In March 2023, the debut podcast of Automatic Merchandiser’s Vending & OCS Nation offered three business development strategies for 2023. The podcast was well received and is worth checking out if you missed it because those strategies are still applicable. But, 2024 is a new year with a changed market condition, and that requires some new business development strategies.
We are part of a dynamic business channel, which means regular adaptation is essential. Accordingly, our first podcast of 2024 offers three fresh strategies designed for the current business climate. If you are involved in sales, be sure to give it a listen: “Designed for 2024: Three proven business development strategies that are guaranteed to succeed.”
Since this column deals with office coffee service (OCS), let’s focus on one of those three new business development strategies from the new podcast that is particularly suited for OCS. It is all about renewing your focus on the three R’s: retention, referrals and revenue.
Retention
According to the Harvard Business Review, Bain and Company, working with Earl Sasser of Harvard Business School, analyzed the costs and revenues derived from serving customers over their entire purchasing life cycle. It showed that in industry after industry, the high cost of acquiring customers renders many customer relationships unprofitable during their early years.
Only in later years, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns. The bottom line, per the study, increasing customer retention rates by 5% increases profits by 25% to 95%. It's a good reminder that trying to see every client in the first quarter is a great idea.
Referrals
While you are spending time with your existing clients to ensure their happiness, ask for the second R, referrals, but ask for referrals the right way. You have heard this time and time again from me, but it's worth repeating, especially in the early part of the year, the optimum selling season in 2024, a year when referrals will become critically important.
Brynne Tillman (the LinkedIn Whisperer) and I talked about how to get referrals the right way using LinkedIn. The idea is to receive targeted introductions from your clients and centers of influence. You simply go to a client, bring in a list of 30 to 40 of their LinkedIn connections and, according to Tillman, here are the questions to ask and how the conversation should go:
Account executive: “I'm going to be reaching out to these folks in a couple of weeks, but before I do, can I run them by you quickly and ask you who you think I should talk to from this list?”
Tillman said that list might get pared down to eight or ten names.
Account executive: “Of the eight or ten, is there anyone on this list you'd feel comfortable introducing me to?”
At that point, Tillman said the list could be down to just two.
Account executive: “With those other eight, is it OK with you if I reach out to them and mention that you are my happy client and you thought I should talk to them?”
Tillman calls this, “permission to name-drop.” Once given permission, the account executive can reach out to the other eight prospects with the following narrative:
Account executive: “Sally and I were chatting the other day, and your name came up in our conversation. I've been working with her for the last 10 years, and she thought I should reach out and introduce myself. If you're open, let's connect and we'll set up a quick introduction call.
Tillman said that once the LinkedIn connection is established, the account executive should write, “Thanks for connecting. Please share with me your preferred way to set up a call. Here is my calendar link if that works best for you.”
Tillman explained: “We've moved slightly toward asking for permission to name-drop because we want volume. “It's really hard to ask a client for volume, but this process results in plenty of warm leads.”
Revenue
Here's the plan, and this is a no-brainer. When an account executive or a client services rep is out there visiting clients during the retention and referral portion of this strategy, they need to open their eyes with the goal of adding one revenue source at every existing location.
Some examples include: Is the customer a candidate for point-of-use water, maybe even a high-end unit? Does your company supply the first aid products? Why not?
Can we add wellness teas? It is the flu season after all. How about kombucha? Has the client considered cold brew? Is this client now a candidate for single cup? Why don't they have flavored creamers? How about an enhanced filter system? Doesn't every location need an ice machine? Are they really happy about ordering their soda from Costco and dealing with the hassle?
Sustainable paper products would also seem like a nice option. You have solutions to offer. Present them. The list is extensive. Look around. Opportunity is just sitting there waiting to be tapped. Set a modest goal. Add $25 a month in new sales at every location on average. For a company with 500 locations, you can find $12,500 a month in new, recuring revenue in your existing locations.
With one client visit, renew the focus on existing accounts and cash in with retention, referrals and revenue. Also, look for the opportunity beyond OCS – vending, micro markets and pantry service. Nothing is more profitable than finding new dollars within your own locations.
ABOUT THE AUTHOR
Bob Tullio is a content specialist, speaker, sales trainer, consultant and contributing editor of Automatic Merchandiser/VendingMarketWatch.com. He advises entrepreneurs on how to build a successful business from the ground up and specializes in helping suppliers connect with operators in the convenience services industry – coffee service, vending, micro markets and pantry service specifically.
Subscribe to Automatic Merchandiser's new podcast, Vending & OCS Nation, hosted by Tullio and designed to make your business more profitable.
Tullio welcomes your feedback. He can be reached at 818-261-1758 and [email protected].
