Winning over new customers and ensuring that they keep doing business with your company are among the top priorities for small business owners. In a recent poll of 1,300 graduates of the Goldman Sachs 10,000 Small Businesses program, the most common business challenge cited by participants entering the program was finding and keeping customers.
Patricia G. Greene, professor of entrepreneurship at Babson College and the national academic director of the 10,000 Small Businesses program, and Enrique Torres, president of Excellent Fruit & Produce and a program graduate, shared their insights about how small business owners can build a strong customer base and gain valuable, long-term customers.
I want to focus my efforts on boosting sales to customers. What are some smart approaches to lead generation?
Enrique Torres: I’d recommend collaborating with companies similar to your own when initiating a lead generation effort. As a distributor of fresh fruits and vegetables, our typical customer is a restaurant or a hotel. These customers also buy supplies like ice, dairy products, and meat from other distributors. We start by asking our customers about the services they’re receiving, and that’s how I get in touch with other distributors. I communicate with these distributors, and we exchange leads on accounts we aren’t currently serving together. That’s the power of networking and building relationships with other businesses.
Patricia Greene: I’d add that another way to improve lead generation is to create a process map, and it doesn’t have to be fancy. Determine where your best leads are coming from. If you categorize your leads by sources and see you’re getting the most leads from meetings at the local Chamber of Commerce, for example, that can show you the best place to spend your efforts and time. You can also learn a lot about lead generation from people outside your industry—they’re happy to talk because you’re not a competitor and sometimes you get really great ideas about how to get leads.
Once my company finds the sales leads it needs, how do I convert these leads into actual customers?
ET: I’ve found that it helps to understand how the potential customer is currently being served—and by whom—before making the first approach. By studying our competition, we’ve been better equipped to approach our leads. For example, some of my competitors require their customers to place their orders for next-day deliveries with a cut-off time of 8 P.M. But some customers see value in placing their orders at midnight after they close their kitchen operation and make an assessment of their produce needs. So we focus our sales pitch around an extended cut-off time. Learn what’s missing from your leads’ current service and find a way to fill that gap.
PG: There are different types of customers, so you win them in different ways. For example, there’s a huge difference between selling to the government versus selling to other businesses or to consumers. You have to understand your customers and spot their needs or pains so you can offer them a solution. Understanding their purchasing process is also important. The degrees of formality and informality in this process can vary, as well as how much flexibility you have in setting terms.
I’m not entirely sure how to meet the unique demands of the customers I’m targeting. How do I pick up on what my customers want or need most and find ways to address their problems?
PG: It shouldn’t just be your sales team listening to customer pain points—everybody should be listening. Too often, business owners don’t have a method of asking their customers how they’re doing. But having a system to take the pulse of your customers to see where they’re happy, where they can improve, and how your company is doing from the customers’ perspective can provide clear-cut solutions for addressing customers’ needs. Remember: sometimes you have to actually ask what their needs are.
ET: I find that an effective way to improve my customers’ value proposition is by asking them why they’re buying from us instead of our competitors. Whatever the answer is, the conversation allows me to present our strengths and easily improve the value proposition. As a by-product of this approach, I also learn what I should be doing better and I’ve actually implemented changes in my operations based upon that information.
PG: Getting that information is critical. If a customer is local, try to meet once a quarter over a cup of coffee. If it’s a large customer, maybe have them fill out a survey once per quarter. Get feedback and have a plan to build on that feedback.
I want to make sure my customers stay loyal and hopefully spend more with my company. How do I implement an effective customer retention strategy?
ET: We’ve learned the hard way that each of our accounts has four different people we need to satisfy in order to retain that customer: (1) the person who receives and inspects the product; (2) the executive chef in charge of the operation; (3) the food and beverage manager who ensures transparent purchasing procedures; and (4) the shareholder concerned about the bottom line of the business. Mapping each of our customers lets us stay aware that we should be delivering satisfactorily to all relevant parties within the account. We engage in frequent face time and build rapport with each of the four key players. So when we are tested, compared, and challenged by a competitor, we have a higher probability of continuing business with our customer.
PG: You should always have that level of great customer service. But apart from that, there are a number of retention strategies you can try, like loyalty incentives, pricing and multiple-purchasing incentives, or even customer education programs. Take a wine store that offers wine-tastings or hosts a wine class. Customer education can be a very effective way to drive sales, and sometimes that can be accomplished through partners. The manufacturers of the product may already have a program that you can participate in. Remember to always keep your eyes and ears open to see what your customers might benefit from and how you can deliver the kind of added value they’d appreciate enough to keep coming back.
These are just a few of the customer acquisition and retention strategies taught in the Goldman Sachs 10,000 Small Businesses program. Share your small business advice in the comments section below, and visit www.goldmansachs.com/10000smallbusinesses for more information on how the Goldman Sachs 10,000 Small Businesses program can help you find, win and keep new customers.