Professional referrals:
A primary and growing source of new business
By Sid Chadwick
Responses to the question on the client’s customer survey: “How did you first hear of our organization?” were startling. Well over half of the 36 percent of responses indicated either, “Already a supplier when I started this position,” or “Professional referral.” Well down on the list in terms of original contact were, “Sales Rep contact,” and “Company direct mail piece.”

Implications to these two leading replies were supported by other observed market conditions. Frequent buyer turnover was causing buyers to often know less about their supplier than the supplier knew about the buyer — and the buyer’s organization. Additionally, referrals from other buyers and lead suppliers were also an increasing source of new business. One buyer on the survey wrote-in, “I don’t have time to see all the suppliers who call for an appointment — but my current suppliers won’t steer me wrong!”

Background to the survey was that this particular client had agreed that he needed a market-based strategy for developing additional business in certain customer and product markets. However, he was also willing to acknowledge that over the last three years he had put together a mish-mash of self-promotions that were neither targeted, nor cohesive and consistent. His brochures featured primarily glossy photos of equipment and a new building (and could have had several competitor’s names substituted for their content); his Web site had not been updated for over 12 months, and contained little useful information for buyers; and, his year-end calendars and notepads were of little value beyond polite leave-behinds. However, in today’s fast-paced environment, no self-respecting buyer would allow a sales representative precious, unrecoverable time for such an exchange.

The net result was that revenue growth had stagnated, and employee attrition, particularly with customer support and business development personnel, had begun to take their collective toll.

To our surprise, we were asked to figure-out what was wrong, and what needed to change — before the company became unprofitable. (Part of the qualifying process for selection of an outside resource should be to provide relevant references in the client’s industry — whose revenues are growing, whose profits margins are increasing, and who can voice on a business level answers to the often difficult question, “Why?”

Correctly figuring out what is wrong takes a little time, however, uncovering what a client’s customers experience and perceive through a major customer survey is critical for correctly diagnosing what needs to change. Success in such assignments is generally directly proportional to the diligence and effort invested in data gathering.

So, developing and conducting a major customer survey is not only useful for additional business. It can often be critical for correctly positioning a client’s company for market direction, and development of market differentiation.

Market conditions
Customers will determine who gets to stay in business, and what our great industry looks like. If you agree that is true, then it should follow that a supplier’s best bet is to frequently stay as close to its customers’ changing needs and challenges, and perceptions of the supplier’s performances (and particularly relative to the supplier’s competitors) — as possible.

That’s where a major customer survey — perhaps every 18 months — comes in. Customized customer surveys, developed by experienced researchers, can radically change and improve the way a supplier sees itself, its customers, and its opportunities.

Customer feedback on day-to-day supplier performance, additional and even immediate business opportunities, strategic threats, and the value of useful information —provided by customer contact personnel (e.g., prepress personnel, bookkeeping, customer service, drivers, and certainly sales people), can radically change the focus and procedures of the supplier organization.

But that’s only part of the story. Referring back to this column’s survey feedback, suppliers and customers’ buyers play a growing role in new business development. Buyers today don’t have time nor the expertise to evaluate and qualify new and needed suppliers. In the interest of time and necessity, buyers increasingly pick up the phone and ask a trusted supplier or friend whom to use for an upcoming project. This process is quick, efficient, and all but qualifies the new source.

Yet, too often, graphic communications organizations see their suppliers’ reps as necessary evils, and not as growing, critical sources of referrals and additional revenue. The opportunities for developing a more effective “off-the-payroll” team of supplier “referral” reps, who know what your organization is best producing, and which customers you are best at pleasing, and what you are working to be known for and to accomplish — can be priceless at the right moment.

We strongly advise clients to make sure that not only their suppliers’ reps, but their suppliers’ reps’ managers are on their self-promotion and mailing list. (We also suggest that these critical supplier personnel be invited to company celebrations, as well as educational programs designed for buyers.)

Identifying and developing target customers
In our industry, we sometimes hear folks say as an introduction to describing their company, “Here’s what we do best.” Unfortunately, not only is that of little relevance to today’s buyer, but also it wastes the buyers time and does little to offer useful information for supporting customized and needed performance for the buyer.

Well-developed customer surveys, teamed with insightful analysis, allow a knowledgeable supplier to “profile customers who value the supplier most.” This profile of “target customer” can often be compared and supported through review of the gross margins and profit margins of those same customers. Time after time this profile of “who values the supplier most” matches up to “who brings the supplier the greatest contributions.” (And neither performance issue may be relevant to “what the supplier does best.)

It is from these information-gathering steps, and their related analyses, that an effective new business development strategy can be developed. Such a strategy allows for improved alignment, coordination, and results for new account prospecting, self-promotions, hiring, remuneration programs, customer education programs, written standard operating procedures, and even sales team education and training.

Summary
Most graphic communications organizations know what they do best, but fail to invest in ongoing customer feedback regarding how they are performing, and what’s changing in their customer’s business needs. To invest in these information-gathering processes requires one to use the information, and to engage a pattern of constant change on behalf of perceived customer value.

To paraphrase Mark Twain, “Progress, I’m in favor of; it’s change I’m against.”

Most organizations defer from change until it’s too late. My personal observation, however, is that our industry is alive and well. Organizations with aggressive, ambitious management recognize the truth when they hear it or read it. And understand that ongoing, relentless customer feedback is critical for knowing what to change, and when.

About the author: Sid Chadwick is owner and president of Chadwick Consulting, Inc., a business development focused consulting practice that works only in the graphic arts industry. Chadwick focuses on improving an organization’s position and strategy development with customers to improve revenues and bottom-line performance. The company’s Web site is www.chadwickconsulting.com. Chadwick can be reached at 336-945-0645 or by e-mail at .