small business advice
Concentrate on Your Existing Customers
About 70% of customers’ buying decisions are based on positive human interactions with sales staff. The bottom line is that people buy from people, not companies.
— Lee J. Colan, Passionate Performance
With the economy still not showing much improvement, it is vital that you focus your attention where you can have the greatest impact on sales. In these economic times, I have seen everything from firms with sales down as much as 70% to firms that are still seeing small increases; however, the vast majority is experiencing decreases in sales around 20 to 30% this year.
Getting new customers is going to be very difficult in these economic times. Most people want less uncertainty in their lives right now, which means that they are less willing to make changes in vendors.
The low-hanging fruit is your existing customer base. They already have a relationship with you, and they already trust you. You need to cultivate your existing customer base to the greatest extent possible in order to increase sales or minimize reductions.
One strategy is to contact all of your existing customers to see if you can provide additional services or products. One firm that we are working with had each member of their sales staff call 30 customers a day to thank them for their continual patronage. They also asked each customer if there were any additional ways they could help them. Their sales are up by 10 percent through this effort.
Redirecting your sales force from going after brand new accounts to existing customers takes some planning and motivation. For so many years, sales forces have concentrated in getting new accounts not increasing the sales from existing customers. You now must train your sales staff to go after existing customers’ first and new clients second.
As most customers are looking for value rather than price in today’s economy, bundling should be encouraged. By selling bundles of products or services, customers see value much clearer. One firm was averaging $35 per internet transaction. After bundling products, the firm’s average transaction size increased to $75 with an associated increase in profits.
Another strategy is to upsell your customers as much as you can. Upselling is easy and natural when a customer contacts you for a sale. For instance, if a customer wants to buy a service agreement to cover their computers, you can encourage them to get a service agreement for their phone system as well. The point is that once a customer calls in to buy a product from you, then it should be automatic to upsell them as much as you can without abusing them.
Now go out and make sure that in today’s economy, you are concentrating your sales efforts on your existing customers. Some of the ways to do this are through bundling, contacting existing customers and upselling.
You can do this!
Jerry Osteryoung is the Director of Outreach of the Jim Moran Institute for Global Entrepreneurship in the College of Business at Florida State University, the Jim Moran Professor of Entrepreneurship; and Professor of Finance. He was the founding Executive Director of the Jim Moran Institute and served in that position from 1995 through 2008. He can be reached by e-mail at firstname.lastname@example.org or by phone at 850-644-3372.