Post pandemic all of us are rebuilding our backlogs and seeking ways to grow our revenues. What is the best way to do this?
There are 4 ways to grow as depicted below:
We’ve seen all four strategies deployed. But it is worth considering the associated risks.
One example strategy is to open a new branch office and target a new segment. (top left, a market development strategy). This is relatively high risk as you have to learn a new market and you are targeting new customers, albeit with your existing flooring products and services.
The most risky is to decide you want to expand your customer base AND add new services. This is a diversification strategy. You have been a long-time flooring and tile business and you heard that floor care was hot and margins are much higher. You hire a new sales guy who has worked a little in surface care and you tell him to crack open a new market. Now you need to learn a new service offering and the buying behavior of new customers.
Of course, there are easier ways to grow and often are neglected.
The least risky and commonly the most lucrative is the bottom left, market penetration strategy. Sell more of your core product & services to existing customers! We have talked about this before–go to our past podcast episode here: Companies don’t buy floors. People do
A salesperson will declare ownership of a customer, like Hensel Phelps and maybe doing a decent amount of business with a single project manager. However, Hensel Phelps has many managers who oversee a construction portfolio. Do you have a strategy to meet them all, build relationships and solicit work? Also think about adjoining geographies where you can follow your customers.
The next best growth strategy is to extend the number of products/services you offer to your existing customers. Sometimes you have products but are not offering them. We see variation among salespeople within the same business–one salesperson happily adds ceramic and terrazzo to his bids yet another is scared of it and only bids basic floor installation.
A simple exercise is to map your profile of work with your existing customers:
Already you can see there are existing customers who know like and trust you, yet you are underserving. Try this exercise and go after this low-hanging fruit!