A Focused Approach to Customer Development

There are many examples of building product manufacturers who find that they have lost control of their markets to their distributors. This is partly due to the trend of a few players taking control of the distribution channels, but also because manufacturers have reduced their sales teams in an effort to control costs. Often the result is a loss of contact with the final customers. As a result the manufacturer becomes increasingly dependent on the distributor to manage the end customer and provide feedback about customers' needs. Very often the message from the distributor is "your product is the same as your competitors, if you want us to promote you then you must give us the best price."
 
To prevent this situation it is important to maintain contact with the smaller outlets that act as an intermediary between the distributor and the final customer. These might be specialist retailers, small contractors, independent merchants or wholesalers. But to do this cost and available resource are an issue.
 
Customer segmentation
One approach, which will allow you to maximise the effectiveness of your sales resource, is to divide your customer groups into segments. Some will represent high potential for your business, these should be focused on and developed by your sales force, perhaps not as direct accounts but receiving visits when a salesman is in the area to update them on new developments and get market feedback. Others will offer less potential, although still important. These can be a target for telesales, or communicated to through direct mail or a house magazine. See Segmentation
 
Profiling customers
But if you have been relying on your distributor how do you find these smaller customers, and identify those with potential? One cost effective solution is profiling. By purchasing contact lists and then using telephone profiling it is possible to gather valuable information about buyer preferences and hence segment the customers. This also allows a mailing list to be developed which has been fully qualified.
 
The benefit of this approach is that you now have a much better understanding of the market, and can influence the demand for your products being passed onto distributors. By passing on enquiries from these smaller customers to the distributor you demonstrate the importance of your brand and increase your value to the distributor, reducing the price pressure you may be under.
 
See Case Study 3 Recovering lost customers
 
Chris Ashworth 2003
© Competitive Advantage Consultancy Ltd

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