Recommended Reading: 3 Tips to Build a More Profitable Relationship with Small Customers - Modern Distribution Management

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Recommended Reading: 3 Tips to Build a More Profitable Relationship with Small Customers

Sales to small customers can have a big impact on your bottom line. Will it be positive or negative?

Large customers often offer the greatest reward; there are fewer costs that go into processing larger orders for a single customer. But they also offer the greatest risk; if your bottom line is reliant on a few individual customers, what happens if one or two of them stop buying from you?

Making money with smaller customers is possible, if you approach them appropriately. Here are three tips to make sure your making the most of your smaller customer relationships:

1. Use the most efficient and effective channels to serve smaller customers. Small customers don't necessarily need a dedicated sales rep – often the employee group with the highest compensation plan – to call on them every week or even every month. But don't ignore them either. Instead train your inside sales team to proactively serve these customers and upgrade your online channels to help them serve themselves. (Read more in Cost-Effective Channel Alignment.)

2. Implement a process for more consistent pricing of small customers. Small customers often get lower prices for several reasons, but one of the most significant is that they simply aren't tracked due to their size and churn rates. But several significantly underpriced customers – even if they're your smallest – can have a big impact on your top and bottom lines. (Read more in Defeating the Profit Drag.)

3. Change the pay structure for small customers to credit card or PayPal. Much of account receivable tracking and collection is focused on tiny orders from tiny accounts. The costs associated with this far outweigh the transactional fees associated with online or credit card payments. Set a minimum purchase level for buyers who want to be invoiced/billed. (Read more in Balancing Margin & Cost.)

Read more about how to serve small customers profitably in the MDM Special Report: Making Money with Small Customers.

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