A second order is the first order.

Detroit Free Press has an article for small businesses about how to begin building a business. One of the points they make is getting the first customer is the toughest part of starting a business. I agree with this point and will add one caveat: if you are selling to a business, a sale is made only when you get the second order. One lesson that I learnt over the past 18 months is that generating a trial is not so tough, if you have some marketing savvy and are willing to try any or all of the tactics the DFP article mentions. You can generate a trial order by being extra charming, offer deep discount, giving a few samples, adding free gifts etc. While this is not trivial, it is not a real signal of business sustainability either.Lets face it; we all make some pretty heroic claims if it helps us land a new customer. The real arbiter of a good business is how many customers will come back and buy the product again. The first order is usually all about the sales person and product; the second order is about an organization as a whole. A lot of factors go into determining if the second order will come through. The experience the customer has with the product, the billing process, the terms of payment, the delivery process, the support process and the experience with the product itself, all these count. While all the organization capabilities play a role in this, the sales person is accountable person since he/she will be the face of the company. How do we enforce this accountability? We found out that one of the best tools we have is the sales force incentive system. We have structured the incentive system so that the the sales person wins big time if the second order comes in.

In other words, the only true measure of customer satisfaction and sustainable business is the ratio of first orders to second orders (in the same order of magnitude at the very least). So if you are a business owner who is starting out, I would strongly recommend against celebrating the first orders from a new customer. Wait till you score again and then let the celebrations begin!


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