How to Find New Customers for Your Business

New customers and more sales are essential for profit and growth. The business owner-manager should have a specific program for regularly developing new accounts. This Guide presents a systematic approach to finding, getting, and keeping customers whose sales volume produces profit for you.

The problem of developing new accounts is a common one. A frequent lament of sales managers is "we just don't have enough new accounts to provide the volume we need." In most companies a five percent improvement in sales volume will have a most favorable profit effect. It will equal or exceed, for example, a comparable percentage improvement in costs of material and services, productivity, inventory management or control of receivables.

How to acquire the accounts to provide such added volume becomes a matter of prime importance to survival and growth. In a great many businesses, small and large, the matter of new customer acquisition is approached in a haphazard, intermittent, unplanned and uncoordinated way. The results are understandably often less than satisfying, more expensive than expected, and generally inadequate from the standpoint of contribution of profit.

Useful insight into the problem of getting new customers can be obtained by considering the sales department as a purchasing function, spending company resources by investing in customers and sales volume. The controls, systems, thought, and effort devoted to finding the right source of materials, providing for the most effective delivery performance at a favorable price, is a continuing and evident management concern relative to its purchasing activities. Disciplines are established and controls are in place to measure supplier and purchasing effectiveness. Alternate bids are secured and potential suppliers critically tested for quality and service. Capital expenditures are closely evaluated. Yet the problem of investing to get a new customer, one who is expected to deliver profitable sales over an extended period of time, is often reduced to a simple charge to the sales department of "more customers!"

In most cases the investment in customer acquisition is heavy, scattered, unmeasured, and unplanned. The moneys spent in this type of effort consist of advertising dollars, sales salaries and expenses, phones, samples, administrative time, and often expensive engineering costs.

The alternative to the shotgun approach to customer or account development is usually less expensive and substantially more productive. It involves some straightforward initial analysis and planning inexpensive enough for the smallest business. It may likewise involve a change in attitude and emphasis that says that the business of investing in a customer ought to be a selective, investigative, consistent, and planned process, worthy of the closest attention of the managing sales executive. Finding and developing a worthwhile customer is a different objective from simply "more sales" or "more accounts."

The procedure involves ten steps, formalized to the degree necessary for the needs of the enterprise. These are:

1.  Specify

2.  Quantify

3.  Identify

4.  Qualify

5.  Convince

6.  Service

7.  Collect

8.  Measure

9.  Expand

10.  Repeat

The first seven are initially critical. A substantial account that does not pay is no "customer."

How to Specify Your Potential Customers

The first step is to decide what kind of customer is needed. This involves a brief customer "specification." No one just buys steel or a machine tool or a truck. The kind of steel, its characteristics, its yield are matters of instant concern. Are we trying to buy a simple drill press or a numerically controlled multiple spindle processing unit? Does the truck have to carry one ton or ten tons, and what is to be hauled? Good analysis of the strengths or deficiencies of your present customer accounts can help in preparing your customer specification.

The Customer Specification Might Read:

Must be within 100 miles. Must be potentially capable of repeat purchases of product "x" totaling $50,000 per year. Must appreciate value of service as opposed to being strictly a price buyer. May be an intermittent process operation where downtime is a critical concern. Frequent changeovers. Quality conscious buyer. Pays promptly on terms. Probably in the Standard Industrial Classification (SIC) or , (describe)

May currently be using product supplied by National or Atlas. Size indicator: at least 100 employees, reasonable in-house maintenance program, evidence of sales growth. Objective: profit contribution rate of 30 percent.

Or the Specification Might Be Simply:

Companies in the meat processing industry, in Michigan, Ohio, Indiana, Kentucky, Pennsylvania (beef, lamb, pork, fowl) engaged in slaughter and/or portion pack, handling over 100 head/day equivalent;

Or:

Independent distributors of products associated with the material handling industry in major trading centers in the southeastern region, having a sales force of no less than five, and carrying recognized domestic truck brands calling on local industry, particularly food processors. Must have repair facilities.

How Many New Customers You Need?

How many this quarter or this year? "To provide the type of business required, two new accounts with volume potential of $50,000 each are needed in each of the remaining quarters of the year, plus five new smaller accounts in each quarter with a potential of $25,000 to $30,000 annually." Or, "Need an average of three new small machine accounts each territory, each quarter, with potential of supply sales of $2,500 each per year following installation."

Comment: The new account is admittedly a necessary consideration for growth. Some businesses, however, becomes so concerned with the new account syndrome that they overlook the very real, often untapped, potential of existing accounts. By proper attention to maintenance selling, accounts on the books can be upgraded, expanded to new applications, and in effect become new for all practical purposes. The maintenance aspect of selling is often minimized because the battle has been won - the customer is on the books. Neglect gives your competitors the opportunity to develop a new account by taking away one of your customers. In most cases, developing an existing account is much less costly than acquiring a new one.

Which Are the Most Likely Candidates

Having specified and quantified the type and number of accounts wanted, the next step is to identify and rough screen the most likely candidates in the most direct and least expensive way.

