by Barbara Bix and Olga Taylor
Let us tell you a fable that we've heard in a number of group settings. It talks about heaven and hell. If the analogy to small businesses is not immediately clear, it should become so by the end of this article.
A traveler decided to visit hell. When he arrived, he saw a group of people seated around a cauldron of delicious stew. Everyone seated around the table was starving. There was no silverware. Instead, everyone's arms had been turned into wooden handles and their hands into wooden spoons. They were all trying to feed themselves, but the handles were too long and the spoons never reached their eager mouths.
The traveler then visited heaven. There he saw a group of people seated around a cauldron of the same delicious stew. Except everyone was talking, laughing, and eating. Their arms had also been turned into wooden handles and their hands into wooden spoons. The difference was each person was feeding another.
These days it's hard to meet a small business that isn't hungry for more sales. There are two ways to grow sales: sell more to existing customers or find new ones.
A small business typically has a limited number of customers - and a limited number of products. Therefore, the path these businesses take most frequently to grow sales is to chase after new customers or even new vertical markets. Yet the return on this sales effort is low due to the long sale cycle that usually accompanies sales to new business-to-business customers. Especially if the organization's product or service is complex or expensive, prospecting, building the relationship, and waiting for the right opportunity can take years.
In contrast, big companies often emphasize selling additional product lines to existing customers. The industry term for this practice is "cross-selling." Cross- selling allows a company to shorten the sales cycle by taking advantage of a customer relationship already in place.
Small businesses can use a similar strategy to build on existing customer-provider relationships in their markets, and shorten the sales cycle. In their case, it takes the familiar form of business partnerships and mutual referrals. Many small business owners and their sales executives network tirelessly in hopes of connecting to an important buyer through a third party. However, traditional networking activities and even a few cross-referral partnerships with other providers will not make a dramatic impact on the sales pipeline unless two conditions are met.
#1: You Know Your Target Market
Your target market consists of your existing customers and your most promising prospects. Therefore, you need to determine who is mostly likely to hire your company—and under what circumstances.
Once you have narrowed your target, you'll need to find out about their needs and buying preferences--beyond those applicable to your own product. What problems do they encounter daily? What changes are coming up for their industry? What changes are coming up for their organizations? What other vendors or solutions do they employ? Your ability to recognize your clients' struggles, as well as opportunities for other businesses, is essential to strengthening existing client relationships and winning new ones, especially given the second condition:
#2: You Are Part of a Small Business Network Capable of Fully Addressing Your Clients' Needs
Once you understand your client's business well enough to recognize the need for services your firm does not provide, you next step is building a peer network to meet these needs. While your company can only address a small portion of your clients' concerns every now and then, someone in your network should be able to help with any specific problem under your client's or prospect's purview at every point in time.
Make sure that you are comfortable referring your partners to your clients and your partners are likewise comfortable referring you. Set clear expectations about how each partner is compensated for referrals. Keep your network "alive" by frequently exchanging professional expertise, market intelligence and referrals.
Where are you most likely to find referral partners? They join the same industry groups and attend the same events as you do.
Chances are you already know many small businesses in your target market that could link together to form a virtual "value chain" for your customers. Do your research, spend some "face time," then go ahead and approach your network with formal or casual cross-referral proposals. In contrast to cold calling or "schmoozing," there is nothing more rewarding than proposing a mutually beneficial relationship to a fellow professional.
Trust builds quickly as you demonstrate your sincerity in learning about and promoting their business. In fact, the best way to earn a referral is to be the first to give one. Needless to say that, apart from the quid pro quo, the breadth of expertise you gain in the process, will serve you well in your own career.
Now, instead of viewing your company as an isolated specialty provider, you can see yourself as part of a team capable of delivering a "full-service" solution to your client. You can reap the benefits of the big company cross-selling techniques--without the big company overhead. Instead of starting your sales cycle at the very beginning, you can now step into an existing customer relationship and save your company a lot of unproductive sales time. You can also feel good about the quality of service your client would receive should they hire the company you referred to them – because you personally know the principals.
Just as the traveler in our story, we hope these ideas help you land safely in the small business "heaven" by splitting lengthy sales cycles across your network and feeding good business to each other.
About the authors
Barbara Bix is Principal of BB Marketing Plus, a strategic marketing consultant that works with professional service organizations, and a member of the AccountingWEB Bloggers Crew. Olga Taylor is Vice President of Marketing and Business Development with Quartesian LLC, a clinical stage CRO serving small and mid-size biopharma and device companies.