Your largest customer is your best customer, right? It’s easy to think so. Far too often, manufacturing businesses will bend over backward to keep their biggest customer, thinking that if they do not satisfy them, the losses that follow will be irreparable.
Depending on your business, market conditions and factors specific to your manufacturing operations, this may not necessarily be true. Manufacturing is a unique sales business in that the company’s overall profitability is dependent upon operational dynamics within the production of finished goods.
To be a successful, sales-focused manufacturing business, you must understand how to effectively manage your customers instead of having them manage you. A first step might be a review of your C-Level goals to ensure the sales team is in alignment with the company’s strategy. This is a critical aspect of B2B sales strategies that must be considered. (See figure below)
Following are five areas where the sales team can become misaligned with their C-Level Goals. We will also explore a realization of your sales strategy, and what happens when you prioritize one or two top tier customers at the expense of the rest of your book of business.
Be cautious not just to address the individual issues above without first diagnosing the problem and solving the root cause. Incorporating B2B sales strategies can help you identify and address these issues effectively. For example, you may be able to solve your sales team spending too much time with customer complaints by passing the complaints on to another role. Although, an incomplete understanding of what is driving the issue or “the why” behind the problem will have the sales team remain less effective and less efficient than possible – and who doesn’t want a little more effectiveness and efficiency from their sales team?
Missing Better Sales Opportunities: Customer C-Level Goal
Sales organizations that have operational dependencies need to ensure alignment between departments when it comes to customer order fulfillment. When your largest customer makes a purchase or places an order that is substantial all might seem as though you’ve hit the lottery, but beware, as this may tie up plant capacity eliminating your ability to sell products to other customers with a greater return (margin).
I worked with a manufacturing company in the northeast which at that time was a top regional player in their market. A massive commercial opportunity came knocking and the work seemed too good to pass up. In this situation the order volume, frequency, and timing of completion overwhelmed the production team, limiting their ability to service other customers. Those unserved customers sought out a competitor to manufacture their products. Ultimately, the decision to move forward with this sale negatively impacted the business causing them to lose their top regional player status. Here are three things worth considering if you are in a similar situation in your manufacturing business.
Difficulty Converting Your Largest Customer: Product C-Level Goal
Many sales team have the strategy of introducing new products to help drive profitability and growth across their current base of customers. Unfortunately, your largest customer may not see the value of your new products and therefore may want to keep the current products at the lower price. Changing your largest customer’s product mix can be an arduous task and could result in potential fallout and lead your customer to seeking out a competitor. You want to protect and defend your current relationship so that your competitor does not come and steal them away from you. Here are five considerations when promoting new products to your large customers:
Not all organizations are great at innovation or introducing new products to the market. To understand how well your sales team introduces new products, you will need to perform a vitality index analysis, and this can give you a baseline from which to improve upon.
Your Sales Professional is No Longer Generating Value: Talent C-Level Goal
Sales professionals are compensated for creating value, not only for the company they work for, but also for their customers. However, sales teams often slip into the role of “order taker”, providing little value to the customer and/or their company. A large, loyal customer is great to have in your book of business, but the value you bring to that customer can diminish if you are not careful and intentional. What you did for a customer is less impactful the further the event is in history. In other words, customers want to know, “What have you done for me lately?”. It is easy for customers to become complacent and forget about all the valuable work you put in to get them to where they are now. When this happens, your sales teams may need to be creative in how they service your customers and ensure they are providing value. Sales teams are often generously compensated for the work they perform, therefore, it is imperative for a business to understand the value from the effort of the sales team or in other words, what the actual Return on Sales Investment (ROSI) is.
Calculating the sales costs per sales call is one way to begin this type of analysis. One question you might ask at the beginning of this analysis is “Would your customer rather have the sales team visit, or would they prefer to be given a check from your company in the amount it costs them to fund the sales call?”
All that being said, this is no implication to let your top customer go. It can be helpful to view the relationship to your customer as a partnership. This way, you both benefit from the exchange of products and services. There is often a give and take in the relationship and the balance will sometimes swing one way and then the other, like a pendulum. Ultimately, your largest customers are important, as they may be keeping your business alive. However, it is vital to create an awareness of the impact they may have on your sales team and your overall manufacturing business.
SalesGlobe is a leading sales effectiveness and data-driven creative problem-solving firm. We specialize in helping Global 1000 companies solve their toughest growth challenges and helping them think in new ways to develop more effective solutions in the areas of sales strategy, sales organization, sales process, sales compensation, and quotas. We wrote the books on sales innovation with The Innovative Sale, What Your CEO Needs to Know About Sales Compensation, and Quotas! Design Thinking to Solve Your Biggest Sales Challenge.
Project Manager, Business Analyst