In recent months, the casual football fan may have noticed increasing discussion of the use of analytics among the upper levels of certain organizations regarding both the drafting of college players and the valuation of current rosters. This intrusion of unconventional metrics into managerial thinking is noteworthy, mainly because it represents a significant departure in what has been a traditional industry dominated by an accepted way of thinking.
In the corridors of power, however, all of that may be about to change.
Not to take the analogy too far, but the textile rental industry we know is also prone to traditional and accepted ways of thinking that may limit our ability to exact the optimal performance from our teams. Historically, our companies have benefited from largely captive customer bases for whom a change in suppliers represents a fairly significant hurdle. In addition, building strong relationships can take many months, so once a pattern or routine is set it’s easier to accept the status quo than to challenge ourselves to think differently about the results.
The result is that textile service companies continually search for additional revenue along the higher risk and higher expense route of relying entirely on winning new business. There are two problems with this approach. The first is obviously that the businesses we target are prone to the same kind of inertia and acceptance of the status quo that we, ourselves, are. They must be convinced that we represent a superior value. But the second and more important issue is that our reliance on winning accounts completely overlooks sources of new revenue from existing clients.
This is the problem that the Business Intelligence Analytics Tool and Playbook Process has been modeled to address, while delivering positive results. Using business intelligence to produce increases in marginal revenue from current accounts requires a paradigm shift in your team’s mindset.
In our industry, route service reps do not have a sales mindset. They are not hardwired to sell and probably view attempts to turn them into salespeople as a diversion from what they view as their primary purpose. Said another way, they think “sales” is a four-letter word.
Business Intelligence clears this hurdle by teaching and coaching route reps and service teams to see themselves as problem-solvers. How this is accomplished is a tale in itself.
Optimize the Under-optimized!
Some battle cry, right? And yet, it works. We take it as fact that your customer base is almost certainly under-optimized from a financial performance perspective. Here’s why.
All textile rental companies possess an established customer base. Each customer in the database buys many products from other sources, when it would be just as easy – easier, really – to buy them from us. Often these sources are outlets like big box retailers and other local suppliers, and maintaining supply levels is an additional responsibility for someone within the organization. And of course, most textile rental companies offer a wide range of products –mats, janitorial accessories and supplies, specialty products – that are relevant to 100% of businesses. After all, who doesn’t have an entryway and a restroom?
The Business Intelligence Analytics Tool and Playbook Process raises your success average by identifying the low-hanging fruit on each customer’s tree and providing the route rep with a road map that lays out the steps to optimizing each account’s revenue opportunity. Here are just three of the ways in which using Business Intelligence has helped companies generate marginal revenue from existing business:
Identify Product Opportunities Specific to an Industry Classification.
Identifying opportunities. One of the key hurdles to increase sales lies in identifying the right product for the right customer. The Business Intelligence Analytics Tool identifies strategic product group solutions to capture open product revenue opportunities for customers within a specific industry classification.
Reduce Retention Risk.
Importantly, optimizing your customer base reduces your risk of exposure to competitive pressures, and thus to customer retention issues. After all, the more lines of products and services you can provide, the easier it is to demonstrate value. Look at it from the customer’s angle. It’s much more difficult to switch to another service provider when you’re getting multiple products across varying categories from one company.
Address Revenue Erosion Within Your Customer Base.
We also use the Business Intelligence Analytics Tool and Playbook Process to address internal customer revenue erosion—by identifying accounts that have undergone significant erosion since installation or since the signing of the most recent contract. This is critically important, because all pricing is predicated on a level of usage. In other words, it’s a bargain!
The key in this case is to get the customer to see the situation from a reverse point of view. For any bargain to work to the mutual satisfaction of both partners, each has to uphold his end of the bargain! The service team has leverage in this situation. The key to solving the customer’s problem can be as simple as saying, “Look, Mr. Smith, this actually works to your advantage. You must be meeting these needs somehow, somewhere. Wouldn’t it be easier – and frankly, a better value –just to let me supply them for you?”
Reduce Dependency on Outside Sales.
All textile rental companies also suffer in varying degrees from another problem. Companies in our industry are highly dependent on outside sales forces to generate in new revenue in order to reach their financial goals. This plain fact becomes obvious when sales goals are not met and the shortfall is reflected right on the bottom line!
Once route reps are able to see themselves as problem-solvers, increasing revenue from existing accounts is shown to be much easier than gaining new accounts from outside sales. After all, your outside salesperson is tasked with prying a customer away from your competitor. Who knows what kinds of accommodations must be made? The level of difficulty is reflected in the numbers. Studies show that the probability of generating marginal revenue from existing accounts can be as high as 65%, whereas your chances of flipping an account from a competitor can be as low as 5%. The additional revenue gained through this strategy can be seen as a hedge against failure to meet sales goals.
Finally, one further point needs to be made about existing customers vs. new ones: They’re less expensive. The cost and process of onboarding a new customer – account set-up, purchasing new product, etc. – will result in new revenue. However, it’s much more costly than optimizing your existing customer base. The new products added into your existing customer base are typically high-margin items, an easy way to realize a nice bump in revenue.
In short, the Business Intelligence Analytics Tool and Playbook Process is a proven method for accomplishing what we all intuitively know is an easier route to growth. We have found the key to unlocking this growth potential, and it depends on instilling a new, more rewarding way of getting route reps to see themselves as problem-solving change agents and providing them with a road map to a more fulfilling future.
You don’t have to invent a better mousetrap. It already exists!
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