In an increasingly competitive industrial market, it's essential that companies are not only reaching new customers, but are also retaining their current ones. ID took a moment to chat with John Sheridan — Senior Account Representative at 3M Company and a speaker at the upcoming Distribution and Manufacturing Profitability Forum — to address some of the biggest mistakes companies make in customer retention and what they can do keep clients and increase profitability.
ID: What is one of the biggest mistakes companies make in customer retention?
John Sheridan: The time tested approach to customer loyalty starts with understanding from the customer perspective what is important. Of course the customer is going to suggest that the supplier reduce the costs to doing business. A wise supplier gains an understanding from the customer, what are the intrinsic and measured sources of value. Customer loyalty is gained by working with multiple decision makers within the customer, to identify what is important at various stages of the entire process. 3Mer’s often ask questions such as “how much does this problem cost in downtime, material waste, customer dissatisfaction”. The answers provide a rich source of value.
Too often a supplier simply asks the customer at the front end of the business, if they are satisfied. That is courteous and fine but it often lacks any measured and tangible action. Also by taking a surface approach to the customer, the supplier fails to meet and develop relations with multiple stake holders throughout the customer. These multiple stake holders are so important when inevitably a problem or opportunity arises. A worthwhile goal is to earn the credibility of the customer all the way through.
How have customer retention strategies changed in recent years? Has retention become more or less difficult?
JS: Common courtesy, application performance, cost and sustained quality haven’t changed over time. However many other items have. Smart customers search for suppliers with efficient and effective supply chains. This brings in multiple forms of distribution including allied independents, large Nationals, Integrators and more direct coverage and service models. If a supplying company isn’t ahead of the channel evolution it can find itself replaced at large and midsized accounts with little or no advanced warning.
Also the manufacturing pie in The U.S. has contracted over the last 40 years and customers and suppliers find themselves with shorter product life cycles and hyper competitive conditions. Years ago friendly relations and a good product could suffice. Growth today requires constant increase of competitive advantage in the form of accessible information, innovative product, ease of transactions, and knowledgeable support.
Often a global competitor that hasn’t previously been a factor in the local market can gain access to customers due to global supply chains and instant communication. The result is a measurable increase in supplier options for the end user.
Without giving away your workshop secrets, what’s one tip you can share with our readers to keep their customers and increase profitability?
JS: One way of gaining new customers and improving customer loyalty is to have a well thought out approach to Finding New Customers, Winning their business efficiently and keeping their business over time. Each of the three important processes have a series of necessary tools in terms of letting the customer know of the product or service, gain the interest, demonstrate, sell and sustain. Essentially this will be the seminar subject and deliverable.
For more information and to register for the Distribution and Manufacturing Profitability Forum, please visit www.distributionmanufacturingforum.com.