“We have a sales problem” is a common diagnosis for an underperforming enterprise. If this is correct, and not a symptom of deeper rooted organisational or product issues, then I will refer to two principles:
- Conquest, Basket & Frequency
- The Pie
This is about the differentiation between hunting and farming customers. There are three ways to gain sales:
- new customers (Conquests)
- customers spending more (putting more in their metaphorical Basket)
- customers buying more often (increasing transaction Frequency).
The most expensive gains are conquests, the customers that require hunting. The marketing… the prospecting… the negotiating… and they do not all result in a sale. If more sales are needed urgently, a big dose of good fortune will be required to rapidly capture new customers. And, frankly, if it were easy, you would not have a sales problem right now.
Alternatives to hunting are farming to increase yields.
Introduction of a new product or service to all existing customers will involve marketing to a captive audience, with a much higher probability for a sale than starting from scratch. This is increasing ‘basket’. Supermarkets, especially, are past masters at this technique. Once you are in the store, every effort is made to improve yield. Think of the increase in product categories over the last twenty years. Today it is a standing joke about how often we return from a supermarket with more than we set out for… It works.
Another farming technique is to increase frequency: multiple harvests as it were. Once again, you have a captive audience to communicate with. If they are left to their own devices to decide when to contact you, there is a chance they might stumble elsewhere instead. Just maintaining contact can pay dividends but periodic communication, with promotions or basket-increasing new products, will keep you front-of-mind.
Create a matrix of customers and products and write in each box the number of times in a year the customer buys the product. All the empty boxes are your Basket opportunities, increasing the numbers in those boxes represents your Frequency opportunities.
More customers create more opportunities, but hunting-while-farming is the optimum mode of operation. This reinforces why the three pillars are so important to direct and manage at all times. There can be no resting on laurels in the tasks of making it or flogging it: they require continuous effort. Whilst this may sound trite, many businesses sleepwalk into difficulty when their success metrics appear to have become easy. The product range goes stale… customers are taken for granted because they just come (or used to)…
Working the matrix described above has the following goals:
- expand matrix with more customers (Conquest) and products (Basket)
Bigger grid - improve take-up of products amongst customers (Basket)
Reduce empty squares in the grid - increase transactions in a year (Frequency)
Higher numbers in every square
One more maxim: do marketing when you are busy and you will never be quiet. The sleepwalk into oblivion happens when customers and product are taken for granted to the extent that marketing appears to be a cost one can save. Believe me, when the quiet arrives, it will cost multiples of that saving to resolve. Have a read of Coal or Diamond?
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