Customer churn and the quality of sales

One of my clients is in a pretty difficult spot.

Having lost a major contract, simply on price from an offshore based competitive supplier to his supermarket customer, he finds himself in the position where his overheads will eat him alive quickly without very painful commercial surgery. 

Over a period of time we have been discussing the Quality of his sales Vs the Quantity of sales, but assembling and allocating the resources to execute a change in the customer base has proven easy to say, very hard to do.

 It is fine to obsess about the sales revenue line,  but rather than just consider the quantity of sales, the quality is just as, if not more important. Had the volume he did with the supermarket been spread around 3 customers who were less likely to go offshore looking for a better  price, even accepting the higher transaction costs, he would today be far better off.

Many businesses, particularly service businesses like insurance and Telcos factor in customer churn, and spend lots of marketing dollars to replace the customers they will lose through poor service, pricing, competitive deals and so on. Directing a small percentage of those dollars to better engaging with and servicing existing customers to reduce churn would be far better.

It is the quality of sales that should be measured, not just the quantity.

 

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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