Small or Mid Sized companies need to choose their clients and customers wisely, particularly when competing with bigger companies. Since resources are finite, it is important to define a Niche for specialization. The Niche could be regional, national, or international. The Niche could target certain size clients, with a particular mix of business as a requirement for Sales focus. This can be difficult because very often today when Procurement goes out to bid they will cast a wide net to test the market. The temptation to bid on every Request for Proposal that comes in the door is great. Certainly, sales people, working on commission, would prefer to practice the Spaghetti Theory of Sales, which is to throw every deal against the wall in the hope that some with stick. The problem with this approach is that it becomes less possible to focus on the deals that would be in the best interest of the company.
Completing increasingly complex Requests for Proposal, that come from major clients, cost time and lots of money. Before doing so, it is critical to ask many questions of the client to determine if bidding makes any sense. If the prospect declines to answer those questions, the odds are pretty good that the bidding process is just a requirement every three years, rather than a real opportunity. If we can't get good answers to our questions that would allow for an intelligent bid, we pass on the opportunity.
Further, it is important to establish a client or prospect business profile that is most advantageous to the company. In our case, this relates to the mix of business. If the mix will not provide suitable profitability, then it makes no sense to bid. Since today clients often go out to bid every three to five years, it would be a mistake to absorb losses up front believing it could result in a long term relationship. More often than not, the client that requires that the supplier lose money to get the account, will change suppliers as soon as a fee increase is requested.
There are some clients that believe it is a privilege to do business with them just to have their names on a client list. They expect major investments up front with no guarantee of future business. These companies often go through suppliers every few years looking for lower and lower pricing. This CEO Blogger is not interested in that business. It is very disruptive to an organization and will only lead to big losses and lay-offs in the future.
It is critical to identify a Niche for Sales success. It is just as important to focus on clients and customers that are likely to result in a long term business relationship. If a client has a history of changing suppliers every few years, it could be a sign that all that matters is price. In a cost driven world, partnerships are still the key to maintaining successful business relationships. Partnership are more likely when both the supplier and the client are suited for each other; just like in any marriage. Business Partners strive for constant process improvements and cost savings in the normal course of doing business. This is the sign of a successful business relationship that evolves over time and only gets better.
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