Firms could often offer a much broader array of goods and services to a specific customer than they actually do. Not exploiting this potential is a widely underestimated problem.
For customers, there are certainly good reasons to diversify their suppliers, one of the most important ones being to minimize risks. From the buyer’s perspective, the seller is labelled according to the existing buyer-seller relationship and is primarily is viewed as the supplier for a particular type of product or service. It is often neglected that there might be other relevant offerings that potentially serve the customer’s demand. This is due to the fact that the customer usually has a more or less explicit list of which goods or services are obtained from which provider.
On the other hand, there are also various reasons for not making use of the full potential that originate from the supplying company itself. It can frequently be observed that a firm is organized in divisions and that each division cooperates with its customers independently. This divisional structure is by no means bad or harmful in general. However, when entering into a business partnership offering only a small part of the portfolio to get a first foot in the door, chances are high that the commercial relationship remains of small size. Divisions usually inform the customer about their own products and services, which is the part of the company’s offering they understand best. Said approach of course makes sense for the individual division, as there is always a latent danger of the customer getting overwhelmed and not buying anything at all. For the supplying company as a whole on the other hand, this method does not enable a larger share of wallet with the existing buyer and limits their initial approach towards a new customer. Bearing in mind that retaining a customer is less cost intensive than acquiring a new one, increasing internal cooperation and hence the share of wallet might be an approach worth considering.
The solution to the contradictory problems described above are not always straightforward either. The following aspects should be taken into account when selling to existing as well as to new customers:
- Communication: Proactively communicate your portfolio as customers are likely to see you in rather narrow terms
- Customer potential: Do not overvalue the customer’s potential but estimate realistically
- Customer’s advantages: Deliver and communicate more advantages for the customer than just the price
- Positioning: Position yourself broader and with more than one of your products than just getting one foot in the door
- Customer relationships: Systematically expand existing relationships by defining clear crosss-selling strategies
- Cross-selling: Enable cross-selling through coordination of sales and internal specialists
- Value creation: Organize more of the company’s value creation according to the customer groups
The problem of being labelled according to an existing business relationship and being minimized to it oftentimes underestimated. Unfortunately, there are no simple ways to solve the issue because of its inconsistent nature. However, there are several specific measures that suppliers can tackle in order to move into the right direction and to get rid of the falsely attached one-product-supplier-label.
Based on: Belz, C. (2015). Raus aus der engen Schublade beim Kunden!. Sales Management Review, 5. 44-47.