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If you do not have a marketing department, consider hiring a marketing intern to analyze all incoming new sales orders. You might start with today’s orders going forward or if your intern has the time, go back through the past few months’ orders to build your database of marketing information. Instead of only measuring sales and net profit, define and enter into your sales data base a number of variables about the customer (i.e. potential market size, number of locations/buyers, industry type, public or private and possibly the potential to become a vendor also). You want to know which buyer of this customer placed this new order and what is the possibility of increasing the amount? You need to know your new customers and how they fit into your current sales mix and especially into your sales’ long term growth. Here are some ideas for variables to measure and pursue for the intern investigate and track. Note: Some of these items should be already asked and received by your sales person so ask him these questions after his first order arrives.
Possible details to track on all new sales orders:
- Customer’s products/services?: What does your new customer sell? (products/service?)
- Customer’s industry?: What industry or market segment is this new company in?
- Customer’s sales $ size?: What is your customer’s current annual sales?
- Purchase reason (salesman knows): Why did they choose your firm to buy from? What key issue prompted them to issue their first purchase order? (i.e. literature was convincing, lowest price, best value, cheapest alternative, no other products available, best value for the money, nearest outlet or provider, U.S. firm mandated, etc.)
- Product purchased to be exported?: Is the product you are going to sell to them to be exported? (If so, someone in your organization needs to look at the international market potential that you are apparently ignoring.)
- Non-taxable purchase?: Did the customer forward a sales tax exemption certificate indicating they are manufacturing something to be sold (that uses your product)? Does the certificate say in detail how your product is to be used? Part of another product for sale? To be exported outside the U.S.?
- Sole source of the product or shared with other vendors?: According to the buyer, are you the only provider of this product and if not, what percentage are we getting? If he will not disclose this, assume we are getting 1/3 and mention to the buyer that the price can come down with larger purchases if that is a possibility.
- Public/private company?: Is the company private or public? (listed on a stock exchange? or a mom/pop store down the street — granting credit is far easier for one listed on the NYSE)
- Number of employees?: How many employees does this customer have? (for some companies, this represents a potential secondary market given that your firm is allowed to sell to its customer’s employees given they are offered an attractive ‘corporate’ discount at no cost to your customer),
- How many locations? How many potential locations are there in which to sell in the future? (other than this first one which placed the order)
- Multiple locations, larger sales, available corporate discounts?: When talking to the buyer and he mentions there are multiple locations which have more potential buyers in the future, tell your buyer you have corporate discounts for all participating divisions within his company. Make sure to add that if he convinces more buyers to buy, all will benefit from the higher volume savings meaning he will get a price cut.
- Economy correlation (+ or – or not)?: What does this business segment do when the economy is in a downturn? Strong positive correlation to the stock markets or exactly the opposite with an inverse correlation? (You want to know to this customer attribute to help steer sales in a direction that will offset economy swings (new companies with both types of correlations help to smooth sales).)
- Dependent upon a commodity?: Is this firm’s success tied to the price of oil? or Wheat? or Corn? (do sales drop to this customer when the price of a barrel of oil drops?)
- Potential market size?: What is the potential market dollar $ size for this customer? (per your salesman or representative who opened the account)
- Literature distributed?: Has the customer received brochures, literature, company product listings? (catalogs, brochures, and other pertinent literature was handed out to multiple personnel at your new customer?)
- Non-taxable sale?: Was your product that was sold non-taxable? (this indicates that what you sold will be part of another product to be resold)
- Where used?: Where is the billing address vs the shipment address?
- SIC /NAICS Codes?: What are the SIC /NAICS primary codes for this business? Find out so if they turn out to be great customers, you can go find more listed under the same code.
- Possible vendor also?: Is your customer a possible vendor? Ask your purchasing guys to evaluate buying from this new customer and if cost and quality are favorable, begin buying from him. As a customer, this added relationship will make it more difficult for them to think about buying your product elsewhere. Both sides should consider carving off price for each other in order for both to enjoy cost reduction benefits offered in the deal.
