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Jul 1, 2002 12:00 AM
Never has it been more important to develop new accounts — and never has it been more difficult. The difficulty comes from a combination of a shrinking pool of opportunities, the absence of one or more compelling reasons for a prospect to switch suppliers, poor selection of target prospects and the expectation that new-account development be entirely the responsibility of sales representatives.
A great deal has been written (much of it by yours truly) about how a graphic-arts company should formulate and communicate a differentiated strategy, a unique reason for a targeted constituency to do business with the company. That differentiated message may be an indispensable part of the equation, but it cannot carry the burden of successful new-account development on its own.
First, let's define successful new-account development. Not too long ago, a good account was defined in terms of annual sales volume. Today, there is growing appreciation that sales has a quality as well as a quantity. In an environment in which cash flow is as major a consideration as profit, that means regularity of sales, low transaction costs, trust, and perhaps most important, the size of a graphic-arts company's market share within that account.
Ask five people to define marketing, and you may get eight different answers. A superior frame of reference is “development,” the systematic, organized cultivation of accounts that are characterized by mutually important and profitable relationships.
A differentiated message is critical to new-account development. It is, however, necessary to deliver that right message:
Most companies would agree that a worthwhile objective would be the opening of no more than five or six new accounts during the next year — if they were the “right” five or six accounts with which a future can be built. Twenty or 30 new accounts may produce desirable short-term sales volume, but if your objective is volume rather than customers' lifetime value, it won't be long before you are scrambling to replace most of those accounts — about half will not place a second order.
Many printers undoubtedly salivate at the prospect of selling to a Fortune 500 company. But be honest: Does a Fortune 500 company ever perceive your firm as important, even if you deliver great product, on time, at a competitive price? Isn't that buying organization likely to believe it can use its purchasing power to hammer a supplier for price concessions in difficult times? Our company's research overwhelmingly indicates that mistaking a regular “one-night stand” for a partner is a serious error made by firms that define a good customer solely in terms of sales volume.
The industry has many CEOs with a background in finance or manufacturing who feel uncomfortable with customers. Avoiding customer contact is lethal. Pity the exec who believes, “That's what I pay salespeople to do.” The reality is that customers and high-potential prospects want the assurance of a pipeline to the CEO.
Sophisticated graphic-arts companies also understand that selling at the bottom of a buying organization and working up the ladder is no longer successful. The salesperson fears antagonizing the buying contact, but selling at the lower levels usually involves those empowered to consider only cost in the buying decision, not the cost-benefit relationship.
Graphic-arts companies that have studied prospective partners and believe they can make, not simply save, money for those clients need to evaluate the risks and rewards of starting the selling process at the upper reaches of a prospect's organization. Establishing value should address the benefits, as well as the cost savings, to a print-buying organization. In the long term, what would yield the greatest benefit to a customer: a five-percent concession in the price for printing of a direct-mail piece or the long-term value of a five-percent increase in the response rate?
The subject of new-account development is complex. Every situation, every prospect and every print company is different. The objective of this column is to pose issues that sometimes get lost in the heat of the daily battle.