All dealers know several major customers that are not buying from them, and it is critical to understand the reasons why they choose to purchase from your competitors. To accomplish this, dealers must understand both their image in the marketplace and the specific needs of their non-customers.
A company’s image is generated mainly from its perceived performance. Since we are talking about your non-customers, their image of you is based solely on perceptions or a combination of current perceptions and past experience. We often find that perceptions of a dealer may be hindering its ability to increase penetration in the market. By understanding how your company is perceived in the marketplace, you can address any potentially damaging issues and play upon your strengths.
For example, Farnsworth worked with a dealer last year and found that its non-customers overwhelmingly felt the dealer’s order accuracy and delivery systems were substandard. The ironic part was that this dealer had invested hundreds of thousands of dollars to correct these issues more than three years earlier and now had state-of-the-art systems in place. While the salespeople were talking to non-customers about price, they should have been talking about their massive investments in logistics. The company adjusted its message and positive results soon followed.
In addition to analyzing your image, you need to understand what is important to your non-customers when selecting a supplier. This is particularly important if you are interested in serving a different customer segment. If you are serving production builders and want to attract major remodelers, you will need to know how they buy to design specific sales programs and convey what messages hit this group’s hot buttons.
Dealers can understand their image in the marketplace and the supplier selection criteria of non-customers by executing various formal and informal research strategies. Formal research entails hiring a firm to design questionnaires, to talk with non-customers, and to report the findings and recommendations back to the dealer. The advantage here is you gain outside expertise and perspective.
Informal research can be conducted by the dealer. This can be anything from hosting a dinner with non-customers, talking to them at your next in-store event, or conducting a few focus groups. The advantage of informal research is the cost savings, although your non-customers may not be as honest with you as they would be with an outside firm.
What Next? There are always opportunities for dealers to sell more to existing customers and win business from non-customers. The two types of growth discussed here are especially attractive since they utilize existing assets and do not require major capital expenditures. The key is to begin communicating with your current customers and non-customers to find out exactly where your company stands in their minds. Embrace the feedback you receive and implement programs to make sure your company is responding to the market. Once you are willing to invest time and energy into these initiatives, you will be able to fine-tune your present operation, making new locations and acquisitions even more successful going forward. —Sean Thompson is a project director for The Farnsworth Group, an Indianapolis-based consulting firm that assists clients in developing and using information to formulate opportunistic business strategies. 317.241.5600. sthompson@thefarnsworthgroup.com.
