Increase revenue through Sales Excellence
For Marketing, New Product Introduction constitutes a major intellectual challenge, the allocation of significant efforts and resources and a source of creativity. For marketers, the products or the brands they are responsible for are the most important assets they manage. Similarly, in the case of Sales, customers are the most important assets of a salesperson!
In Sales, the kind of “threats” like Airbnb or car2go exist since many years: Amazon or Alibaba or any kind of aggressive e-commerce companies. All those e-traders, small or big, who reach out at the customers of every business, may that be B2B or B2C. If Product Innovation is the answer from Marketing, New Customer Acquisition is the response of Sales.
While for Marketing, new product introduction may be the responsibility of a central department, somewhere in the headquarters, in the case of Sales, New Customer Acquisition is a daily (yes daily) task of every sales person, even in the most remote territory. As if new product introduction were a daily responsibility of a junior brand manager!
It is worthwhile noting that some companies consider assigning the task of acquiring new customers to a specific sales representative, outside the main sales force, aiming at intensifying the effort and building some kind of expertise. Our position is that such a case is the absolute exception. Acquiring new customers is part of the core responsibilities of a sales executive and cannot be assigned to any internal or external team.
There are some distinctive steps which describe the process of New Product Development and Introduction. Exactly in the same way, there are some distinctive steps in the New Customer Acquisition process.
Step 1
The first step of NPD is: Idea Generation and Screening. For Sales: #1. Prospect Listing and Screening. In idea generation, some ideas are better than others. Exactly in the same way, for Sales, some customers are more promising than others. Many salespersons, either do not understand the importance of new customers or their listing is not done in a systematic way. In any case, they do not have clear targets of new customer acquisition.
Putting some criteria of screening the prospects helps tremendously. They could include quantitative dimensions like the revenue potential they can generate (do not allocate resources to acquire smaller customers) or qualitative characteristics like potential customers who use particular competitors’ products or services where you have a significant advantage. They could also include efficiency reasons (find new customers in a particular area to justify the expenses of a trip) or effectiveness targets (enter a new area, unlocking new opportunities for growth).
Prospecting, the correct terminology for Sales, has become an area of tremendous developing over the recent years with many software based tools assisting Sales in defining, screening and even scoring prospect customers. See my article, Prospecting: What’s Next.
The outcome of Prospect Listing should be a concrete list of customers to be approached. This list should be validated, regularly reviewed and updated to eliminate some prospects (those we see that there is no sign of future cooperation) and be replaced with fresh prospects.
Tip: it is advisable to standardize the criteria as well as the list of prospects to allow for better steering. Keep it simple: write 3 criteria and define X # of customers to be reached within the sales cycle you consider appropriate to open a new customer.
Totally New Customer or more sales to Existing customers?
For Marketing, the team needs to define first the segment where to develop the new product or service. Will it be a new line extension or a diversification in a totally new segment?
In the same way, Sales need to decide if they will acquire a completely new customer (what we call Raw-Gems because they are so difficult and precious to find) of they will try to sell a new product or SKU to an existing customer. Companies have different ways in distinguishing these customers since both need to be developed. Some talk about vertical and horizontal distribution, with vertical meaning completely new customers and horizontal referring to new categories of SKUs to existing customers. Others talk about cross selling (selling products that are related) and upselling (selling products with higher value) when selling to existing customers and recognize as new customers only those that are completely new.
The costs associated with a complete new product development and introduction are significantly higher than those of a line extension. In Sales, it has been proven that finding new customers could cost 600% to 700% more than selling to existing ones. However, without reaching out to Raw-Gems, growth is limited; therefore, both directions must be pursued.
Step 2
For Marketing the next step is Concept Development & Testing; with Concept Development being one of the most crucial and creative steps in NPD. In Sales, the concepts of reaching the customers are pre-defined: what products to present and how to do so should be clear and well described in a series of Playbooks dealing with Product Presentations and Steps Approaching and Servicing any customer, existing or new.
Role-playing is the equivalent to Testing and should allow sales representatives rehearse their presentation skills and examine how products or services are accepted by the various types of customers, what possible objections they may face and which are the appropriate responses.
In Marketing, one can try testing the acceptance of a product when it is ready and after it is placed in the market, without prior testing its concept, its packaging or its performance. In Sales that would mean trying the presentation of the product or service, for the first time, in front of the customer. Recipe for Failure! Sales persons will eventually (and hopefully) learn, will ask and find the answers to the questions the customers have, but a lot of valuable time will have passed. If the initial presentation is made in front of a major customer, the negative impact may be serious.
