Sales & Marketing Management

Scenario #2:

Salespeople often concentrate on the big orders and give little attention to other
prospects that, with a little attention, may blossom into a significant source of
additional sales revenue.

Problem

In some cases, this policy is even condoned or encouraged by sales managers.
Sales managers have been known to:

Û Instruct that accounts below a certain volume are not to be called on

Û Ignore that the salespeople are not servicing the small accounts

Often, salespeople will be content to babysit a few large accounts and try to
maximize their potential. This may even look good for a time as the big orders
roll in but, in the long term, it inevitably will leave the business in a vulnerable
position.

Possible solution

To survive, a business must generate a constant flow of new business to replace
the business lost every year by normal attrition.

To do this effectively, a business owner/manager must always be aware of the
various types of customers that make up the business and the contribution that
each type makes to the business.

Remember:

Five years from now, up to 50% of the

accounts that presently make up

80% of the business will be gone

If there are too many eggs in one

basket, the business can be

devastated by the loss of even

one of the eggs

The mix of the customer account base

is very important to profitability

The small account normally

generates much higher gross

margins and, if the business has

enough of them, it can be a

powerhouse of profit.

Large accounts can be high volume, but

often they can be very low gross

margin business and sometimes

very demanding and dictatorial.

They know the power that they can

sometimes wield.

When diversifying the business, it

is much harder to be

displaced by a competitor in

the market. It is easy to forget

that eventually some little

accounts will become big

accounts.