Grow your Share of Wallet in multiple-supplier B2B accounts and boost profits

B2B Sales & Marketing Executives:

GROW YOUR SHARE OF WALLET IN MULTIPLE-SUPPLIER ACCOUNTS AND BOOST PROFITS

The case for growing Share of Wallet

In many of today’s stagnant or shrinking B2B markets growing through new customer acquisition may not be an option. It may at best be a
long-term option, with a high sales and marketing investment attached.

You need a profit growth option that is realistic, can be achieved at much lower cost than new customer acquisition, and in much shorter
time: Increasing Share of Wallet in existing multiple supplier accounts.

I have extensive experience in helping B2B companies systematically review key customer relationships in a multiple-supplier setting. Over the years I have been surprised by the frequently lacking knowledge of the Share of Wallet within an account, and if this share has
remained stable, increased or decreased.

While sales volumes might seem satisfactory, there is thus a real risk that a competitor is “eating the cheese off your sandwich”, without you knowing it.

Customer Satisfaction is a key driver of B2B Share of Wallet

The predictable myth that needs debunking is that Share of Wallet success in B2B is driven by price.

However, empirical research identifies four key drivers of Share of Wallet, with Customer Satisfaction at the top:

• Customer Satisfaction
• Trading Terms
• Length of Relationship
• Supplier Capability

The impact of Customer Satisfaction on Share of Wallet in B2B is three times as strong as the other drivers which have virtual equal impact.

Trading Terms is a strong driver of Customer Satisfaction and is undoubtedly also of high relevance.

How I can help you increase Share of Wallet in B2B accounts

As a seasoned customer service consultant with more than 25 years experience in some twenty industries I know my way around the critical issue to increasing Share of Wallet: Customer Satisfaction.

I developed and widely applied a process and methodology for reviewing key customer relationships with the purpose of turning them into High Value Relationships. In the process I conducted more than 400 executive interviews, mostly in person and also via telephone.

This is a “Fresh Eyes relationship X-ray process” that helps you see hidden flaws:

• Determine strengths and weaknesses and develop competitive benchmarks, with a focus on customer satisfaction.
• Bolster your relationship with key customers and increase Share of Wallet.
• Prevent unnecessarily losing a key customers (what would the cost be?).
• Demonstrate how you value this customer.
• Design a strategic account management plan.

Is this an expense or an investment?

If you consider this as an investment and you pilot this process, you are advised to ask yourself:

“What is the dollar value of this account? If I invest X amount of dollars (typically less than $10,000) in an in-depth review process, what are my chances that I will not be able to increase enough Share of Wallet to break even?”

My experience has been that without exception this process always provides a positive experience and my clients had no problems acting on the information and recouping their investment.

Most important is to know or discover how easy it is to pilot this process and if it works for you!

The upwards potential is significant, while the investment is low.

Visit my website for more information about me or contact me for a no-obligation phone conversation or request a service brochure with details.

Can you improve customer service and profitability by Exorcising Demon Customers?

During the many customer service improvement workshops I have conducted I have often heard participating front employees observe the difficulties and dilemmas of dealing with those difficult customers that always require extra attention and firefighting and who never seem to have their own act together. The squeeky wheels get the grease, but these customers take up time and resources that could much better be spent on building the relationships with "good" customers. The question is often asked: Can't we fire customers?
I think so!

You have to keep a special eye on those customers you want to wean from your business. Deal with the bottom-feeders first to immediately free up additional resources to help support your more profitable customers.

And then there are the customers that on the surface seem important customers. But are they???

I like this [abbreviated] blog posting by Bruce Hunter of Lighthouse 360 who puts a great perspective on this issue. He also introduces the notion that using Activity Based Costing to establish the Cost To Serve is an enlightening practice to help make those difficult decisions about exorcising customers.

An Evil Myth

The unfortunate reality is that most demon customers, on the surface, seem like everyone else. In fact, they may themselves be unaware of their true nature. But take it from me: demon customers exist, you've probably got 'em, and even as we speak they may be sucking the lifeblood out of your company. The sooner you are able identify and exorcise them, the sooner your business will benefit.

Easier said than done, right? A while back, I stared across a conference table at a group of radio executives and wondered how to tell them that the last national account they had scored was a loser. These were hard-knock sales folks who knew their industry and knew how to chase down leads and convert them into time blocks sold. For years, their philosophy had been "any customer is a good customer." It was my unenviable task to educate them that this old truism was not, in fact, true.

Their situation wasn't unique. Years before, I had assumed the leadership of another business organization that had developed along similar lines. Culturally, the group had bought into the notion that the bigger the customer, the better. Not only did they bring in money, they also provided a certain cache simply by being a customer - that would, reasoned the groupthink, surely bring in even more big customers.

That organization had succumbed to an evil myth. Not only is bigger not necessarily better, in most cases we discovered that these mega-customers were actually bad for business. (I know. It didn't make sense to them, either - at first.) To prove it, I conducted a customer profitability study that forced us to take an inventory of all of our customer-related costs and where they were being applied.

I have often had the occasion to cast my eyes upward and give thanks for the folks from the finance department. This was one of those times. They performed a bottom-up exercise called "activity-based costing" that aligned the right costs to the right customers. Before that, costs had been averaged out across the customer base in the belief that it provided a decent view of the costs associated with each customer. As it turns out, that was a fundamentally flawed belief.

What emerged from this financial exercise was a very different view of the customer base. To widespread surprise, we saw that some of our largest customers were actually our "worst" profit performers. They sucked vital resources in terms of the people dedicated to the business, they were the most demanding in terms of price concessions, and they were quite low on business sustainability. They regularly required us to bid on projects, which resulted in more time and resources spent preparing the bid as well as the inevitable price concessions. (Think about it: when was the last time you were able to increase price and build margin through an RFP process?)

The People > Service> Profit Chain

I was asked to write a blog entry for DrakePulse which connects the HR community with Drake International. Here is what was published.

The companies with the sharpest customer focus and who have made this into a market differentiator typically enjoy an above average profitability. This is not anecdotal but supported by ample hard data. In other words: Sharper customer focus leads to a sharper competitive edge.

Their brand of customer service is however ingrained in everything these companies do and don’t do, in terms of: Processes, IT deployment, customer management and measurement, organizational leadership and people management. In other words, it is part of their “organizational DNA”.

In this context we often speak of the People>Service>Profit Chain. Tom Peters used to say that it takes turned on people to give turned on service. In the excellent organization everybody has a customer and is focused on partnering with customers, be it internally or externally.

All of this to say that it is requisite to success that everybody – and I mean everybody – in the organization has a high customer service aptitude. Skills can be trained but a person has the right “customer stuff” between the ears or not.

Hence my recommendation to any organization that is intent on (further) sharpening their customer focus, to the extent that it becomes a sustainable competitive advantage, needs to conduct pre-interview customer service aptitude testing and use passing this a first hurdle in the hiring process. Thus, eventually, the entire organization will be infused with people who all have an above average and pre-determined service aptitude and ethos.

There are tools for this measuring this. I have experience with a particular one that is soundly pedigreed and proven. In the U.S. this is at times deemed legally risky, but I have repeatedly been assured that this practice is do-able and it is being done. This has consistently been a success factor for South West Airlines.

If you want to make this profit chain work, my advice is: Do the right thing and do first things first in hiring.