If you’re planning to improve business performance in the coming months (you are, aren’t you?), there is no better way to succeed than investing heavily in current customers and clients.
If you’re thinking I’ll write about how much “cheaper” it is, you’d be wrong. This belief seriously disrespects your current buyers. Who would want to be cultivated because they’re a “cheaper” alternative to someone else? Or “low-hanging fruit?” And given the range of costs for new buyer acquisition, it’s hard to nail down just how much you’re spending or would save.
No, I’m focused on outcomes, not cost reductions. My advice to business owners across industries is this: invest 70% of the full range of your business development efforts and growth strategies in your current customers and clients and 30% in new buyer acquisition. If your company primarily sells once-and-done products or services, change the ratio to 50/50. I’ll explain briefly below.*
I define business development activities to include all of the following: marketing and sales; product development, innovations and improvements; delivery of products and services; customer service and post-sale services; continuous cultivating and nurturing. Design a clear sequence of activities and repeat it forever. The details and content of the efforts will be different for different buyers, in order to stay relevant to them as they change and evolve.
The three powerful outcomes
Outcome #1: The company will maximize the Return on Investment from these resources. Allocating 70% of your efforts to current buyers allows your team to understand what value the buyers desire; improve or innovate to add that new value; develop new products and services that increase the value they covet; bring these buyers closer to your company. You can track the results in revenue and profit of every one of these efforts.
Outcome #2: Each additional purchase increases the likelihood that they’ll buy again and again. The more frequently a buyer buys from your company, and the better you handle your relationship and post-sale services with them following those new purchases, the stronger their bond grows with you. Your company is always top of mind for these buyers when they are looking for solutions you offer.
Outcome #3: The happier a buyer is with your company the more likely they are to make introductions between their friends and colleagues and your company. When this is done the right way, you never have to create artificial methods** for generating referrals. The introductions will arise naturally in the course of their conversations with their friends and colleagues, and they’ll be eager to connect you two. These new prospects enter the pipeline or funnel in the middle, having already established that there’s a need and they are qualified. They’re also predisposed to like your company because of all the things your buyers have told them. You can immediately begin discovery of the value they’re seeking that prompted the introduction to you, and build your relationship from there.
*Your company should have a robust cultivate and nurture approach for the buyers of once-and-done products and services. These buyers will talk about their experiences with your company.
Continuous cultivate and nurture efforts will keep your company top of mind. They’ll make introductions to people like themselves. This is an instance of never knowing how far and wide your reputation might travel, so why not make it a great one?
**It is never a buyer’s job to give you referrals. It is your job to be so attractive, appealing and have such value that they volunteer introductions.
It’s possible without too much difficulty to identify the dollars spent on the full range of business development efforts. I’d rather you have a reasonably good estimate and get busy, than obsess over the exact number and delay.
Sales and marketing: whether your company has one function for both or two departments, you can add up the dollars spent. Include compensation for employees, all paid marketing, things like networking costs, tracking inbound inquiries, purchasing and maintain your CRM, dues in industry organizations or Chambers; and your complete digital presence. Include the costs of continuous cultivating and nurturing efforts.
Customer service and post-sale services: compensation, technology applications, training, bonuses, cost of returns, escalation processes if any.
Product development, innovations and improvements and delivery: employee compensation; trial or model products; beta testing services; all costs of getting something new to buyers; corrections or remediations needed; delivery costs; return costs.
Let’s say the total for all of the above is $1 million per year. 70% of that is $700,000. That is the number you use as a benchmark for all business development. Ask how to allocate it across the range of activities? How much to each? Who gets to spend it? What metrics will you use to track the spending and the results? You can design the approach that makes the most sense for your business. Most important is to do it: identify the number; create plans; implement the plans; and track efforts, progress and results.
Should YOU Invest Heavily in Current Buyers?
How will you know if investing in current buyers is what you need? If your profit is disappointingly low, if your revenue for the past few years has gone up and down like a roller coaster, or if revenue has been stuck at the same level for three years or longer, investing in current buyers is exactly what you need. Give us a call to get the conversation started. 703-801-0345.