How to get an accurate idea of how your customers see the value you provide.
By Jim Poggi, Principal, Tested Insights
Customer business reviews are intended to help us and the customer understand the dynamics of our business and relationship at every meaningful level.
From a quantitative perspective, we need to understand several key metrics. What is the customer’s purchase trend? What are their high unit and dollar volume purchases? Are there product gaps? Is the proportion of private label product purchases at a level to help customers get the best value for their dollar? Are they buying private label from my competition and why? How do their purchase patterns compare to other similar customers?
Qualitatively, we need to assess and understand their view of us. Are we trusted as their top tier distributor? Are we a gap filler for them when their lead distributor has product supply issues? Are we considered a consultative resource? Are we viewed as a trusted resource by each key decision maker or simply a transactional convenience? Have we developed a coach with the customer to help guide and inform us?
We would all like every customer to consider us as their most valuable distributor and most trusted resource for their product needs and a consultant when they face strategic issues about their lab business, significant capital purchases and even alignment with GPO organizations. Many large distributors “heat map” their customers and their business patterns. While this data is useful at a high level, every well-established distributor account manager needs to understand their customers intimately, from what they buy to why they buy and to the extent that they invest trust in us as a consultative resource.
I propose that if you believe every one of your current customers gives you an “A+” against every metric, then you need to look for a few new customers. Every account manager I know has a mix of relationships. Within that mix some relationships are growing, others are steady, and unfortunately, some need improvement. The message behind this month’s column is simple: take a good, objective look at your business approach and relationships, at least with your key customers, and ask what you could be doing better.
Every customer represents a mutual investment in time, product selection, spend volume and most importantly in trust. By objectively asking yourself how you can improve, you are engaging in an investment that will pay dividends down the road. Let’s explore a few ideas that pertain not just to your lab business but also to your overall customer business.
Setting the stage for success
A respected colleague once offered me one of his keys to success and why he was so highly valued by his customers. This individual had an enviable level of customer trust and respect, a highly productive territory and was also considered an outstanding leader by management of our company. I was not alone in trying to learn more from him and how I could become more successful.
He agreed to coach me. He told me he treated every key customer as if they were “new” once a year. I asked what that meant and how he approached it. He let me know he selected certain customers for the “new” customer process each year. Before the next business review, he shared his desired approach with the customer and asked his selected customers to interview him as if they were deciding whether to do business with him for the first time.
By using this process, he felt empowered to ask them more meaningful and probing questions about their practice, what they needed from a distributor and to observe where he felt valued and welcomed and where he did not.
While simple, it was an idea I had never tried. But, once I gave it a try, the results were impressive. Customers felt more at ease sharing areas where I fell short, were clear on where I was considered a good consultant and also told me which departments and personnel felt like I was ignoring them during my visits. This level of candor can be humbling, but it gives you the information you need to improve. We all expect our financial results to improve each year, but to what extent do we tie the needed revenue improvement to improvements in how we interact with our customers and how we invest in them? Over time I have learned “to get more, give more.” It works.
Analysis leads to questions which lead to insight
Review your customer’s quantitative metrics before your next business review and be prepared to ask the hard questions while receiving blunt and truthful feedback. Is business slipping away? Are your private label products properly positioned and penetrated? Are they buying around you, or from you? Are their rapid order guides up to date with the right products on them? Is their lab business stable and well managed? Is the practice you are analyzing an example of a well penetrated customer, or do you have spend gaps?
In addition to business review templates, most large-scale distributors also offer their account managers information to compare their customers to similar ones from practice size, ownership type, specialties, and other factors. Before your next customer business review, you should have a very clear view of how your customer ranks on these metrics, whether their business is growing and, most importantly, the data you want to review with them and insightful questions you need to ask. As you consider your customers’ questions, avoid the temptation to focus on positive issues only and steer away from difficult topics. You cannot effectively manage your customer and their expectations without thoughtfully asking the difficult questions. Did you get your fair share of their vaccine spend? How about lab respiratory products? Have they purchased new capital equipment without asking you for your product options and a proposal? Are they moving toward more private label product?
If your relationship is strong and you properly position your questions, you should be able to have open dialogue and understand their needs and motivations well enough to improve your approach to the customer. You also need to welcome open, honest feedback and accept the information they offer to you in the spirit of partnership.
Qualitatively, you need to be able to assess the extent to which your customers both respect and trust you. These two pillars have often been described as the gateway to excellence in customer relationships.
Understanding how you rate here can be even more important than which products you offer. Are you perceived to be engaging in “fly by” customer visits? Focusing on friends? Avoiding concrete follow up or suggesting “I will get back to you on that”? Are there any departments that seem to be avoiding you? Are any of your key suppliers underperforming in terms of customer support? Do you answer calls and emails promptly and offer clear, concrete, actionable solutions?
The customer may not mention it directly, but believe me, if you get poor marks for follow up or response quality, your business will be in trouble.
Here’s an easy test for every lab salesperson: did you see new capital equipment you did not know about? Has the customer switched high lab spend items without your knowledge? Are they using new consultants you have not introduced them to? Have your recent requests for meetings been postponed or canceled?
If any of your key customers have made any of these changes, it’s time to have an open, honest discussion. You may not like what you hear, but it is better to be able to address it before you find your lab business shrinking and your customer relationship damaged beyond repair.
Getting a separate viewpoint
Over time, I have learned that I am not always completely objective by nature. I personally tend to make judgments, positive or otherwise, and act upon them until I see reasons to change my attitude and behavior. I am willing to bet some of you are at least somewhat like I am.
How can you avoid this trap? Bring fresh eyes to your next business review. Whether it’s your manager, a trusted colleague or a key supplier with a meaningful amount of your customer’s spend, it is useful to involve them in the process and to debrief openly after the meeting. You may be surprised by what you learn. If you invite a key supplier to the meeting, it is also their opportunity to evaluate how their products and support are perceived by the customer and to reset their relationship as well if needed.
Using what you learned to improve
If you and your customer had the open, honest meeting you looked forward to and you received clear feedback, it’s up to you to make the changes needed to rebuild your relationship, or to acknowledge it is on the right track and continue with the approach that is working for your customer and you.
Coming out of the meeting, you should know:
- More about WHO the decision makers are.
- How they make decisions.
- What their strategic priorities are.
- How you fit into their purchasing and support plans.
- Areas of their business they are looking to improve.
- Areas of the business where they expect you and/or your company to improve.
- Planned capital expenses.
- Any (especially lab) equipment they are not satisfied with or which they want to replace.
- Who trusts you and who you need to work more closely with to gain their trust.
A smart account manager will send a summary of issues and proposed resolution with CLEAR actions, timing and responsibility for actions soon after the meeting. Ask for their input and agreement with the actions. Then set a plan in place and monitor it.
If you have assessed the situation properly, created a proper action item list and have committed to improvements, you will be on your way to delivering a more satisfied customer, a better business and have learned some valuable skills you can use every day. To get more, give more.