Recovering from lost sales? Build the sales pipeline.
Have been slowly losing revenue from our biggest account, and it’s now starting to hurt our business. I just don’t know where to go from here. It’s been a huge part of our business for a long time.
Thoughts of the Day: Losing revenue that you’ve come to count on really hurts. Buy yourself time to get out of the hole you’re in. Be smart about what prospects you’re adding to the pipeline. Keep track of your top clients to make sure they stay on track. Use your sales and marketing team to build a plan of attack for each potential client in the queue.
Keep your top 5 customers below 25% of total revenue to stay safe.
If your small business has been dealing with a top-heavy mix of one or two big customers, here’s an opportunity to right-size the mix to your advantage. One way to keep your business safe is to keep your top 5 customers below 25% of your total revenue, and all individual accounts below 8% of total revenue. That way, you’re in a stronger position to negotiate with a large customer that starts making unrealistic demands. There’s less of a hole to fill if one big customer cuts back on orders or goes away altogether. And you have less accounts receivables exposure if big accounts use their clout to demand carrying terms.
Take a close look as well at the vertical markets that your company serves.
- How many customers and how much volume comes from one industry?
- Spread out to serve multiple industries and you reduce risk if one vertical market hits a downturn.
- Serve equally at least 4 – 5 vertical markets, and your company is safer than if it relies on one or two markets for most or all of its revenue.
Be realistic about how much time you have, make cuts if you need to. Monitor dicey and/or big clients to ensure a continued relationship.
Realistically assess how much time you have before things could get dicey. Make cost cuts if you have to. Pay down lines of credit lines. Decide if you’ll need funds to get through this period and if so ask for credit line increases now. Start asking questions to find out how vulnerable you are with other clients. Ask customers if they’re planning to consolidate work with fewer vendors, and if so, how soon. Are any clients heavily concentrated with their own big customers or in specific industries? If so, how vulnerable are they to a downturn? Talk to sales and purchasing people to get answers.
And what about your sales pipeline?
Assess the quality of your sales pipeline and sales and marketing team. Most companies get into customer concentration trouble because sales as a whole isn’t strong enough or disciplined enough. When a company loses sales, and the pipeline is dry, that can spell trouble. Beef that up now, assess whether that’s with people and/or processes.
Keeping a big customer happy and engaged for a long time is a great sign.
Here’s the good news. Keeping a big customer for a substantial period is a signal that your company is doing some things right. Ask the people you serviced why they did or are doing business with your company.
Make a list of things to promote to other companies or industries.
- Do some research on companies in the same industry, and in other industries that might need what you’re best at, build a list;
- Approach this list as market research; tell them you’re doing research on market needs and gather information to find out if what your company does is still relevant.
Do your homework on potential clients, quality is more important than quantity.
Get to work making potential buyers aware of the great job your company does for its current big customers. Do homework on each prospect by looking up what they do, what they value. Figure out who you and your target contacts are both connected to. Ask for introductions from people who know you and the people you want to meet. Send out intro letters, attach case studies, letters of reference, a write up on industry trends gathered during your research phase. Ask for an opportunity to get together. Don’t be afraid to reference what a great job you’ve done for your lost client. Just say it’s time to move on and you’re looking for other opportunities of similar or better quality.
Looking for a good book? Fearless Referrals: Boost Your Confidence, Break Down Doors, and Build a Powerful Client List, by Matt Anderson.