Some customers love the experience of doing business with your company; unfortunately, others have encountered problems with the experience. But aren’t all customers fair game for a cross-selling or upselling pitch?
Not so fast. Think hard before blindly committing to another sales pitch. In particular, stop wasting time and energy selling to customers who are detractors of your company.
Instead, spend that time fixing those relationships. Turn around the situation so that these detractors become at worst neutral, and ideally real promoters. Only then will you have decent odds of winning new business.
Consider the math behind this logic. Looking at one metric for gauging customer advocacy, the Net Promoter Score, promoters are worth nearly three to seven times more in lifetime value than detractors, depending on the market. That’s because promoters buy more, stay longer, often cost less to serve, and are more likely to recommend your company to colleagues and friends. They become promoters because they’re delighted with your products or service, and maybe the entire experience surrounding the product. You have earned the right to ask them for another sale.
Not so with detractors. These customers don’t want be upsold, cross-sold, or sold at all. A call from a sales representative will just get their blood boiling, and could send them defecting to a competitor. Alternatively, a detractor could attempt to extract a price discount to make amends for prior service failures.
Why do companies persist with indiscriminate selling without regard for a customer’s recent experience or attitude toward the company? One reason is the intense pressure to hit quarterly sales targets. Another is that the sales organization often flies blind: Sales reps simply don’t have feedback from the customer — that is, if the company bothered to gather feedback at all.
Making the situation worse, many companies rely on customer relationship management (CRM) systems that use algorithms to generate sales plays following a trigger event. Too often, the algorithms don’t fully factor in what’s happening in the customer’s world.
For example, at one business-to-business supplier, the CRM system monitors customer spending, and if the spending drops by a certain amount, the system spits out a recommendation for a sales play. The algorithm did not factor in seasonal spending declines. Worse, it did not account for supply chain disruptions that plagued the company and annoyed many customers. Ramped-up sales calls were the last thing that customers wanted from this vendor.
The remedy for such awkward overtures is to proactively obtain feedback from customers — from specific buyers within accounts — and then fold that information into account planning discussions. In most cases, any problems they raise will fall into three categories: product performance, price, and service around the product. A strong closed-loop system routes the feedback quickly to the relevant frontline employees so that they can determine the root causes of the various problems, fix them, and get back in touch with customers to report on progress and start to repair trust.
Given scarce resources and a long list of problems, companies have to identify the highest-priority problems and focus on those first. They can do this by ranking each problem or defect by frequency of occurrence across the entire customer base and severity of the effect on the customer’s relationship, as measured by the defect’s correlation with the customer’s loyalty score.
For example, an insurance company could have a dozen service defects cited by its broker customers, but two problems in particular could occur most frequently and cause the most-severe damage to relationships: delays in claims handling (which angers the end consumer) and lack of regular contact (which leaves brokers uninformed about changes in the insurer’s products or policies).
Once the company determines how to resolve the problem, it should follow up first with the highest-priority customers.
The sales force also needs to be in the loop about problems and how they are progressing toward resolution. That way, their account planning can cover what has to change for a customer before the team should renew sales efforts.
One large property management company implemented a feedback system last year for its office and retail customers. The company had been generally aware that tenants wouldn’t renew their leases if they had too many problems with a property. But incorporating the customer feedback system into the sales process gave the company a smarter sales approach. The firm sorted accounts according to their level of advocacy and the company’s share of their property spending. For customers with the lowest levels, the company pledged to fix the basics and delay sales. For customers with high spending but low advocacy, the company set about understanding the root causes of the problems and addressing them immediately. Customers with a low share of wallet and high advocacy qualified for upselling, and the company now has focused its selling on that group.
Sales teams have a role in advocating for their customers to make sure that the root causes of problems get addressed in a timely way. Only after it’s clear that the situation has turned around should the customer become a legitimate prospect again.
Mark Kovac is a partner at Bain & Company who leads the global Commercial Excellence group.
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