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May 01, 2010

Working Smart

Follow-Up: The Success Recipe Salespeople Don’t See

by Tammy Stanley

Most salespeople understand that they need to get on the phone, yet days, months, even years go by (yes, years!) without them following up with their customers. Why? The challenge is that they do not know how to do it and they do not truly understand why. As an expert in the field of sales training and having worked with CEOs and thousands of direct sellers, I believe that the answer to improving sales, decreasing attrition and increasing profits is found in an often-overlooked success recipe all great marketers implement: follow up.

Why Customers Stop Buying

A number of years ago, the Carnegie Foundation conducted a marketing study on why customers stop buying from companies. There seems to be a belief that customers quit buying products because they are in some way dissatisfied with the products or the company. Interestingly, however, only 12 percent of customers leave for that reason; 55 percent leave because of  “company indifference” or “no contact.” Indeed, your company may provide the highest-quality products in the marketplace, but customers will stop buying from you, not because they do not value your company or your products, but because they believe the company (or in this case the direct seller who failed to never contact them again) does not value them. If the direct sellers within each company fail to follow up with previous customers in a timely manner, it is simply too easy for customers to look for what they want elsewhere, namely retail stores.

Very few direct sellers in the field realize the value of each acquired customer because they do not know about the hierarchy of a customer. According to direct marketers at J. Schmid & Associates and their study on the hierarchy of a customer, all buyers are not the same. Those who try the product or service either remain one-time buyers or they become two-time buyers.

The Value in Two-Time Buyers

The rule of thumb of leading marketers is that a two-time buyer is twice as likely to buy again as a one-time buyer.

Therefore, it is not only easier to sell to repeat customers, but the profit margin is typically higher as well. And not only is the profit margin higher on repeat buyers, but only repeat buyers can become advocates. Ah—advocates! Advocates are those wonderful customers who purchase repeatedly and enthusiastically spread the word about you, your products and your company, and in the direct selling industry, an advocate can also be someone who decides to become a distributor in the company.

The difference is always follow-up.

The Real Cha-Ching Moment

Direct sellers yearn for the highly anticipated cha-ching moment, when they get the first sale and convert prospects into customers. However, the real cha-ching happens once customers make a second purchase. By not understanding that acquiring new customers is typically the most expensive task in any business, direct sellers lose sight of the most lucrative profit center in their business—their current customers! At my live workshops, direct sellers confess that they have piles of sales receipts with the phone numbers and names of previous customers, with whom they have never followed up after the first sale was made.

My own experience with direct sellers substantiates such confessions. Recently, a direct seller encouraged me to try a new skincare collection. She did a good job of convincing me to purchase both the dry and the oily skincare collections and then switch off using them for maximum results. Interestingly, she never followed up for the second sale, even though the product line was clearly consumable. Far too often, direct sellers fear the follow-up call and may assume that customers will call them, but prospects do not become advocates merely upon trying a product. “Tryers” must first become two-time buyers before there is any hope of them becoming advocates, and one cannot expect customers to initiate the second purchase. In other words, your salespeople will benefit when they clearly understand that they are not handed advocates; they must develop advocates!

Reasons They Don’t Follow Up

First-time tryers who make large purchases are obviously well on their way to becoming advocates, and one would assume that direct sellers find it easy to follow up with them. That assumption is anything but true. Here are the findings from my live workshops, where direct sellers share why it is so painfully difficult for them to call even those individuals.

  1. They assume that the customer purchased everything they wanted.
  2. They fear the customer may want to return something.
  3. They do not want to appear greedy by following up too quickly.
  4. They assume that the customer just purchased all they can afford to purchase.
  5. They do not know what to say or how to proceed without appearing pushy.
  6. They do not want to viewed as a pest.
  7. They do not want to risk losing the customer.

The repercussions that ensue from little to no follow-up are far more than most direct sellers imagine. They know that their sales performance is dependent upon contacting their customers, but they grossly underestimate how much they could actually earn from that activity. With no marketing knowledge of the hierarchy of a customer, they remain unaware of the impact two-time buyers have on their business, how small-purchasers can become frequently purchasing advocates, and even recruits!

Of course, most salespeople have an idea that they could increase their business if they followed up, but the challenge is that they do not know how to do it, and they do not truly understand why.

New Distributors’ Challenge

People join direct selling companies because they value the products or services and they want others to benefit from them, as well. They do not join because they strongly desire to be salespeople. Where it might seem like an easy task to begin by selling to family and friends, new salespeople quickly realize that they risk losing something they value far more than money—their network and friends. They want to reach out to the people in their network, but they worry what will happen to that network once they approach it as a salesperson. If the first few conversations do not go very well, brand-new distributors can decide to throw in the towel rather quickly.

The Treasure of Hidden Profits

Whether the issue is following up with old friends and family members as a brand-new distributor or following up with past customers as a seasoned distributor, a treasure of hidden profits can be uncovered by showing direct sellers more effective telephone skills—what to say, how to say it and why. Indeed, the faster direct sellers become better marketers, the faster they attain a profitable business. Direct sellers with profitable businesses do not look elsewhere for work; they stay with their current company, keeping attrition down.

If the main reason customers leave is because they feel there is no relationship to lose, imagine the growth this industry could have by instilling follow-up as a means to show customer loyalty and improve relationships! Because this is such a unique industry, it seems utterly appropriate to communicate visible and audible appreciation for our customers, thereby becoming a fortress for human interaction and exchange.

Tammy Stanley is the Director of the Tammy Stanley Sales Refinery, a sales training firm that teaches direct selling companies to have more effective salespeople through powerful marketing, selling and leadership strategies.