This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in August 2016 and is posted here by their kind permission
Buyers are scarce and highly selective. How do you get a share of their business?
The business climate has been bad for several years. The mining sector is in decline, manufacturing has been shrinking and consumer spending has reduced. In tight economic times buying patterns change; projects are postponed, companies are reluctant to replace machinery, individuals stop buying nice-to-have things and financial managers slash budgets. Cutbacks like these can affect suppliers seriously, even fatally. Buyers become much more selective when they do buy. They negotiate harder and look for better deals, so competition increases for the little business remaining.
While this is going on you need to keep your sales at a profitable level. It is too risky to plan to break even; the tough times are likely to continue and your costs will increase so you risk making losses. Loss making companies do not survive bad times very well.
How do you maintain or even increase sales? A good starting point is your attitude. In my experience entrepreneurs who focus on how bad things are will often see their fears come true. Those who ignore doom-and-gloom conversations and show determination often succeed in making sales despite the economy. It is also crucial to put the downturn into perspective. The majority of buying continues. All of the savings and deferred expenditure makes up a small portion of all purchases. Even depressed economic sectors, like mining, spend billions of Rand on goods and services. Your challenge is to be a supplier who gets a slice of the buying that still takes place.
You cannot control the economy, or the areas which customers choose to cut back, but there are things you can control, and you should do so.
Start with your customers. A quick thought; do you know, as you are reading this, exactly how many customers you have? Customers are your primary or exclusive source of income, and yet we so often treat them far too casually. We cannot afford to lose a single good customer; this is something we can control. Talk to all your customers about what they need in these difficult times. Set up long term supply contracts, even if it is at reduced prices. Improve quality of everything you do to shut out competitors. Replace falling sales by increasing the product ranges you sell to each customer. Few companies can boast that all customers buy everything they could buy from them. If you are not one of them you have a huge opportunity to increase sales in an easy-to-access market. The reality is that right now many of your customers buy from competitors because they do not know that you have a similar product. Fix that and reap the rewards.
It is a tragedy to lose winnable sales simply because you were never considered as a supplier. You need to inform the market of your range and advantages. Your website and social media presence are important. Get a good analytic programme for your website then work with your web designers to increase the number of visitors, the length of time they stay and the conversion rate. This does not have to be an expensive exercise. Develop campaigns to generate the right sort of interest response and send your sales force out to those and other prospects to develop new business in areas where you have an advantage. Do not allow them wait for incoming enquiries.
Increase your strike rate (the ratio between sales leads and orders) with better, solution-orientated sales patterns. Monitor your results and diagnose why you lose sales. For instance sales which just seen to die, where you never find out what happened could mean your sales force never really understood the prospect’s needs, or were not at the right level. If training is required to increase sales effectiveness then do so immediately – it is a small price to pay.
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