Lisa Veeck talks to dealers about their strategies for keeping customers and raising their engagement.
There is usually a fair amount of talk among independent dealers about how to win new accounts. However, Business.com reports securing new business costs five to 10 times more than selling to a current customer; while on average, existing buyers spend 67 percent more than new ones. Other sources back up these figures.
With this in mind, we asked a diverse selection of independent dealers about strategies for retaining existing customers and increasing their spend.
1st Source
With 10 employees and annual sales of $10–$20 million, 1st Source, Minneapolis, Minnesota, is keenly aware of the importance of keeping and growing existing business. In fact, the company’s efforts to “dig deeper” are why food service disposables, chemicals and other janitorial supplies now account for 70 percent of its total business, with furniture generating an additional 5 to 10 percent.
“The X factor for us is our people,” says CEO Greg McLeod. “We over-communicate to form close relationships with our clients—and we show up. In the past, when you signed in at a client, you could scan the day’s page and see two or three of your competitors. Now, it takes two weeks to fill out one page with visitors. So, we show up—and the world belongs to those who show up.”
This requires a purpose, however. “Our single most important tool for retaining customers and finding more areas to sell them is our quarterly customer business reviews,” reports McLeod. “They let us see how we are doing, make us aware of any issues and highlight areas where we can provide more solutions. The reviews used to be more formal. Today, people are busy and it’s harder to get in front of them. It’s a bit of a lost art, but we still try to do them in person. We take every opportunity to tour customers’ facilities. This lets us know what categories they are not buying from us and allows us to find new sales opportunities. It’s a chance to tell them about items they might not be aware we carry or discover ones they weren’t aware they need. We recently went to see a client and got a $100,000 furniture order. They said they hadn’t considered us because they didn’t know we did furniture and were happy to find out we do.”
Another key factor for 1st Source is trust: “When you do a good job, it’s not unusual for customers to turn to you for help in other areas. They’ll say, ‘Hey, can you supply this? We are getting it from another vendor, but we don’t trust them.’”
Other 1st Source strategies for retention and growth are more tangible. “We offer discounts or free freight for buying bulk,” explains McLeod. “If we can ship $30,000 worth of product in six shipments versus 30 of $1,000, it saves them and us. There are direct and indirect savings, like fewer deliveries and invoices. It is also more sustainable, with lower carbon emissions, which is the icing on the cake for some customers.”
Porter’s Office Products
Porter’s Office Products, Vicksburg, Idaho, similarly attributes customer retention to its people. “We still have an inside and outside sales team, which many competitors do not,” says Porter’s visionary Mark Porter. “We are in contact with our customers at least monthly. We also use our CRM data to track spend, to see if it is up or down. If it is down, the system automatically notifies the rep.”
Another customer retention ace is clever branding. “One of the biggest things that helps attract and retain customers is what we call our Blue Cow Service,” says Porter. “We package it as something only we provide and explain to customers all they get: next-day delivery, online ordering, bill payment and a dedicated sales rep. We put the paper where it belongs instead of just dropping it off with the receptionist. It’s good packaging and has been very successful.”
The service is also used to encourage customers to expand into new product areas. “We post a list for Blue Cow customers only that includes 10 items priced at cost or lower,” Porter explains. “A few items will be ones they buy from us already, but most will be in categories we want to get into, to get them into the habit of buying those from us.”
Standardization has also helped Porter’s increase customer spend: “We’ve spent the last several years documenting how we do things to create a standard process that is repeatable, whether for office products or furniture. Our employees have the autonomy to change something when they need to, but having a standardized process keeps customers from cutting corners or forgetting a step that could lower the quality of the final product. Having a standardized process also makes it easy for customers to say yes to a new category or project.”
According to Porter, every customer receives a Net Promotor Score survey every six months. “The answer to ‘How likely are you to refer us to a friend?’ tells us a lot. If we get a 10, we are doing things right, keeping a referral at the top of the customer’s mind. If we get a low score, we seek feedback to find out why and are proactive to correct the issue. Customers appreciate that.”
“Another thing we do is that every six months, customers get a thank-you signed by me with a $10 or $25 coupon they can use at Porter’s online,” he continues. “We spread them out over the year, so not all the customers get them simultaneously. I write the note personally for our top 20 percent customers.”
Porter’s also offers bulk discounts and uses a customer loyalty program to run specials, such as double points month. Customers can select free products based on their points. “It depends on company policies, but usually customers want items they can take or use at home, such as a television, coffeemaker or snacks, rather than filing folders or Post-It notes,” says Porter.
