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How selling more to your core customer will help your business grow

You’re sitting in an Executive Team meeting.  The conversation turns to your customers.  What thoughts do you have in your head? And are these the same as everyone else’s?  I bet they aren’t.

I ask this because I’ve been there.  At Peer 1, we found ourselves with 13,400 customers.  And when we met to discuss initiatives, we realised that when we talked about customers, we all meant something different.

I was thinking of bigger, more upmarket businesses.  Ones with more complexity that would result in more margin and more growth.  Others thought of the average customer we served at $2000 per month.  Others still were looking at it through the lens of ServerBeach – a company we bought from Rackspace – whose value to their customers was measured by the computing power they got to their dollar.  None of these was wrong, but there was no unity of approach.  And no realisation of who our critical, core customers really were.

We had no product marketing function when we designed new products or services at Peer 1.  So there was no one in the team whose job was to get under the skin of our core customer.  Let alone understand what they needed and tailor our products accordingly.  This is vital if you’re to have any chance of selling more to these high-value, profitable customers.

So we decided to clarify the identity of our core customers.  Then, we focused on how we could sell more to them.  Here’s what I learned.

    Clarity on core customer identity

    We’ve written before on this process because it’s important.  You can’t sell more to your core customers if you don’t know who they are!  Remember, you’re looking for customers who you can sell to at maximum profit—the ones with the potential to fuel your economic engine of growth.

    At Peer 1, we decided to make this a priority – calling it Project Challenger.  The title was deliberate.  We wanted to be a challenger brand to Rackspace in the same way Virgin Atlantic challenges British Airways.  Rackspace was stodgy and corporate – a bit like BA – whereas we wanted to take more risks and be irreverent in our marketing.   

    So we put our collective heads together to determine who was buying from us at a maximum profit and their personas.  Eventually, we arrived at a detailed profile.  They were customers who had the potential to or were already spending at least $10,000 per month with us. They were eCommerce businesses and were likely to buy a VMware stack.  It didn’t matter what industry.  They all shared these characteristics.  

    Why were these our core customers? Because if you can pick up an eCommerce customer early and they’re successful, this success will drive their spending with you.  We took particular interest in companies that were using or seeking to use Magento Enterprise as it was such a flexible, scalable platform.  We knew we needed to be world-class at this technology and set about becoming a platinum partner.  On the back of this, we picked up Boohoo and Missguided as they went from turning over peanuts to millions of dollars. We also won the wine store for Waitrose and the Debenhams eCommerce operation.   

    Creating core customer sounding boards

    So you’ve profiled your ideal core customer and you’ve narrowed down your target.  Now you need to spend some time with them.  Don’t just leave this to the sales team.  You as CEO and the rest of your Executive Team need to visit or host your core customers.  

    Our recommendation to all our clients is that they create a customer sounding board that meets three or four times a year. At Peer 1 in the UK, we took our top 20 core customers and asked them for their perspectives and insights.  During these gatherings, we’d ask them, ‘If you ran our company, what would you do to make us easier to do business with?’  We’d also discuss the things that they bought from other suppliers that they could buy from us. 

    Laying on a decent breakfast, we’d facilitate some sessions where we’d talk through specifics. I remember a guy from Debenhams saying, ‘You keep sending me 29 invoices and then threaten to switch me off. Your credit control system isn’t fit for a purpose for a business of our size.’  Good honest feedback.  And something that I prioritised to fix.

    The thing was, for the vast majority of our customers our credit control was probably perfectly adequate.  But for our top 100 customers, it was mind-numbingly annoying.  They were different.  They didn’t pay by credit card.  They didn’t pay monthly in advance, they paid quarterly in arrears.  The terms were different.  And our process didn’t allow for it. 

    Visiting core customer sites and calling them regularly

    Go and visit your customers. Don’t just talk to their head of IT.  Speak to the project managers that deal with your teams. A quarterly business review can be really helpful here.  Make sure you listen as much as you talk. The retrospective part should be tiny. It’s more important to look ahead at what they’re planning in the future.  Ask them what’s happening in their industry.  Look over the horizon with them and stand beside them as their technology partner.  Work out their current and future needs and how your company can help.   

