Suppliers could be losing £27,575 in repeat sales
Small- and mid-sized alcoholic beverage suppliers are missing out on an average of £27,575 (US$35,800) in repeat sales annually, a new report suggests.
The research comes from a project between Oxford Brookes Business School, and ProspectSoft, a customer relationship management (CRM) software company that is part of The Access Group.
Researchers reviewed 15.8 million sales from companies trading with more than two million businesses, processing 15.8m orders. Several sectors were included in the research, including health and beauty, engineering equipment, suppliers to the construction industry, medical and lab equipment, and alcoholic drinks (beer, wine and spirits).
Alcoholic drinks suppliers were ahead of other sectors with the least amount of ‘missing revenue’. For comparison, the construction industry was found to be losing £119,156 (US$154,710) on average per business.
The researches concluded that loyal customers spend more overall, and highlighted how repeat orders can speed up the sales cycle and ease cash-flow concerns. They said this was due to returning customers usually placing their second orders after 136 days – and a third after 65 days.
Andrew Ardron, founder of ProspectSoft, said: “Business-to-business sales trended upwards by 7.6% in the second quarter of this year, according to our data. However, with tough trading conditions continuing, including high costs, firms will need to make the most of every opportunity.
“While it’s always great to win new customers, securing more orders from existing ones, and building trust and loyalty with them, is generally more cost effective and offers cash flow certainty.
“Customers who go on to make a fourth purchase can be classed as loyal – so it’s important to drill into the data to see where they’re dropping off and then develop strategies to retain them. Our work with Oxford Brookes Business School suggests that businesses are not yet making full use of this data to increase loyalty and drive growth.”
Methuselah Singh, KTP associate at Oxford Brookes Business School, questioned whether business-to-business (B2B) companies were focusing too much on new customers, but at the expense of neglecting to build existing customer loyalty.
“Each business will have a different answer, but we can now at least put a number on the potential upside of building repeat sales,” Singh said. “Encouraging customers to place further orders is vital for product businesses. Being able to measure order frequency, and applying strategies that shorten the time between purchases, offers significant potential for growth.”
The full report is available to read online.
In August, data showed the UK Treasury had lost almost £300 million (US$393m) in tax revenue over the past year, after spirits duty in the UK was increased by 10.1%.
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