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Chase the Right Business

by Tom Reilly, the guy who wrote the book on Value Added Selling (McGraw-Hill)

Salespeople spend less than one-third of their time face-to-face with customers. In a forty-hour week, this means that salespeople only spend twelve hours selling in front of the customer. Twelve hours per week to produce enough revenue to make sales quota. Whew! With so little margin for error, salespeople cannot afford to squander any time on low-priority prospects or customers. What is low priority?

Let’s ask that question differently. What is high priority? Certainly, customers who realize your company is not a non-profit organization rank higher on the sales food chain. But, selling price alone is not the sole determinant of high-priority customers or prospects. Accounts that are high cost-to-serve, high-aggravation factor, high maintenance (accounts that sap your resources) deserve closer scrutiny. The margins may appear substantial, but you must consider the other costs associated with servicing the account.

Talk to your sales manager and ask these questions:

  • What is fundamentally good business for our company? Why?

  • What business do we want to pursue? Why?

  • What business do we want to avoid? Why?

Volume business is seductive and buyers know this. It’s an incredible stroke to one’s sales ego to claim that you landed the biggest fish in the pond. And if you are a distributor, your suppliers love the volume because it helps them carry their burden. What about all the other fish in the pond?

At the end of the day, it is neither volume nor gross margin that determines your viability. It is net profit, for that is what you take to the bank. To fully maximize your face time with customers, you must first ask “What customers should I invest time with?”

Copyright 2005 Tom Reilly

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