Why then do we spend so much time and energy focussed on the next customer?
Finding, engaging and converting a new customer is way more expensive than working with an existing customer, one who has already experienced what you have to offer, and unless you screwed up, is usually more willing to talk to you than they are to someone with whom they have no relationship at all.
My preferred sales metric is share of wallet. How much of a customers business that you could supply, do you supply? The challenge in this metric is the definition of the wallet.
My second favourite metric is the likelihood that an existing customer will refer you to those in their networks that you may be able to assist. Sometimes this is expressed as a Net Promoter Score.
A ‘warm’ lead in the parlance, is a nascent relationship to be nurtured until such time as there is a need. It will not always lead to a sale, but it does get your foot in the door with the opportunity to be on the list when and if the products you have may be useful.
Making your current customers successful is the best marketing you can have, as they will talk about your contribution.
How much of your investment in revenue generation is aimed at leveraging the success of your current and past customers, Vs finding new ones?
Many businesses rely on what I call ‘reactive marketing’.
They respond to the phone call, enquiry from their websites, generic email blasts, even cold calling. When you calculate the conversion rates for these sorts of leads, they are not great, but always chew up considerable resources. Moving to a pro-active, customer centric strategy in almost all cases increases revenues while reducing costs.
Three simple questions.
- What more can I do to assist my current customers?
- Who do they know that you might be able to assist?
- How much of my revenue generation investment is aimed at customer retention?
Need help thinking your way through this maze, let me assist.
Header photo courtesy Lars Menken via Flikr
