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|  |  Customer Penetration Strategies June 20, 2008 TECHNOLOGY AND CUSTOMER PENETRATION Two questions commonly asked by most companies are: “What process should we use to build a new customer’s business? Or “what process should we use to build an existing customer’s business”. These questions generally arise after either a successful prospecting process has culminated in some opening business, or current customer business is just not building. Both dilemmas relate to marketing’s concept of “customer penetration”. The new and current customer dilemmas include the following: Most opening business is usually a “trial” to see how the new company is going to perform. Unless the opening business is leveraged to create future business that will result in customer penetration and ongoing business, long-term new customer profitability is in doubt. Many current customers’ business is sporadic with no process in place to maximize penetration. The key to new (and current) customer penetration is to have a structured process in place. Unfortunately, structure has not been the norm for most marketing companies. Most recognize the need to build a customer’s business, and they implement various well-intended follow up programs. Arrays of promotional materials are used, but mostly in unstructured sequences that lack strategically timed customer touches. It’s tantamount to “hit and miss” at best. Also lacking is a system for measuring the effectiveness of a penetration program. Structured customer penetration programs need to be built around CRM (Customer Relationship Management) software such as GoldMine. GoldMine can store both demographic as well as business history. Once stored, this information offers a “snapshot” of the level of penetration being achieved. A snapshot could include demographic information such as a customer’s number of employees multiplied by estimated annual business per employee to determine a customer’s annual buying potential. The potential is matched against business history to determine a customer classification based on the level of penetration being achieved. Classifications become the basis for creating customer groups – the groups are attached to structured penetration strategies. GoldMine can be very effective in implementing structured penetration strategies. Consider the following example: Historical information shows that a group of customers are buying little if any of a particular product or service. They are classified in GoldMine based on their status and subsequently are placed into a sequential process of promotional touches that could also include appointments and/or phone calls by sales people. This is an example of Goldmine Automated Processes and represents a part of sales force automation. Most companies have well-intended follow up programs; unless they employ some kind of sales force automation they are plagued with the inconsistencies and low return of investment that plague manual unstructured programs. The scenario sighted above is only one example of how companies can build business with GoldMine and sales force automation. Unlimited processes and sales and marketing campaigns are possible. An added benefit from a software-based customer penetration strategy is the built in sales person accountability. All process events can be coded and automatically posted to call reports within GoldMine, providing a synopsis of not only the events being carried out but the effectiveness of the calls and appointments as well. There is no doubt that customer penetration is at the core of a typical company’s level of profitability. New customers are of little value unless their new business can be leveraged to create future ongoing business, and perhaps from a wider array of products and/or services. At the same time underachieving current customers represent much lost opportunity unless they are constantly analyzed for their profitability and buying status. Subsequently their status should determine a follow up program and GoldMine’s CRM and sales force automation functionality must be at the center of the effort. The automated process scenario sighted above is only one example of software-based penetration strategies. Customer information used properly provides many penetration opportunities if used effectively. Consider the following example from a reseller of office products: A customer is listed as a wholesaler of air conditioners. A sales person has noted (in GoldMine) that their customer has its own sales force. This information, if used properly by the sales person, presents an opportunity to target this customer with audio visual supplies for conducting better sales meetings, or binding equipment and binding supplies for the customer’s presentations to its own customers. This scenario not only results in more business from a wider array of products, but has the spin off effect of enhancing the relationship with the customer by providing the savings associated with having to buy from multiple vendors. It’s been estimated that it costs a typical company $75.00 to create one purchase order. CRM software-based strategies (using GoldMine) must be at the forefront of most company penetration programs. Customer information must be used to constantly identify more business opportunities and subsequently turned into processes and campaigns for structured follow up. Importantly, each customer’s buying status must provide a snapshot of where a company is with a customer’s penetration and where a company wants to take a customer. More business and more profits usually ensue. ABOUT THE AUTHOR: A sales and marketing veteran with more than 30 years’ experience, Neil Saviano is president of Longbow Consulting Group and CRM Boston www.crmboston.com , a sales and marketing organization that focuses on helping clients combine proven sales and marketing techniques and strategies with state-of-the-art technology-based solutions. He can be reached by phone at 978-750-6882 or by e-mail at neil@longbowcg.com.
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