A few days devoted to secondary research can prove rewarding. The precise method depends on the scope of the project, the number of required new accounts and the geographic area involved.

For the smaller local business, the telephone directory is an obvious, available, and well organized reference for new accounts. In fact, a study of the directories for several cities provides a fast, comprehensive, and specific source of information for the significant trading centers in a region.

This article offers managing your business tips and Handle business advice. However, you aren't ready to begin your own business
till you have given any thought to managing it. A business is an ongoing activity that doesn't run itself. As the supervisor
you'll have to set goals, determine how to achieve those goals and also make all the necessary decisions. You'll have to purchase
or create your product, price it, promote it and sell it.

You will have to keep documents, and determine prices. You will have to Control inventory, make the ideal buying decisions and
keep prices down. You'll need to hire, train and motivate employees today or as you grow.

Setting Business Management Goals. Good small business management Is the secret to success and great management starts with
setting goals. Establish goals for yourself for the achievement of the many tasks necessary in starting and managing your business
successfully. Be specific. Write down the goals in measurable terms of functionality. Break big goals down to sub-goals, showing
exactly what you expect to attain in the next two to three months, the subsequent six months, another year, and the subsequent
five decades. Beside each goal and sub-goal place a particular date showing as it is to be attained.

Plan the action that you need to take to achieve the goals. While the effort Needed to achieve each sub-goal ought to be great
enough to challenge one, it should not be so great or foolish as to discourage you. Do not plan to reach too many goals all too.
Establish priorities.

Plan in advance how to quantify results so you can know exactly the way Well you are doing. This is what's meant by"measurable"
targets. If you can't keep score as you go along you are very likely to eliminate motivation. Re-work your plan of activity to
allow for obstacles which may stand in your way. Try to foresee obstacles and plan ways to avert or minimize them.

Buying. Skillful purchasing is an important essential of Managing a business. This is true if you're a wholesaler or retailer of
product, a producer or a service business operator. Some retailers say it is the most important single element. Merchandise which
is carefully purchased is easy to sell.

Determining what to buy means finding out the type, type, quality, Brand, size, color, fashion -whatever applies to your specific
inventory - that will sell the best. This requires close attention to salespeople, trade journals, catalogs, and especially the
preferences of your regular customers. Assess your earnings records. Even the producer should view the problem through the eyes of
customers before deciding what materials, components, and supplies to purchase.

Know your regular clients, and make a Fantastic evaluation of the People you expect will become your customers. Just what
socioeconomic category are they? Are they homeowners or tenants? Are you currently searching for cost, quality or style? What's
the predominant age category?

The age of your customers can be a prime consideration in Establishing a purchasing pattern. Young men and women purchase more
often than many elderly folks. They need more, have fewer responsibilities, and spend more on themselves. They are more aware of
style trends whether in sporting apparel, cars or electronic equipment. If you choose to cater to the young trade only because
they seem dominate in your town, your buying pattern will probably be wholly different than if the more conservative middle-aged
customers appear to be in most.

Study trade journals, newspaper advertising, catalogs, window Displays of businesses similar to yours. Request advice of
salespeople offering you merchandise, but purchase sparingly from several providers rather than one, testing the water, so to
speak, until you understand what your best lines would be.

Locating suitable merchandise sources is not simple. You may buy Directly from manufacturers or producers, from wholesalers,
distributors or jobbers. Pick the suppliers who sell what you need and can provide it when you need it. (Distributors and jobbers
are utilized by most business people for quick fill-ins between factory shipments.)

You may spread purchases among many suppliers to gain more Favorable rates and promotional material. Or you may concentrate your
purchases among a small number of suppliers to simplify your credit issues. This will also allow you to become famous as the
seller of a particular brand or line of merchandise, and to maintain a fixed benchmark in your goods, if you are buying stuff for
manufacturing purposes.

When to purchase is essential if your business will have seasonal Variations in sales volume. More stock will be needed ahead of
the seasonal upturn in sales quantity. As sales decrease, less product is needed. This means purchases of goods for resale and
materials for processing must change accordingly.

At the outset, how much to purchase is speculative. The best coverage is To be frugal until you've had enough expertise to judge
your wants. On the flip side, you can't sell product if you don't have it.

To help solve buying issues, you should Start to keep stock Control records simultaneously. This will allow you to maintain the
inventory in equilibrium - neither too big nor too small - with a suitable proportion and adequate assortment of merchandise,
sizes, colours, styles and attributes.

Fundamentally, there are two types of stock control - control in Dollars and control in physical units. Dollar controllers reveal
the amount of money spent in every product category. Unit controls indicate the number of individual items when and from whom
bought by class. A good stock control system can help you determine everything, from whom, when, and how much to buy.

Pricing. Much of your success manage a business will depend on How you price your services. If your prices are too low, then You
Won't cover Expenses; too high and you'll lose sales quantity. In both cases, you will not Earn a profit.

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