What Are You Waiting For?

By Mike Moore

We have become so distracted by new sales that we forgot the best way to get more sales is to make customers.

Most businesses seem to be in survival mode waiting for the economy to recover and wondering what's next. Manufactured Housing is no exception. To find out what's next, we do need to look back for just a few minutes. Many of us have suffered through and prospered from recessions or economic downturns in the past. The only thing I can get anyone in the financial markets, business analysts or in business in general to agree upon is this time is different. No consensus on what's next; forget consensus, there isn't even a majority. Most analysts are looking for reasons for the collapse and reasons for recovery and we have such a mixed bag of reasons for the collapse, the perfect storm so to speak, that a normal recovery isn't likely.

This is causing many business leaders to take on a bunker mentality to just survive until the economy recovers. This strategy has worked during past economic downturns because the recovery was cyclical and more predictable. "Let's do what worked before" isn't the best plan when most agree this isn't what happened before and the recovery won't be the same this time.

What's next? Well to begin to answer this puzzling question, we have to add another cause into the mix of reasons business is in the mess it finds itself in today. And this may be the central cause of why we are in this economic crisis.

We changed business and selling over the past 4 decades from supplying products for the benefit of the buyer to supplying products to the benefit of the seller. This affected product design - first, by changing the intentions of designers and product developers from how to make a product better to how to make a product cheaper. This took product development's focus off the consumer and placed it on the product. As this happened, most products became more similar and gave consumers less reason to buy them. When all things are the same, price becomes important.

With price becoming more important as products became more similar, businesses began to apply pressure to reduce operating costs. This was the second turn away from the customer and placed even more focus on the business.

The next step was increased pressure to make new sales as customers were lost and business growth slowed or came to a stop. New sales became the driver of business. This happened at the same time we saw the explosion of media that allowed for a new way to motivate consumers to buy products. Increased advertising drove sales and an increased cost to business, which needed more sales to support the costs, and more pressure was applied to reduce operating or product costs.

As this happened, we moved to a philosophy of the, "The Customer Is Always Right." Businesses created customer service departments to handle the problems created by lower cost products or operations and the unrealistic expectations set in making new sales. We tried to market and sell customer service as a differentiation or value proposition to make new sales without real concern for the customer. Customer service department's job became fixing problems to allow salespeople time to make more new sales. The problem was that this created new costs needing more new sales to support the costs. Somewhere in this mess, business focus even moved from profits to revenues and the cycle escalated. Sales forces grew and sales became focused not on the customer, but on how to convince someone to buy product.

This was the final step and the beginning of what you see today. Sales training and sales meetings focused on sales and not customers. You see traditional sales training teaching critical-path sales skills. These programs are packaged with many different names, but even when relationship selling became popular, it was focused on selling, not serving. The intention is the same in all programs: how to make new sales. This escalates as businesses serve themselves rather than consumers. Sales are made and customers are lost.

What was the result of these past few decades? We began a slow slide toward the consumer and salesperson relationship we are experiencing today. What's next? More of the same - or even worse - if we don't change our intentions in business and sales, because when the economic recovery does happen, this relationship will be worse, not better. Let's look at where we are and how to stop this cycle.

Sales Strategies and a New Business Model

In this environment, most companies' sales strategy defaults to, "Our sales department's job is to make new sales." No one in business would have started this process wanting to create the relationship that now exists between business and consumers, specifically how consumers view salespeople. This is an unintended consequence of poor business intentions.

When a company needs more sales, what do they do? They escalate the existing strategy by increasing advertising and pressure on their salespeople to make more sales. Add in that if this isn't working well enough, they add more salespeople and increase incentives for new sales or lowering prices. The consequence is usually higher cost of sales and operations and lower profits, even if you make more sales… and this just creates the need for more new sales.

It has been proven many times that referral and repeat business costs less and is more profitable than new business, yet most companies do little more than talk about customers, repeat business or referral business. Sales people with new sales intentions may be told to ask for referrals or call back their customers, but in our existing default strategy, this produces little-to-no results because no one wants to talk to salespeople or give the names of friends to a salesperson.

As mentioned before, companies even started customer service departments and began calling them customer retention. This creates higher costs and poor results in customer loyalty because the consumer's relationship with a company starts with the salesperson and their intentions and is difficult to change after the first impression given by our default strategy of, "We only want to sell you something."

Since customers create repeat and referral business that makes a company grow and generates more profit, then why turn over the customer to someone whose job has become fixing problems, not keeping customers and converting the service contact into repeat or referral business? The answer is an unintended consequence of our default sales strategy to just make more sales.

We have become so distracted by new sales that we forgot the best way to get more sales is to make customers.

You won't convert a sale to a customer often enough to grow your business significantly. The focus of the consumer-and-salesperson relationship has become "What's in it for me?" on both sides, because consumers believe you don't care about them.

Business growth comes from adding customers, not just sales. Sales are too expensive to maintain or create growth. Most companies are experiencing how difficult it is to keep generating new sales without a loyal customer following. Higher cost of sales is inevitable if you continue with the existing sales process that happens because of our default sales strategy.

Customers are best created by changing the intentions at the point of first contact with consumers, then continuing the relationship as the most important part of your business. If this relationship doesn't change, then nothing we do will create satisfactory return on investment and we are doomed for a continued economic downturn.

This isn't like past recessions; there are too many added issues involved: globalization, rapidly changing technology, the banking crisis, the markets, weak and unethical leadership, social entitlement and the dysfunctional consumer-and-salesperson relationship have created the perfect storm. This time, you won't be able to just wait out the economic cycle and be ok when it returns. The economy will get better, but the consumer-and-salesperson relationship will continue to get worse if you don't make changes to improve it and business will suffer or disappear if it isn't improved.

The good news is you control this relationship. You can change and heal this relationship, but more of the same won't get it done. New thinking and new attitudes driven by new intentions will be required and need to start today. Contact me if you are ready to begin changing and improving your business. ##

Mike Moore, Co-Founder and President, Making Customers, Inc., 858-354-2802, www.makingcustomers.com. To learn more, go to www.makingcustomers.wordpress.com