When is Net New Business not Net New Business?

I get it, we all need to drive net new business.  We can't survive by continually upgrading our base. Personally, I do a pretty good job with acquiring net new business.  A quick glance at my CRM will show that roughly 60% of follow ups and cold calls are for net new accounts.

 

Many dealerships will offer incentives to their sales reps to garner net new business.  Thus, those dealerships are willing to give away a piece of the pie to grow their revenue stream.  Good for the client, good for the dealership and good for the sales person, every body wins right?

 

What Defines a Net New Business?

 

All dealers will agree that net new business is an account that you have no play in, never sold them a thing.  Not only is it net new business, it's a net new account! WooHoo!

 

Another caveat that may or may not be considered for net new business is that the account can qualify if your dealership has not done any business with them within a certain time frame.  They got away from you years ago and you were able knock out the incumbent and win them back.  Your relationship with the client stood the test of time.  Knocking out the incumbent with your devices generates additional revenue for the dealership.

 

If you knock out a competitors piece of equipment and place your new equipment that's net new business, right?

 

It seems that it's not just that easy. Let's assume you have an account that has 10 imaging devices.  You own half of the devices and the competitors owns the other half.  You've worked the account for years and finally you knocked out the remaining five systems!  Do the five new systems count as net new business?  Seems that's a bone of contention and differs from dealer to dealer, some will say it counts, will others will not count that as net new business.  I'm in the camp that will take the side of "how is that not net new business", you knocked out the remaining five systems, captured additional clicks and grew the business!

 

Let's take another scenario, customer got away from you many years ago, they upgraded one device with a competitor, and still have one of your older systems.  After 5 years, you have a chance to get the business back, however you find out that twelve months ago they bought one toner cartridge for $49 from your dealership for the one old device.  There are dealerships out there that will say nada, this account will not qualify as net new business because they bought that $49 toner cartridge from us "x" amount of months ago. I don't understand this either, what part of the new hardware sale ($15K) is not net new business when you knock out the incumbents device!

 

Next month, I'm thinking about buying a new car.  Right now I have an older Eclipse, the dealership that I bought my car from is no longer in business. I'm going to go buy a buy a Ford from a local dealer, however, last month I bought an air filter from them for my son's car. Do you think that dealership will count my business as net new or not net new because I bought the air filter a few months ago?

 

-=Good Selling=-

 

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In my opinion, Net New is any revenue stream you did not previously have. Take over service of a competitor's equipment = Net New.  Replace that machine purchased from a competitor with one of your own = Net New.  Take over management of their print fleet or IT infrastructure = Net New.  Replace those printers or computers, Net New.  Time comes to renew those contracts at a lower or identical service payment= Upgrade.  But, if their monthly payment increases, the difference between the old payment & the new = Net New.  

Originally Posted by Czech:

I've always learned the two terms separately:

 

Net New Business: Placing an MFP into a new account that had no existing MFP

 

Competitive Knockout: Displacing a competitor's MFP with your own

 

Base Upgrade: Upgrading one of your current MFP's

 

Base Net New: Adding a new MFP into one of your current accounts

 

The terms would be based based on the department. So for your car dealer example, you would be an existing account for their service department but net new business for their sales department.

 

If you get paid higher percentages for competitive knockouts than base upgrades, I can imagine the frustration if your company tells you knocking out competitive MFP's in your existing account is not a knockout!!

 Amen to that Czech!

We were staying away from Toshiba for a long time until we had a friend who could sell us parts, supplies, and give us manuals etc.

those 4 figure contracts certainly do help. Seems few and far between but I'll take them when I can get them.

Jay,

 

We typically go after about any machine other than a Xerox. If someone wants us to service their machine and its not a complete piece of junk we will take it on and will get parts and supplies from dealers etc. until we can upgrade to one of our lines; Savin, Canon, or Samsung.

 

We expect our reps to go out and take service agreements and we pay them the first months billing. Most don't like to mess with 30.00 agreements but they add up and eventually you find a big one. We had a rep who secured a contract for $5,000.00 per month about 6 months ago. That was way more than he had made on a copier deal and others kind of got the fire under them, and now that customer has upgraded their production system and he would have made another $5,000.00 if he was still here.

I was wondering if the subject of those customers who were acquired through service was going to come up, & Jason's comment is certainly "food for thought"...

 

In his example, he brought on the service customer (with the obvious intention of upgrading them at the first opportunity) & the dealer gets a contract & machine sale that they otherwise wouldn't have. Sounds like net new to me.

 

In my experience, though, most of these service to machine sale conversions are from customers who find us through google, word of mouth, manufacturer dealer listings, etc..

 

I've always learned the two terms separately:

 

Net New Business: Placing an MFP into a new account that had no existing MFP

 

Competitive Knockout: Displacing a competitor's MFP with your own

 

Base Upgrade: Upgrading one of your current MFP's

 

Base Net New: Adding a new MFP into one of your current accounts

 

The terms would be based based on the department. So for your car dealer example, you would be an existing account for their service department but net new business for their sales department.

 

If you get paid higher percentages for competitive knockouts than base upgrades, I can imagine the frustration if your company tells you knocking out competitive MFP's in your existing account is not a knockout!!

Interesting perspective. We constantly have the talks about competitive machines we took on service, especially brands we don't carry. I tend to consider is taking a Konica on service and then a year or two later upgrading it to our equipment net new business from the sales side. Obviously we had net new business on the service side but not net new for "x" with the equipment sale.

I'd be interested to hear how others see this. I hear a lot of people say it doesn't matter but if I bring a service contract on a machine that pays 1,000.00 per month for clicks then that makes services revenues look that much better and while I wrote the business from the sales side it doesn't show that way until I upgrade that equipment in time in the future.
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