Preventing Attrition Part 3: Not Every Customer is a Good Customer

Leaking bucket

Attrition happens when companies underestimate the importance of customer selection.  Sales teams often spend time and money on customers who don’t share the same strategic priorities–the things they will and won’t do to win.  Strategic misalignment results in  customers leveraging suppliers for pricing and largess with no intention of developing an authentic long-term relationship.  A salesperson who fails to take the customer selection process seriously risks building the competitor’s team, not his.  Using strategic criteria to evaluate a customer’s qualification better ensures that strategic alignment is baked in to the relationship from Day 1.

Strategic alignment needs to be the driving force behind the majority of selling decisions, including new customer selection.  Salespeople must be able to communicate their company strategy in clear and differentiated terms.  They must live by them.  Salespeople can’t sell value in the morning and price in the afternoon.  It doesn’t work that way.  New customers should also demonstrate a clear behavioral and organizational alignment with the strategy.  This better ensures a “fit.”  Generalized prospecting criteria may gather the names of key contacts, website, physical address, number of years in business, monthly equipment purchases, business mix, marketing strategies, number of vehicles on the road, expectations from a supplier, and such.  But these are value-neutral and reveal nothing about strategic alignment or willingness to change. That a prospect has five trucks on the road is insignificant if the new customer does not share the same strategic aim as his supplier.  Using generalized new business criteria fills a pipe line that often “gives out more light than heat.”

Differentiation is critical to conversion and long term client loyalty.  It is the essence of a company’s strategy.  Without it, companies run the risk of commoditization and the constant price bake-off.  Attrition will occur under these circumstances if customers are unconvinced that the grass isn’t greener elsewhere.  While it is a sales manager’s job to communicate the strategic differentiators, they themselves may have a difficult time clearly doing so.  This lack of clarity permeates their teams.  If that’s the case it will be further diluted among their customers.

The best way to grow is by replicating a strategic advantage in new contexts.  Attrition happens when sales teams don’t apply a win-loss analysis as part of the performance improvement cycle in order to decrease the odds of it happening again.  When breakage happens too few teams consider internal opinions, conduct a loss or exit interview, or integrate exit interview content in to a team feedback loop.  The same goes for the wins.  When a client’s performance ignites most companies treat is as nearly as an anomaly rather than ask the question: “How can we repeat that?”  And so it goes.  Breakage happens, nobody digs in to the specifics or shares them with his team.  Analyzing positive and negative trends helps a team make smarter choices while revealing opportunities for improvement.

Published by Matt Plughoff

Exploring the next evolution of small business success.

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