you as opposed to others.
As far as starting points go – this is also good – you should be selling more to your current customer base. But at some point you need to find and sell to new customers if for no other reason than there's a natural attrition rate. Old reliable customers get bought out by larger entities, which have their own sources of supply. Companies move, go out of business or change their business direction. In order to grow – heck, in order to maintain steady sales – you need to do more than sell to your regular, loyal customers and start selling to totally new ones. This brings about a whole bunch of questions: Which companies? Where are they? How to find them? How to sell to them?
Far too many companies facing these very questions cast a truly wide net. They haven't stopped to think about what kind of companies they are looking for and – fearing they might miss an opportunity – go after everything. These companies spend a lot of time, shoe leather, cell phone minutes and all-around general effort and the results are often disappointing. In short, banging on every door, sending out a jillion mailings or e-mails can be a long, hard slog and probably won't get you those new customers you need. The key to finding good (meaning profitable) new customers (and equally important new markets) is to have a targeted plan, a laser-like focus on what you are looking for and what you want to do once you find them. The first step in developing a good strategic sales plan is using a technique called SWOTs.
Using SWOTs will help you focus on what your company does best and which markets would respond most favorably to your specific capabilities. SWOTs stand for Strengths, Weaknesses, Opportunities and Threats. The first two – strengths and weaknesses – are internal. These are your own assessment of what your company does well and where you company perhaps doesn't perform as well as you would like. Before you can assess what new markets and new companies might be interested in your company's offerings, you have to have a realistic understanding about what you are good at and where you fall short. Strengths and weaknesses are things that are under your control. You can capitalize on your strengths, even beef them up; you can always work on improving your weaknesses.
Opportunities and threats are external to your company. These can be changes in commodity prices or new EPA laws. Opportunities and threats are out of your control, as in you can't change the economy, or alter trends in customers' preferences for green friendly products and technology. But you can respond to opportunities and threats, so knowing them is valuable. The trick is figuring out where your strengths match up well with the opportunities (and conversely where your weaknesses might make you vulnerable to the threats).
A simple example
A company is thinking about extending its geographical reach. It currently serves a radius of about 60 miles from the warehouse. The company is considering increasing this to 75 miles. Here are the company's SWOTs.
S: The company has excellent delivery service – its on-time delivery numbers are high (as is customer satisfaction). It has optimized delivery routes and provides good day-to-day service to current clientele.
W: The company is small and can't afford new delivery trucks for the new territory. The warehouse space is limited. The only way to serve the new geography is with existing trucks and delivery crews. This strategy could stretch the company's delivery capabilities and even have an impact on customer service. The new territory has a different industrial base from the company's customers. Serving this new area will require both a steep learning curve and increasing inventory.
O: There are industrial companies in this new geography that appear to be underserved. There is a potential to increase sales by 20% or more.
T: The new territory is sparsely populated with companies. There isn't any one "hub" of industrial activity.
In this simple example, SWOTs help the company see a snapshot of the market potential and the hazards.
We know the company is very good at delivering product in a timely fashion, and this skill should be valued by potential customers in this sparsely populated, underserved area. We also see that the company is small – and reaching out that additional 15 miles could put a strain on its resources (trucks, warehouse) and ultimately its customer service.
SWOTs make the trade-offs very clear; they show where success may be achieved and where the possible downfalls might occur. SWOTs also show the company the key issues that must be addressed before starting.
- Can we carry more inventory? How much more?
- Can we deliver to this geography with our existing fleet?
Possible strategies
Now the company can start developing its market entry plan. It starts with the quadrant of the new area. The company would increase inventory per that smaller region's customers' needs and reconfigure a delivery route to accommodate the new region. From there, the company can slowly add another quadrant each quarter (or whatever time frame makes sense). As sales increase, the question of acquiring a new truck won't be quite so scary.
Granted, this is a very simple example. Still, it demonstrates how performing a SWOTs exercise doesn't cost the company a dime and helps the company think about its capabilities, where they match up with market opportunities and what to consider before making the first move.
Opportunities can be anything: entering new geographies, new industries, new technologies (such as any and all things "Green") and don't forget services. Services such as after-sales maintenance, take-away services, supplying documentation, warehousing, on-line purchasing, to name a few, are added benefits that your existing and potential new clients will appreciate (and in some cases require). When looking at SWOTs, consider the addition of services that will enable you to take advantage of some market opportunities.
Despite all the gloom and doom out there, market opportunities abound. You can find the right market fit for your company's strengths, one that will reap many rewards without risking everything.
Joan S. Adams has consulted for industrial clients for more than 20 years. She operates Pierian, a consultancy that brings sustained and measurable success through operational excellence, customer focus and competitive market strategy. She has engineering degrees from the UW-Madison and MIT. E-mail her at adams@pierian.net.
This article originally appeared in the Sept.Oct. 2010 issue of Industrial Supply magazine. Copyright 2010, Direct Business Media.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