Strive Workplace Solutions
Strive Workplace Solutions, Portland, Oregon, has 45-50 employees and enjoys annual sales of $15-$20 million. “Our products are not unique, so we rely on relationship sales, which require constant interaction, including in-person, Zoom meetings, phone calls and emails,” says president Jeff Lurcook. “We make sure every interaction has some value beyond just checking in. And we don’t use third-party customer service reps. Our employees get to know our customers so well that they ask questions like how their son’s soccer team is doing. We also do business reviews quarterly or twice a year, depending on the client, and an annual one in person. This helps us identify areas where they are not buying from us—usually because they didn’t realize we offer those items. Client business reviews are a good way to sit down and compare our offerings to the competition: 90 percent of the time, we walk away with a to-do list to earn more business.”
Backorder calls are another USP, according to Lurcook: “We will call customers to tell them that nine of the items they ordered will be there tomorrow, but one will be two days later. We ask if they’d like to wait or substitute something else, and 99 percent of the time, they say there is no rush. Our customers mention they like these calls and Staples and other dealers don’t do them.”
Butler Office Products
Butler Office Products, Katee, Texas, mixes tried-and-tested measures with innovation to encourage customer loyalty. “We’re still old school,” acknowledges president Stacy Duke. “We do things like buy season tickets to the Astros, which customers can earn when they reach a certain dollar threshold. We also recently made up mystery bags filled with things we weren’t selling much of or had discontinued. Customers could buy them for $5 or get them free with a $100 order. Most went for the free ones. We made up 200 mystery bags and were out of them weeks before the promotion was due to end. We also do mystery gifts. Some are better than others—they range from Fossil watches to a box of Pilot pens. We had people placing multiple orders to get more prizes.”
But not all of Butler’s strategies are old school, especially when encouraging existing clients to increase their spending. “One thing we do that I don’t think other dealers do is have different people call on an account,” says Duke. “We’ve found that customers often buy different things from different people. Sometimes, it’s sending in a furniture expert; sometimes, it’s a different rep with a different vibe. In addition to our annual customer appreciation show, we do pop-up shows at customers’ facilities. We bring in vendors and invite different departments to showcase different products.”
Duke admits not all their retention tactics have been a hit with customers: “We are working on a rewards program, but we tried it in the past and wasn’t so successful.”
United Business Supply
Customer retention and increasing spend are also key priorities at United Business Supply, Cleveland, Ohio, which has been in business for 100 years this year. “We offer lots of free gifts for any order over $75, from small snacks to safety vests to mystery gifts,” says CEO T.J. Monachino. “We provide a free shredding program for customers who do a certain dollar amount in at least three categories. We also offer vendor-managed inventory, including restocking their safety vending machines with items like earplugs and gloves and refilling eyewash stations. Some customers will contact us and tell us what they want from Amazon, so we’ll order it, mark it up and deliver and stock it where they want it.”
Specialist knowhow is another powerful customer retention tool: “We have experts in each category on staff with decades of experience to help clients solve problems. We recently saved a hospital $280,000 by having our expert go through and reduce its product SKUs from 17 to six. And we also increase spend through demonstrations. For example, the summer is when school custodians need to refinish floors—we show them how to use the equipment and apply the finish.”
Social media and marketing
Nearly all the dealers interviewed use social media as well as email for their marketing efforts, which several companies target toward categories they are looking to grow. “We usually focus on a category and change it every three months,” says Porter. “But we focused on furniture all last year and it paid off: we increased our sales in the category 300 percent over the previous year.”
Meanwhile, Butler has reaped great rewards from fun social media campaigns. “We do things like ask customers to post a picture of their desk to be entered in a drawing for a desk organizer,” explains Duke.
Words of wisdom
For dealers keen to maintain and grow their customer base, McLeod advises: “Never underestimate the power of in-person. Show up. Be present. A lot of companies have forgotten the importance of showing up, which has created big opportunities for us.”
Porter recommends checking the data—and speaking up: “Do a business review so you can see what categories customers are buying and what they are not buying. About 90 percent of items our customers aren’t buying from us because they don’t know we sell them.”
Strive’s Lurcook advocates a change in mindset: “We’ve learned the hard way that we need to adapt to the way the customer wants to do business. Now, customers have so many options—including the elephant in the room, Amazon—that you have to be the best and provide the best customer experience the way they want it. Buyers are more tech-savvy and some want to see reps less; they want no one to bug them. You also need a user-friendly website where they can see what they want to buy, click and check out without having to work hard to find things. Also, you need a good search function. Customers who want golf balls should be able to type it in and see the selection with real-time pricing. And the site needs to be kept fresh—you can’t get it up there and forget about it. We have a full-time person to oversee our site so customers see new blogs, pictures and products.”
Meanwhile, communication is key for Butler’s Duke. “Make sure to stay in touch with your customers through email, social media, phone—whatever way they prefer,” she suggests. “And listen to your customers. We asked a new customer why it had left its previous supplier and the buyer said she had told the vendor no substitute products, but they kept sending substitutes. Also, remember that different reps can often get different information and sales.”
At United, Monachino concludes: “The big thing is to be forward-thinking. You have to be flexible and think outside the box. You need to find ways to bring customers real value.”