Practically Perfect Prospects
by Andrew Shedden
As published in Small Business Canada Magazine
As 2008 makes itself known it’s possible you’re analyzing last year’s results, drafting budgets, and making plans for the upcoming year. Alternately, you may be in a board meeting with your spouse-who happens to be the only other board member- at which you’re determining the colour choices for your matching top of the line Mercedes Benz automobiles. Still others may be working hard on not being condemned to repeating the mistakes of the past. Many of you will be enduring well-intentioned but ultimately misguided customer acquisition strategy meetings. During many of these meetings plans will be mapped out to obtain as many new customers as possible. You may want to reconsider the focus of your activities.
How to build your business
There are really only three ways to build sales in your business:
1. Increase your total number of customers.
2. Increase the average number of times your current customers buy from you.
3. Increase the dollar value of the sale to your current customers.
New customer acquisition - while obviously important - should be only one of several objectives guiding your overall business building strategy. Solely focusing your efforts on acquiring new customers instead of further developing your existing customer base is the most expensive, time consuming, and frustrating way to build your business. So why do so many entrepreneurs do this?
The customer is greener on the other side
For some entrepreneurs the chase is better than the catch. It seems they possess a hard-wired and primeval desire to bring more game back to the camp than some rival chieftain. By seeking bigger and better customers many entrepreneurs also satisfy their overwhelming desire to blaze new trails.
New customer counts seem to be a form of subconscious currency in the mind bank of many of these entrepreneurs. New customers become the standard by which progress is measured. Many entrepreneurs have their worldviews mirrored by a strong sales force in which they have inculcated the necessity of methodical and ongoing customer acquisition.
In with the old out with the new
In your rush to get more customers you may have ignored the relative ease by which you can dramatically increase your sales without adding even one new customer. You can achieve this sales miracle by consistently and imaginatively marketing to current and past customers.
The best-qualified and most highly motivated sales prospects are residing in your computer or filing cabinets right now. These ideal prospects are called your existing customers.
There are many good reasons for your past customers to buy from you, some of them are:
1. You have a good relationship with them.
You'll note the statement reads “…a good relationship with them.” In the final analysis all marketing and sales activities are about relationships. If you don't have a good relationship with even one of your customers do something to correct it, now.
2. They are familiar with your company.
You have spent a great deal of time and money obtaining your customers. Familiarity can bring a high degree of comfort to your customer relationships. In this case, people's natural resistance to change can be a big plus in your favour.
3. You are familiar with them.
This is a point that should not be overlooked. You'll know if certain customers are time wasters and how much time you will need to spend with them to get the sale closed. If you have ever made three presentations to a prospect who thinks that you’re being paid to visit you'll soon more appreciate your existing customers. You'll also know how inclined they are to pay your invoices.
4. It is easier (and cheaper) to sell current customers than to obtain new ones
Everyone knows that this is true yet few companies seem to act on it. Whether you are selling "bleeding edge" or traditional products, you can drastically cut the time and expense of launching them by firstly looking at your internal customer database.
What to do?
Use that spark of creativity to come up with new ways and products to sell to your existing clients. Apply all of your native entrepreneurial instincts into creating new and exciting ways to reach your current customers. Bundle your products and services, upsell, cross-sell, and keep in constant contact.
First things first
To effectively build your sales through existing customers perform some research to determine a couple of figures. The first figure you need is the size of the average sale to your customer. You next should ascertain how many times per year the average customer buys from you. Once you have these two figures it becomes relatively easy to determine the true value of increasing the frequency or unit size of your sales to existing customers.
