Read pretty much any article about developing an effective business development process and one idea is common…
It is much easier to get business from an existing client than it is to find a new customer...
Why then, is there so much focus on selling to new contacts and prospects? Getting the first sale from a customer is an expensive process. As a result, the cost of marketing and securing the sale can eat into, or even eat up your margin. Here are 2 real examples of the problem…
The online toy retailer
This business was 100% online and focussed on traditional toys – no wires or batteries! Within 2-3 years of launch, the company had built a solid 6-figure turnover. Much of the growth had been fuelled through investment in Google Ads. They built a strong following with great feedback. They had a client base of over 18,000 paying customers.
However, all was not well. Within 5 years, they had to close down as they had run out of money.
How did this happen? Simple. They did not make the most of existing customers. The company might have had 18,000 customers but there was virtually no focus on marketing to this customer base. All the sales focus was on Google Ads. This was a great way of generating new customers and building a customer database but virtually all the margin ended up in Google’s pocket. Selling to customers who already know and love you is easier, quicker and cheaper. The company regularly launched new products so there was always ‘content’ to talk about but they just didn’t do it enough. Customers typically ‘opted-in‘ to receiving email marketing so they had a low cost, effective communication channel that they just didn’t use.
A more customer-centred marketing plan may have been the key to creating a sustainable and genuinely profitable long-term business.
The specialist maps retailer
Built on the back of the opening up of the Ordnance Survey, this online business was able to offer bespoke and personalised maps to its customers. An affiliate relationship with OS was the basis of the initial success and in the early days, things went well.
As with my first example, the company built a customer base of nearly 20,000 but again, these customers were ignored with the focus being on always finding new customers. Company profits were funnelled away through affiliate fees. Sound familiar?
Again, there was huge potential for repeat business to existing customers where the cost of sale was lower and there was more opportunity to hold onto the profits. With a different strategy, the company may well have succeeded.
Making the most of existing customers seems obvious – so why doesn’t it happen?
The first step in virtually any new marketing process is to find the first customers for your offer so inevitably, the focus is on new business. As we discussed above, new business development can be expensive. Consequently, many SMEs see finding new customers as a cost rather than an investment and put a lot of focus onto managing this cost.
However, too much focus on managing these costs can mean no resource is allocated to marketing to existing customers. Even the idea of steadily switching resources from new business to developing existing relationships never happens through fear of losing out on new customers if you cut back on looking for them.
This is exactly what happened in both of the examples I quoted. Marketing processes were poorly planned and overly hand to mouth. Furthermore, the business owners didn’t appreciate the impact on margins from the high cost of new customer acquisition.
With all the focus on finding new customers, there was no money or resource allocated to maximising repeat business. This was even though they were addressing the biggest challenge to repeat business marketing by default – the creation of a customer database!
A plan for your customers
Probably the most important thing is to recognise the opportunity and plan for developing business and relationships with your existing customers right from the start.
It is never too soon to start your repeat business marketing, even if you only have a handful of customers. In fact, starting when you only have a few customers can be a good thing as it gives you the opportunity to try out different approaches.
The ‘bottom-line’ of making the most of existing customers is the ‘Keep in Touch’. Your objective should be to build relationships and grow awareness of your business and what you offer. You don’t need to focus overtly on selling. Existing customers have already bought from you. They will buy again when they are ready, so long as you reinforce the value and benefit you deliver.
A good idea is to mix your messages. Don’t just focus on one aspect of your business. Talk about different things and let people get to know you and what you offer. Here are some different things you can talk about:
- New products
- Reviews and advice
- Case studies & testimonials
- Offers & incentives
Note that direct selling through offers and incentives is only one of the four ideas above. This is probably a reasonable proportion for your content. Remember that your aim should be to build a fan base. Turning customers into advocates of your business means they may refer new customers to you as well as coming back to buy more themselves – a real win:win.
Of course, at ALL times, ensure you deliver high quality with fantastic customer service
Remember that referrals are the most cost-effective marketing of all!
So, new customers and repeat customers are equally important for the success of your business. Make sure you understand your approach to each – and make sure your process is joined-up.
Do get in touch if you’d like to find out more