As describe above, the second step in New Customer Acquisition is #2. Sales Enablement and Role Playing
On the trendy Sales term of Enabling, see my article, Enabling Sales Forces.
Step 3
In Marketing, following the positive approval of a concept, a detailed Business Analysis needs to be made on the marketing strategy, the product positioning and the various elements of the marketing mix like the price positioning, the distribution objectives and the promotion activities.
The equivalent step in Sales is the analysis of the customer needs and the definition of the optimal solution that the products or services can provide. Not all of the problems the customers face are the same, not all customers have the same positioning and priorities. Understanding the needs of every customer is paramount before making an offer. Therefore, the third step in New Customer Acquisition is #3. Customer Needs Analysis.
We all expect every sales rep to be experienced and systematic enough to be able to identify the customer needs. Fact is that only very few can do it. Even if Marketing starts every presentation with the description of the consumer need they cater for, for some members of your team, it will be very complicated to be done professionally and exhaustively. Even more dangerous is to feel confident to identify the needs while being in the appointment just before making the offer. One needs to be extremely experienced to do so while trying to establish a new relationship, especially nowadays when the buyers are very well informed about the available options and the pricing.
Tip: define the main areas of the needs your products cover and the major types of thought your customers follow to approach their business. Some customers decide on price and trade terms, others based on the technical or emotional characteristics of the product. In every case, conduct a dedicated training on how to identify specific sets of customer needs.
Step 4
Fourth step in Marketing is Product Development. The briefing to the laboratory of the design office is the step, after a concept has been analyzed in detail and the green light has been given.
In Sales, designing is the same act as making a specific offer. There are two separate processes in that: preparing the offer and communicating it to the customer.
In Marketing, defining a target cost is essential, taking into account the intended price positioning. The same applies for the offer to be put together for the new customer. The mix of products and the respective trade terms have to be carefully chosen. Most salespersons have a good idea of the limits but for Key Accounts the exact calculation is very important.
After the offer and the terms are decided, it is the time for the battle, the time of the truth! The sales person gets on the stage and performs! How well the needs are analyzed, how well the role playing has covered the particular case will play a major role for the success.
#4. Preparing, Making the Offer and Negotiate is the fourth step in Acquiring a New Customer.
Of course, the negotiating skills of the salesperson will also play a role. The qualities of connecting with the customer beyond a formal business contact. It is advisable, as part of the negotiation process, especially if the account is significant, to take someone else along, from Marketing or Technical Support, to allow negotiating more effectively. Just make sure you delegate the roles well and explicitly!
Step 5
Marketing, as a final step has to Launch to all Stakeholders. When the concept has been developed and tested, final decisions are made to place the product into the market. Pricing and marketing plans must be finalized and the sales teams as well as the distribution must be briefed. All that is included in a detailed launch plan.
In New Customer Acquisition, assuming that the sale is closed and the customer has decided to work with us, this is the step of ensuring that the start of the relationship is smooth and early successes using the product confirm how beneficial this decision had been.
The fifth step in New Customer Acquisition is #5. Customer Onboarding
Imagine a Raw Gem customer who has required significant effort to acquire him, having a terrible start. Maybe the terms of the first cooperation were particularly high, maybe the first order is just “ a foot in the door” for significant sales. Remember that cross-selling and up-selling we mentioned in the first step? All is under danger if the onboarding is not done smoothly.
Onboarding is the time when you must be getting the most support from the technical department and the customer service. Get them involved, make sure they understand the significance of a new customer and that they make it a priority to serve them.
Tip: define clearly the period of onboarding (most of the companies use 30 days), make a concrete list of actions during that period and ask for feedback at the end. Also, the phase of onboarding is the ideal to find out the exact estimation of potential of purchases of the customer and set a target of how and when you should increase your internal share to these purchases.
Special characteristics of New Customer Acquisition
While in NPD, the various steps can be initiated at the same time (while a concept is being developed, a member of the team is going through the step of business analysis), in Sales, every step should be taken, strictly one after the other. Maybe there is no distinctive time lag between steps but still all follow strictly the same sequence.
Measuring the success of the New Customer Acquisition process is not an easy task. Special KPIs are needed, beyond the number of new customers acquired and the sales they have contributed.
Where to Start?
Make sure you understand well the 5 steps of acquiring new customers. Describe in each step the way your company acts and identify the gaps. Use the tips and devise an action plan how to strengthen the process. Start from there!