Existing Customers Key to Growing Your Business
Imagine getting new business from customers you don't have to go looking for. You don't have to introduce yourself, demonstrate the quality of your offering or convince them that you are a reliable supplier.
They already know these things. And, the best part of this dream scenario is that you already know them. They are your current customers. They are your best future prospects. And, they are the key to growing your business.
Tapping the potential of current customers is about getting them to buy more and buy more often — also called up-selling and cross-selling. Compared to seeking out new prospects, this tends to generate more revenue while taking less time, money and energy. This lower 'cost of sale' makes current customers an important category to develop.
The Foundation: Treat current customers well
You have closed a new account. Take the time to celebrate and then get to work. How you handle this customer after the sale often determines their financial potential. Will they be satisfied with your performance and buy more? Set yourself up for success. Here are a few key tips to keeping current clients happy:
- Manage expectations with clear communication so that your customer is not only satisfied but motivated to tell others that you delivered more than expected
- Manage all the details: the sale, product and service
- Anticipate issues and be proactive with solutions
- Consider sales and service as mutually supportive activities
The Resource: A Customer Relationship Management (CRM) database
You have performed well and you have many satisfied customers with financial potential, but how do you develop a cross-selling and up-selling strategy? Which customers warrant the greatest investment of time and money? What products might they be interested in? Where are they in the sales cycle? A well-designed CRM database can answer these questions. It provides the information needed for a strategy and is a useful organizational tool.
Develop your database by considering what type of information you may need to access later, such as the source of the lead, last purchase or expected closing date. The more you know about who buys from you, when and why, the better your sales will be.
- Make a record of every conversation with a customer
- Expand your database by collecting business cards, buying lists and telemarketing
- Update your records and keep the data current
- Mine your database strategically:
Pareto's Law - 80% of your sales usually comes from 20% of your customers. Know who the 20% are in your business. Identify your stars. What kind of attention do they need? Onsite visits? Monthly calls? - Categorize clients by their potential and develop a plan for each category
- Look for trends. By analyzing your data you could learn things such as the corporate position that does most of the buying, how customers prefer to buy, when they buy, what their next purchase need might be and where your greatest number of customers are located geographically
- Identify happy customers and ask for referrals, testimonials and case studies that can be used in your sales and marketing
- Re-activate old customers. Contact them to find out why they haven't been purchasing from you
The Strategy: Selling techniques
Naturally, the type of sales strategy you choose will depend on your product, service and customers. However, there are some strategies that work for business-to-business as well as business-to-consumer companies. Consider how you can apply these tactics to help build revenue from your existing customers:
- Encourage customers to buy more.
- Consider a 'volume' discount. It is easier to encourage a customer to spend a little more at the time of purchase by giving them a great deal than returning later for another sale. (You save too as your cost of sale is lower.)
- "Would you like fries with that?" Use suggestive selling to offer an additional product or service as an impulse purchase.
- Cross-sell complementary products and services. An interior designer may sell furnishings or a technology company could sell extended warranties. You'll enjoy great return for little effort.
- Make it easy for your customers to buy from you more often.
- 'Frequency' strategies such as reminders keep customers coming back. Think of the simple oil change sticker on your windshield.
- Loyalty programs work for everything from travel to coffee
- Pre-scheduled deliveries, renewals and payments make it easy for people to purchase products they use regularly. Mail order prescriptions, insurance policies and even charities have success with this strategy.
- Show your appreciation.
It's just common sense - treat your customers like you want to be treated. Let your customers know how much you appreciate their business.
Schedule when you are going to make your follow-up call.
Be prepared to go out of your way to assist the customer.
Keep the pipeline full
Regardless of how successful your company is or how loyal a customer may be, there will be circumstances over which you have no control. Client attrition will happen, and it will always be important to promote your business. Ensure you continue to prospect for new customers, but remember: the value of one well-managed customer over the lifetime of your business can be enormous.
by Entrepreneurship Expert Roger Pierce, BizLaunch.ca, June 2007