How to create a stickier brand – Part 2

Typically, Pareto principle applies within the wholesale market: 80% of revenue and profit generally comes from the top 20% of customers. This, for many wholesalers, means that the majority of sales resource is focused on the Top 20% of customers. This has become known as the ‘Superstar’ theory.

However, there is an increasing school of thought that this theory is flawed. By focusing the majority of effort on the top 20%, the fragmented ‘tail’ of customers often gets ignored. But given the fact that these customers tend not to be promiscuous and in most instances generate higher levels of percentage margin should they not be a key target when wholesalers seek to develop their business?

Part of the issue with this fragmented tail of customers is that they are often credit constrained. This means that the volume and value of goods supplied by a wholesaler is constrained to the credit limit that the wholesaler offers. Often the limit and duration of credit terms is insufficient to cover the trading requirements of the customer. As a consequence you find customers juggling credit limits between suppliers in order to satisfy their needs.

So, if we look at this through the eyes of your customer, what do they want? Ideally, the provision of a credit facility that enables them to purchase what they need from a supplier and a credit period that enables them to maximise their working capital. But more and longer credit means higher risk right?

Not necessarily..

Capital On Tap’s real-time credit monitoring platform can offer more credit to your existing customers without increasing risk. We can do this because our proprietary software enables us to refresh the credit assessment of customers every time they order.  As a consequence, we have more information about the trading patterns and performance of their business which allows us to provide more credit to nearly 80% of our clients’ customers.

We have found that, when provided with more credit and more flexible payment terms, 7 out of 10 customers buy more with increases in order size of up to 20%.

Capital on Tap can help you create a sticky value proposition from your trading terms. We enable you to cultivate long lasting, mutually beneficial customer relationships where you help to improve the liquidity and positive cash flow within your customers’ businesses. They grow, you sell more, you grow.

 

Learn more about how Capital on Tap can help you sell more to your existing customers.

Sell more now!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s