Are You Losing Enough Business?
Before working with a powerful FMCG company in Europe I asked of the thousands of points of sale they have how many client relationships they lose every year to competing companies. The company proudly announced that last year they lost less than 1% annually to competition.
I dared to suggest that 1% is probably not enough and that they need to lose more business. This did not deter them from working with us and here’s why…
Large companies with lots of employees often apply across-the-board campaigns, discount policies and permit their staff to offer certain concessions when facing customers. Prior to putting their staff through Scotwork training these concessions are unfortunately more often than not gifted unconditionally and therefore counter-productive. Their sales staff finds themselves in a destructive race between their company and the competition as to which side will concede the most to the client. In order to maintain losses at less than 1%, they are often giving away a great deal more than they need do, to more than 99% of their clients.
If they don’t trade and they just show “good will” the company gets no return other than an extended commitment for the business they already had, and often with some erosion of profit. Even worse, a precedent has been set whereby the client is encouraged to try the same “game” next time around and the seller ’s relationship is not in any way improved at the time of the following round of discussions, e.g. the annual agreements.
It’s probable that if they gave away less and lost say 2% of their relationships they would probably make a great deal more profit overall this year from the 98% than they made last year from the 99% plus. Further, if they do not merely give concessions but develop a “Scotwork-based” negotiating culture, those negotiated commercial relationships would be ri