True, going after new customers is an exciting part of being in
business. There’s the motivation of identifying a new target, the
thrill of the chase, and the satisfaction of the close.
But
the reality is that your startup business likely will get more mileage
out of optimizing your relationships with existing customers – even if
there are just a few of them – than from using those same resources of
time and money looking for potential new customers.
“The
conventional wisdom says that it costs six times more for a business to
acquire a new customer than it does to sell something else to an
existing customer,” says Chet Holmes, a California-based sales
consultant. “I’d say it might even cost more than that.”
The
first step in turning existing customers into more revenue and higher
profit-generators is getting to know them better. In the first part of
a two-part article, we provide advice for expanding your understanding
of the customers you thought you already knew.
Really get to know your customers
The
way to most effectively cross-sell and up-sell existing customers is to
convince them that you can improve their results because you know them
intimately. This means you have to get to know your customers as well
as you know your own company.
“Listen to what they say
and don’t say,” says Erika Oliver, a business trainer and author in
Kalamazoo, Mich. “Become well versed in the challenges and
opportunities in their business. Interact with them in their space, such as at their company and at community events where they’re involved.”
Lower-level
people in a business can be invaluable sources of information about
influencing purchases and other decisions made at higher levels. And
the amount of information online, especially about large corporations,
is mind-boggling.
Use your knowledge to set the hook
Revisit
all the data you have about your existing customers so you can figure
out how to more closely cater to their needs; if you haven’t been
collecting information on them in every way possible, start now. That
allows you to hone your sales efforts in a way that’s custom-designed
for them.
“Spend time thinking about how your offerings
can be leveraged to drive their results, revenue, more efficient
processes, and to attract and retain talent,” says Karla Robertson, a
business coach and consultant based in Howell, N.J. “Ask others about
how they see your company so you don’t get into a rut.”
By
knowing both your business and your existing customers better, you’ll
be able to accurately aim business-extending offers to them through
e-mail and snail mail. You’ll know whom to see and where to go within
their organization for useful influence and without stepping on toes.
This
way, you won’t have to throw a lot of guesswork or advertising dollars
into unfocused stabs at pleasing your customers. You’ll already know
how to please them!
Distinguish among your customers
Not
every existing customer is a good customer. It’s important for you to
be able to tell the difference so you can really focus on the best ones.
Core
customers typically comprise 20 percent of a company’s base but provide
80 percent of profits, says Robert Gordman, a management consultant and
author of The Must-Have Customer: 7 Steps to Winning the Customer You Haven’t Got.
“It’s
important to know who your profitable customers are,” he says. “Once
you know who’s profitable, you can find out why they’re doing business
with you. Then you can start extending the relationship with them based
on why you’re currently successful with them.”
Our Bottom Line
If
you’ve already satisfied a customer once, the likelihood is that you’ll
be able to satisfy them again. And by focusing on understanding
existing customers so you can serve them better, you’ll be building
your startup business in the most cost-effective way possible.
