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Increase the number of customers, increase the value of each transaction, and increase the number of times a customer purchases from you. These are the only ways to successfully grow your business. I have seen many companies that are obsessed with finding new customers and that ignore the customers they already have. It is widely reported that it costs 6 times as much to acquire a new customer as it does to sell to an existing one.
Your sales and marketing plan must address all three ways of growing your business. Research by Havard Business School suggests that many firms could increase profits by 100% by simply retaining 5% more of their existing customers.
Increase the number of customers.
Take a long look at your customer records before you brief your sales force to get new customers.
How many customers are not active just records on the accounting system?
I have seen examples where more than half the customers on the accounting system are not actually buying and haven’t for several months. Make these your first prospects, after all they purchased from you once.
Re-activating lapsed customers
How can you regain them as customers? Some suggestions based on some of the companies we have worked with:
Let me give you an example from one of our clients.
Using their sales order-processing software we identified 1,000 customers who were not buying from the company our objective was to reactivate 5% of the customers and increase sales turnover. What did they do?
- Identified the date last ordered and prioritise base on the most recent through to the oldest.
- Surveyed the list to establish, contact details, and confirm address, number of employees and type of business.
- Details recorded and customer prioritised based on number of employees into 3 groups, 20 or more, 8 – 20, less than 8. This last group were deleted based on the company’s customer criteria.
- The sales force visited those customers in the top group. Those in the 2nd group were mailed the latest special offers with a we haven’t heard from you recently letter.
- All new re-activated customers were sent thank you letters and also a special offer for the next order.
- The results, 5% were re-activated and the process is on going
- This exercise is now undertaken on a regular basis so when customers stop purchasing they are spotted and action taken.
New Customers
Look at your loyal customers what makes them different from the others and now look for more of the same types of customers.
Decide on the following
- The type of customers you want and don’t want. Now describe your ideal customer and also the customer you don’t want, e.g.
- Slow payers
- Constant problems over minor issues
- Always pressurising for lower prices
- Low margin
- Disruption to other customers
- The likely costs of acquiring those customers.
- The frequency of their purchases from you.
- How long will they remain active customers?
- The lifetime value of those customers both in sales and profit over there time as your customer.
Next, the "Six P's":
Proper
Planning
Prevents
Pathetically
Poor
Performance
Identify and prioritise the decision makers.
Think like the customer. What is going to motivate them? How can you make a difference?
Increase the value of each transaction
Grow the business by doing more business with the customers you have now - more products, more choices, more promotions, more contact with your company.
The opportunities in adding on and up selling are enormous and usually very easy.
Sometimes it’s as easy as talking to customers. Some ideas:
- A special carry case with a lap top computer or video recorder
- A year’s supply of copier paper with a new printer
- Buy this for a special price when you spend
- Envelopes with printed letterhead
- Car parking with air tickets
Take some time to look at what customers are not buying from you. Customers pigeonhole companies and fall into habit purchasing. “ We always get our xxx from xxx”
Or they are not fully up to date with all your products and services. How many times have you heard “ I didn’t know you sold that” or similar comments.
These are all opportunities to increase vale and also your relationship with the customer. Increase the number of times customers buy from you
Many businesses have products that customers should replace on a regular basis.
Develop a programme of contacting these customers by letter, by phone by visit and put together a special offer or a special package that’s not available to new customers.
Give them advanced information on new products.
Loyalty schemes may work for you. They do not have to be expensive and complicated to run.
Some examples:
Free coffee on your 5th visit. Each time you visit your card is stamped fill the card and coffee is on the house.
Free shoes: The 5th pair are free.
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The three ways to grow your business can of course all work on their own, but by combining one or more your results will be greater. Try ideas and test ideas. Please remember though you will never appeal to everyone.
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