Eight Steps to Increase Revenue from Your Existing Customers
William Bell
Proven Business Growth Strategies Development | Fractional CRO & CSO | Business Growth Strategy Consultant | M&A Advisor | C-Level Executive Coach
There are two ways to grow your business. The first is by acquiring new customers. The second is retaining your current customers and increasing their ongoing revenue stream.
Many companies focus their strategic marketing initiatives on finding new markets, new customers, and new applications for their current product offerings. While this focus is essential, many companies lose sight of their best growth opportunities … their current customers. Current customers allow you to grow your revenue without the increased costs associated with new client acquisition activities.
?According to Marketing Metrics, increasing customer retention by five percent can increase profits between 25 and 95 percent. Providing exceptional customer service that creates long-term and loyal customers is a sound strategy to grow your business. Upselling or cross-selling current customers is significantly more effective and cost-efficient than securing new clients.
?Here are eight ideas to get you started:
1.????? Create a list of your customers and determine their growth profile - It is essential to understand the importance of each customer based on their revenue volume, margin level, and growth opportunity. Understanding your customers' growth profile helps determine their significance to your organization. This lets you choose how to focus your sales and marketing efforts on each customer.
I consulted for a B2B services provider to improve their customer support performance levels. They needed a strategy to service their customers based on their customer profile. They were providing the same level of service to all of their customers regardless of volume, price quality, or growth potential. They could develop support programs explicitly based on different customer profiles by plotting their customers within different growth quadrants. This initiative improved their customer support capabilities without increasing overall support costs.
2.????? Plot Your Customers within the Growth Profile Quadrants – Once you have determined your customer growth profile, the next step is to place each customer in one of four quadrants based on how you want to market and sell to them. The quadrants are as follows:
?Quadrant #1 – Managed Customers
Customers that are your best "bread & butter."
?With these customers, your strategy should be:
?Quadrant #2 – Milk or Fire Customers
?With these customers, your strategy should be:
?Quadrant #3 – Growth Customers
With these customers, your strategy should be:
?Quadrant #4 – Platinum Customers
?With these customers, your strategy should be:
3.????? Expand your product and service offerings – Your customers and their needs constantly evolve. Therefore, so should your product and service offerings. Focus on your customers' long-term needs. Be aware of industry trends that will enable you to anticipate their future needs and position your company to service them.
?I worked with a client that had an aging product line. It no longer offered the same value to its ideal client as it had in the past. They needed to keep up with the industry trends. However, they were lucky that they spotted the trend early. Fortunately, they developed new features to regain customer traction and improve sales. They then implemented a process to perform regular product offering audits to ensure that their product was always on the lead edge of industry trends.
This methodology will allow your company to be first-to-market and a potential industry disruptor.
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4.????? Move Up the Value Chain –?All businesses operate along some value chain. Your business is somewhere along the value chain, from suppliers to distributors to marketing and sales. Moving up the value chain involves identifying ways to take over more of the customer's processes. From the customer's perspective, moving to higher- and higher-value work makes it possible to command a higher margin. Moreover, customers often see this higher-value work as more "strategic," allowing its provider to move from a commodity supplier to a trusted advisor.
5.????? Move Down the Value Chain –?Instead of accepting the conventional wisdom, some companies should consider taking a different path and moving?down?the value chain. What is the value of this strategy? It can help you make your operations more effective by developing organizational efficiencies to manage the lower-margin sales segments. In addition to improved efficiencies, moving down the value chain can open new ways to grow.?Most importantly, it can help you defend against attacks from below. Often, your competitors are the firms honing their capabilities by operating in low-end markets. They can move up the value chain as they learn the skills. By moving down the value chain, you can help defend yourself from new players wanting to attract your prized customers.
Positioning your products and services up or down the value chain is a strategy that can reap significant revenue growth, often with little effort. When I work with clients experiencing revenue stagnation, I advise them to investigate possible opportunities up or down the value chain. Almost always, they can identify product development opportunities that help them renew their revenue growth.??
6.????? Encourage Bundled Services – Make it your goal to sell your customer one thing, then two things, then three things. Once you lock a customer into purchasing multiple products, they can't just walk away. They're on a combined bill for various services, and you have now bundled their solutions together. The customer's barrier to exit becomes more complex and creates a sticky customer.
I encouraged one of my clients to think about a bundling strategy for their customers. They realized their clients were buying hardware from them but contracting other suppliers to install and service it. Fortunately, my client had the knowledge, skill sets, and infrastructure to perform this service. By developing an aftermarket services division, they could provide a complete service offering to their customers while creating a recurring revenue strategy. That strategy alone dramatically improved both their revenues and profit margins.
7.????? Stay in regular touch with your customers – Always look for ways to keep communication open between you and your customers. Keeping a regular cadence of communication is also essential.
This communication can be done by updating your website with new content and posting or sharing the same on your social media channels. Once a potential consumer becomes a regular customer, engaging with them regularly through your email marketing efforts is wise.
Sharing thought leadership content can also be an effective strategy based on your industry and business. Being a thought leader can open new opportunities for yourself and your organization. It can transform your brand and position your organization as a leader in the industry. More importantly, it is a reliable way to elevate your reputation, build brand equity, and attract ideal customers.
I worked with a client that provides predictive maintenance services for heavy asset manufacturing companies. By developing a thought leadership campaign, we dramatically increased their lead generation activities and improved their annual revenue by over 15% within two years.
8.????? Establish a formal Customer Referral Program – Industry research demonstrates that customer referrals are a significantly effective but underutilized business strategy. According to industry statistics, customers acquired through referrals have a 37% higher retention rate. According to Dale Carnegie, 91 percent of customers would give a customer referral, but only 11 percent of customers are asked to do so. Creating a formal referral program can allow your customers to help you grow by becoming a brand ambassador for your company.
As I explain to my clients, in my experience, this is the most often overlooked sales opportunity. If customers love your services, they are delighted to provide a referral. More importantly, new sales targets value a referral. The referral gives them comfort that they are making the right choice. When working with my clients, I help them develop a formal methodology to ensure that they employ a referral strategy. In most cases, it is the least expensive but most effective way to dramatically grow lead generation activities.
SUMMARY
It's easy for businesses to get caught up trying to find new customers. Our past and current customers can offer the most return on investment. Before adding new clients, look for opportunities to grow your revenue without the increased costs associated with new client acquisition.
Remember that not every Customer Revenue Growth Plan will be perfect from the start. Therefore, you should continuously reassess your plan's strengths and weaknesses and make necessary adjustments. With a robust Current Customer Focus Strategy, you will be ready to grow your company's revenue and boost its long-term value.
ABOUT THE AUTHOR
Bill is the CEO of XCELERATE CONSULTING, a strategic consulting company that empowers CEOs of middle-market companies to dramatically enhance their Business Development & Go-To-Market Strategies, resulting in significant organic revenue growth, increased operating margins, and accelerated recurring revenue streams.
Bill is a dynamic and results-driven executive with a proven track record of accelerating revenue growth and achieving strategic objectives. He brings years of experience leading and re-inventing companies, utilizing his operations, sales, marketing, business development, and strategic acceleration experience to help Business Founders and CEOs get to the next level of their business growth trajectory.? If you would like to speak with the author of this article to learn how he can provide fractional executive services to accelerate your company’s growth trajectory, please click on this link.
William Bell
XCELERATE CONSULTING, Inc.
248-982-6459
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