There are only three ways to grow a business. One, increase the number of customers; two, increase the average transaction value per customer and third one is increase a customer’s frequency of purchase.
The first step is most common, but also the toughest. If businesses calculated how much they spend on acquiring customers, they’d get a rude shock. Manpower and marketing costs, time spent in writing proposals and following up – all this cumulatively adds up to a lot. This is something businesses either don’t see, or just take in their stride.
I don’t mean that you should not pursue new customers. But the cost of selling to existing customers who already trust you is almost negligible as compared to selling to new ones.
For instance, if you want to grow your turnover by 100 percent, you could try doubling the number of your customers. But think about how many people you’ll have to recruit, infrastructure you’ll have to expand, and mistakes you’ll make along the way. What will the financial implications of all this be?
On the other hand, if you increased the number of your customers, their purchase frequency and average transaction value each by 25 percent, you’ll still double your turnover. All this at a fraction of the time, effort, risk, manpower, and infrastructure.
Now, if you are about the importance of getting existing customers to buy from you, let me elaborate on five techniques you can deploy to achieve this.
1. Size the Need
Imagine this. Your salesperson successfully sells your product to a branch office of a large organization. Or, the customer bought your product on a trial basis for a tiny number of users.
In both cases, your business has the potential to sell more of your product to the same customer. Document the customer’s potential based on the number of users who are likely to be ideal for using your product. After a few weeks, when things are smooth, get your sales team to pitch the product to the same customer again.
If you’ve managed to win the trust of the customer, this should be a piece of cake
2. Address Concerns Early
We talked about trust in the previous point. How do you build trust in customers? Not by doing things right all the time, but by fixing things promptly when they go wrong. Track instances when customers call your team with concerns or issues, and follow up quickly.
Buffer, the social media management app, follow an interesting technique. While responding to issues, customers whose tenure is less get priority. This is because when a customer is new, it’s important to establish trust with them early.
Respond to customers early, address their issues, and follow up. Each time you follow up to check, they feel heard and safe; and such customers turn from satisfied to happy to evangelists quickly.
When customers become your advocates, they don’t just do business only with you, but also send plenty of references your way.
3. Build an Opportunity Grid
Ravindra Datar, a friend and Founder of Business Mastermind Advisory Services LLP, follows an opportunity grid to track potential sales to existing customers. Here’s how it works.
First, note down your customers’ names. Next, create a column for each of your products. Now, under each product’s column, note the status of the interaction with the customer. Some statuses could be Pitched Following Up, Sold, Not Applicable, Opportunity, and Pitched Not Interested.
|Offering 1||Offering 2||Offering 3||Offering 4||Offering 5||Offering 6||Total Untapped Opportunity|
|Customer / Segment 1|
|Customer / Segment 2|
|Customer / Segment 3|
|Customer / Segment 4|
|Customer / Segment 5|
|Total Untapped Opportunity
This gives you a clear idea about products to pitch to customers, which offerings to prioritize (Row Totals of Untapped Opportunity), which customers to prioritize (Column Totals of Untapped Opportunities) and can thus help you plan your sales and marketing campaigns it becomes part of your pipeline.
4. Identify Influencers
There are decision makers, and there are influencers. It’s not necessary that both are the same.
For instance, one of our customers wanted to sell a safety-related product to a renowned construction company. He stayed connected with the purchase manager, but soon realized that the purchase team merely bought what the safety officer wanted.
When our customer convinced the safety officer about the quality of his product, he quickly became a preferred vendor of the construction company.
In this case, the safety officer was the influencer.
Many times, the sales team interacts only with decision makers and not the influencers. As a result, it loses out on potential sales. Get your sales team to speak to influencers and end users and understand their pain points. Then pitch the product as a solution to the users’ problem. Sometimes the influencers may not even be from the organization you are selling to. For example, purchases by many CIOs are influenced by reports of analyst firms like Gartner, Forrester and IDC; purchases by many doctors and hospitals are strongly influenced by the recognized KOLs (Key Opinion Leaders) in the pharmaceutical and medical fraternity; investments may be influenced by tax advisors who are not on the company’s payroll, etc.
Some of your other customers can also be influencers in the buying process of the customers you are trying to target. Reference from a fellow professional in the industry is much stronger than any sales pitch.
Some of the purchases may also be aspirational, influenced by the buyer’s role model. For instance if you tell a small start-up company that a TCS, Infosys, Wipro uses this product to gain so-and-so benefits, they are more likely to be influenced to buy. Another example is that of iPhone buyers – more buyers buy because their neighbor has it than because they really need it.
When your salespeople get influencers on their side, it becomes easier to acquire a customer and make repeat sales with the same customer.
5. Get a Foot in the Door
Use your smallest product to get a foot in the door with a customer and then upsell.
A consulting company can start with selling a simple software to a client. Next, they can pitch an audit service to check whether the software is getting used optimally. After that, they can study the reports and pitch their consulting to help the client’s business improve.
Upselling and cross selling to existing customers, helping them upgrade at every level, is an easier sales strategy than trying to sell your most premium product to a new customer.
Your customers’ feedback will help you improve your product. By profiling them, you can also streamline your target audience and focus on the right one. Happy customers stay loyal to you and talk about you to their peers. This word-of-mouth is the most effective (and monetarily the cheapest) marketing tool.
Your existing customers can spur your business’ growth to the next level. They are your most prized assets. Treat them like that.