Business Mentor: How to keep the pipeline full of new customers

I'm really busy with my business but don't seem to be getting new customers in the door. Can you give me some tips?

Margaret Mulqueen, general manager of Quantel Business Solutions, replies:

I'm going to state it in tough terms. Every business is its new business pipeline.

It is obvious. If a business does not have new customers coming in, it will not survive. If it cannot retain them once they are in the door it will not last long either, but that's another story.

There are two types of new business pipelines, the attractive and the active.

The attractive type is like the Venus flytrap. It sits there and displays something nice, wafting out an enticing aroma (advertising) to attract prey (clients) to come into the business premises.

This type includes retailers, doctors, dentists, taxis, or any other business that sits and does not know who the next client will be.

The active type is one that can establish who the next new client will be. This includes accountants, corporate lawyers, distributors, commercial cleaners, manufacturers (excluding the factory shop), contractors, advertising agencies, print firms.

They generally service other businesses and the pool of potential clients is relatively small.

Each type of new business pipeline requires different management measurement and techniques.

The attractive must put something enticing on public display and its effectiveness must be measured.

This usually requires statistical methods.

Large firms with big marketing budgets can use market survey companies and other sophisticated measures. But small businesses can implement remarkably effective measures with simple techniques.

A medical client of our firm has a receptionist who, off her own initiative, asked new customers where they had heard about them.

Her notebook had columns for the Yellow Pages, radio, newspaper, referral, and each line was a day. A simple stroke in the appropriate column and over months a clear picture was built up on the total of new clients and where they were coming from.

We had a similar method with one of our retail clients, using a notebook at the counter.

Have you been here before? (if the sales person does not recognise someone) brings a stroke in the new client column of the notebook. A sale brings another stroke and a query such as "Have you got . . ?" or "What can I use for . . ?" brings another stroke depending on whether the query results in a sale.

This gives interesting information over time. How many and what trends are there in new customers coming in the door? But just as important, how many simple sales are being made versus more complex sales initiated from a question by the customer.

How many of those queries are resulting in no sales? What response have we had to a new advertisement, the new sale or the new product range release? These questions can be answered with accuracy.

This simple system did not affect service levels at the counter, even during busy times, and gave valuable information.

Active businesses must know who their potential customers are.

They should know them by name. This type of business runs off a prospect list. Typically, the list has 100 to 200 names, with 20 to 30 hot prospects.

Talk to them and find out their problems. Using your skills, services and products help solve their problems. That is marketing in this category.

Each client and prospective client needs an assessment of the amount and timing of business they will bring in. Not sure? Can't tell? Talk to them again and if you have to, make a guess. It will be better than nothing.

If you are in a tendering business or placing proposals, you better know how many proposals you are putting out a week/month, how many are out there and their value, what stage they are at in the evaluation and acceptance process, what your success rate is and the likely timing of proposal acceptance.

This can be built up on a whiteboard in the office or in a simple Excel spreadsheet.

I worked with a contractor last year. He was responding to up to 30 tenders a week, but had no idea of the exact number (he had a staff member creating the tender responses), no idea of the total value of that work or when it was expected to come in, and only a rough idea of his success rate.

When this information was routinely collated and presented to him weekly, he suddenly found that his planning was easier. Staff and machinery needs and major maintenance scheduling became more obvious.

There was still more to do in predicting when and where tenders were going to come from, but it was a good start.

If you are in business you need to have a good handle on your new business pipeline.

How this is managed will be a little different for each business.

* Margaret Mulqueen can be contacted on (09) 414-5030, or at:
margaret@qlbs.com

* Send Mentor questions to: ellen_read@nzherald.co.nz

Answers will be given by Business in the Community's Business Mentor Programme.