7 STEPS TO TARGETED MARKETING FOR MANUFACTURERS
There is no single formula for successful marketing. The rules for “shotgun marketing” — selling the widest possible number of items to the widest possible base of consumers — are quite different from the rules for selling manufactured products to other businesses.
In the last issue of this newsletter, we started to examine why consumer marketing rules and strategies don’t transfer well to industrial marketing and learned some guidelines for identifying your company’s Most Valuable Customers. This month, we’ll outline the second of seven basic steps — developed by management consultant and author Michael P. Collins — that manufacturers can use to identify their target market and hit that target.
STEP 2 – LOST ORDER ANALYSIS
Following up on lost orders is a crucial way of learning about customer needs — in fact, it could be seen as the foundation of industrial marketing. Lost order analysis is a systematic method of determining why customers did not buy from your company. Without detailed information on what’s causing you to lose orders, your company can’t prevent the loss of future sales or keep current customers happy.
Lost order analysis could be viewed as a “missing part” of the ISO-9000 or TQM certification process. Knowing whether you lost an order because of a deficiency in a product or service can be crucial for quality control decisions. Lost order analysis can also give you specific information on pricing, servicing problems, competitor strategies, and market trends. This information is needed to prevent future lost orders and essential to changing products or services to gain competitive advantage.
Lost order analysis can benefit the bottom line. Addressing the reasons behind lost orders can help create new sources of revenue without having to modify sales force or selling efforts.
Tips on tracking lost orders:
• Explain the importance of lost order analysis to all salespeople, and make tracking lost orders a key objective.
• If you use manufacturing reps or distributors, include lost order analysis as part of their contracts.
• Don’t accept price as an ongoing reason for lost sales from sales reps. Make occasional follow-up calls — as soon as possible after the order was lost.
• Find out whom the decision maker was, and be sure to talk to that person.
• Make the follow up call positive; don’t be a sore loser.
• Ask for the opportunity to bid again. Ask for lost order information so that you can improve on past performance.
• If there is a product, quality or service problem, explain that solving the problem is extremely important to your company, and try to get an in-depth interview. If you need detailed technical information, ask whether you can send the customer a simple follow-up questionnaire.
• Be sure to end the conversation by thanking the decision maker for the interview and follow up with a written thank-you note.
Despite its fundamental importance to customer retention, lost order analysis is not used very often. It often meets resistance from salespeople who fear that lost orders will be seen as failures and that analysis of lost orders will be used against them. Companies who market using the “shotgun approach” also rarely analyze the reasons for lost orders. They are too busy finding the next order.
Companies should ask themselves what is the optimal “hit rate”— the number of bids or quotes won as a percentage of the number submitted. Less than 35 to 40 percent could be low and should trigger analysis of the reasons behind lost orders. More than 65 to 70 percent could be too high and the company should look at the cost of preparing a bid or quote relative to the amount purchased by each customer. Target marketers aren’t looking for just any customers, they are looking for the most valuable ones.
If you’re interested in finding out more about a targeted marketing, contact NI’s marketing specialist Chris Rector at 906-254-2156 x680 or crector@niupnorth.org.
Next issue: Customer satisfaction monitoring.