    This is why I always tell CEOs and Executives that they should be picking up the phone or visiting one customer every week, without fail.  Then your whole executive team will have its finger firmly on the pulse of your customers when you make key decisions.  

    Focusing your sales efforts

    core customer

    Once we’d completed Project Challenger at Peer 1, we could laser focus our sales teams’ efforts on these very specific customers.  We’d identified that we only needed to win 100 of them annually to double the size of our business in three years.  So the sales teams concentrated solely on these customers and reported every week on the pipeline, the value and the marketing leads.   

    On top of this, each of these core customer new business opportunities was allocated an executive sponsor. That meant every member of the executive team knew, first hand, what the sales challenges were.  It was a totally different approach to the scatter-gun sales we’d done before.

    Adding value to existing core customers

    We were constantly looking at where else we could add value to our core customers at Peer 1.  After all, it’s more profitable to increase sales to your existing customers rather than going after new ones.  

    This was one of the reasons we became world-class at VMware. We’d realised it was a key piece in the jigsaw.  Our core customers knew something about the technology but didn’t want to be experts in it.  That was our job. By using VMware, we could reduce the cost of their infrastructure and save them money. Yes, it took more professional services and was more complex to set up, but it made these customers stickier. Always a good thing!  The complexity of VMware meant they couldn’t run it themselves because it was too complicated. 

    Through our partnership with Magento Enterprise in the UK, we created an event called Commerce Futures.  It was aimed at the directors of eCommerce who didn’t buy our hosting services directly but bought Magento.  The event added value to the Magento Partner network and, in turn, we got the recommendations for hosting when they won business.  Every quarter, this content series brought together eCommerce directors and tech partners. Under the Chatham House Rule, people shared stories about their experiences and what had gone wrong. I remember a guy from a big clothing retailer re-telling how they’d nearly gone bust when they expanded into France and Germany.  The discussion focused on the difficulties of multi-currency transactions on credit cards.

    This kind of added value is such an asset to your business.  By creating communities and emotional attachments, you’ll strengthen the bonds between you and your core customers.  Often, close contacts that we’d built over the years would move to a different company and take us with them.  I remember one client who moved from Debenhams to Jimmy Choo and we won their business as a result.  We also found the CEOs that were part of our Customer Sounding Board were much more forgiving if things went wrong.  We had a great relationship so they’d cut us more slack.

    Systematising your business to exceed expectations

    Work out the things that can be systematised in your business so that you exceed expectations, every time.  You can’t scale your business on individual heroics – you need some mechanisms.  

    I remember when Ritz Carlton won the Malcolm Baldrige National Quality Award. They were the first service company in the world to do this and started to run courses on ‘The Ritz Carlton Way’. When I was at Rackspace, we visited Ritz Carlton to see this first hand.  They famously gave a discretionary spend to every employee, even the cleaners.  $2000 to fix any problem that was affecting their guests’ experience. We stole this idea, rinsed it out and put it to work in Rackspace.  Any Account Manager that saw issues in customer service was allowed to spend up to two times the monthly recurring revenue of that customer to fix it. No need to ask for manager approval.  We then monitored who didn’t spend enough money as they were likely not looking hard enough for client problems to fix.

    Offering brand promises with guarantees

    I’ve been an advocate of brand promises with guarantees since my time as MD at Rackspace and Peer 1.  They were a big reason why we grew so quickly, scaling from zero revenue to £30 million in just five years. Committing to a series of promises that we knew mattered to our core customers was at the heart of offering an SLA with teeth.  And the corresponding guarantees, or catalytic mechanisms, ensured customers knew our skin was in the game. 

    It cost us if we didn’t deliver and this built trust with our core customers.  At Rackspace, our purpose was ‘Fanatical Support’ so we differentiated ourselves around customer experience.  We invested time and energy in finding promises that truly resonated with our core customers and that were differentiated from our competition.  And the continuous cycle of performance and efficiency improvements generated by these promises were huge.    

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    Written by business growth coach Dominic Monkhouse. Find out more about his work here. Read his book, ‘F**k Plan B’ here

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