There are infinite ways to gain new business. We took two new paths last year at Gordon Lumber–one analytical, one human–and as a result pushed our sales up 21%. Here's how we did it, starting with the analytical approach.
One of the great benefits of today's LBM software is the ability to precisely analyze sales data by product and by customer. Marry those two categories and you have a powerful tool to discover product categories that could be marketed to existing customers. When I did this, I was amazed at the quantity and breadth of products we weren't selling to our good customers. It's often been stated that it is easier and much less expensive to keep a customer than it is to acquire a new one. It is also much easier to grow sales through an existing customer than a prospective one.
At Gordon Lumber, we break down product categories by framing, trusses, roofing, windows, exterior trim and siding, insulation, drywall, interior trim, and kitchen cabinets. We then look at the sales history of each of our customers in those categories. These numbers are great for budgeting and an excellent management tool to give direction to your sales reps, hold them accountable, and in the process provide greater service to your customer. The data allows you to look for trends, compare gross margins and, most important, identify target opportunities. Once the data has been compiled and analyzed, it's a matter of implementing sound strategies and tactics to secure the new business.
The beautiful part of this exercise is that it is easily measurable. The computer does all the work. It is just a matter of reviewing the data, evaluating successes and failures, and adjusting tactics as prudent and necessary.
Using data to uncover new sales opportunities to existing customers gives us a simple but powerful roadmap to success. It prevents a shotgun approach to growing our business and replaces it with a targeted campaign that provides clarity, measurability, and accountability.
The human side of our sales growth focuses on regarding every employee at our company as a salesperson. Whether they're in management, work in the yard, deliver material, or labor in a back office, if they come into contact with a customer, then they have a sales opportunity. How a customer views your company–and thus what his or her buying habits will be–depends on how that customer views your employee.
We've worked to instill this culture within Gordon Lumber. Every employee has selling opportunities every day, and I have a great example to share with you. About a year ago, one of our delivery drivers, Brandon, was delivering a small order to one of our house accounts. While on the job site, Brandon noticed a lot of other materials, in large quantities, that had been delivered by our competitors. Brandon began asking probing questions like who supplied the other products, why did they use that supplier, what did they like and dislike about that supplier, and would they allow us to quote them. The answer to that last question was yes. Brandon returned to the yard and shared this information with management along with a list of the materials the customer was purchasing from our competition. As a result of Brandon's initiative, our sales to the firm soared from $16,000 in 2010 to more than $750,000 in 2011.
Yes, there are infinite ways to gain new business. One of them is to lower your price.
I suggest you try the other ways first. We did.
Gary Farber is CEO of Gordon Lumber, Fremont, Ohio. E-mail: firstname.lastname@example.org. 419.333.5444, ext. 105