Business Development Through Reactivating Lost Customers
The mechanical products and industrial MRO marketplace is mature and very competitive. Our client, a major supplier to this market, had noticed a slow drop in the number of actively spending customers. This drop was concentrated in the lower spending segment of the customer base, which was served by a combination of direct sales as well as mail order activity. As part of their business development strategy our client wished to revitalise spend from these customers. They were customers who had previously represented a profitable business segment for our client, and their re-activation was a vital part of the client’s business development. Curtis Associates was engaged to manage, measure and recommend the way forward for the activity in the future.
Business development needs:
The overall aim of the revitalisation task was to re-activate 10% of these accounts, generating significant incremental revenue during the life of the project. In doing so, it was envisaged that enquiries and orders would also be generated for other sales channels, and that this would be instrumental in helping our client to get back onto budget.
It was vital for this project that costs were contained so a small amount of internal resource was made available with a view to expansion if the results proved positive and profitable. So as to understand the effect of our efforts, a sample of the total eligible customer base was targeted and spend was monitored in relation to the various activities undertaken.
We found that there was a significant revenue opportunity to be had through using a combination of communication and incentive techniques to reactivate customers who were either not spending or who were spending at a low level. The benefit for our client was simple: business development would result from targeted activity. Through these activities, sales to the target group were 52% higher than those to the control group of customers.
With average order values more than doubled, and reactivation rates between 35% and 69%, there is clearly an opportunity for our client to drive higher profitability through adopting this as a standard business process.
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