Existing Customers -v- New Customers
I came across some research recently that was carried out by Deloitte, the major professional services firm.
It stated that a business has a 7-8% chance of selling something new to a new customer, compared to a 70-90% chance of selling something new to an existing customer.
That’s quite a statistic, particularly when you think that as small and medium sized businesses, we often spend the bulk of our sales and marketing budget trying to attract new clients.
Email marketing, networking events, paid advertising on Facebook and Google, telesales, meeting with prospects, lead generation funnels. All great ways to market. But so often, these marketing and sales activities are designed to do one thing, get a new client.
The problem according to Deloitte is that, for every 100 leads or prospects we will only convert 7-8 of them into new clients.
And as I look at my own business, that feels about right. For every 100 leads at the “front end”, I get 7-8 new clients. And I suspect most businesses run at a similar rate. That’s a lot of money, and also time, that is being spent to generate a new client.
And yet that’s what most small and medium sized businesses do – they are continually on the quest for new clients.
And of course, obtaining new customers and clients has to be part of the marketing mix for any business owner.
However, according to Deloitte, we seem to be missing a trick and I think as business owners, we instinctively know this, even if we’re not very good at putting it into practice.
The figures from Deloitte suggest that if we approach an existing client, someone who we have done business with before and who has bought from us previously, if we approach them with a new offering, or a new product or service, then anywhere between 70-90% will buy. Or to put it another way, for every 100 existing clients or customers we approach with a new product or service, somewhere between 70-90 of them will buy!
That’s quite a conversion rate.
And yet, how much of our marketing effort and our marketing spend do we put towards our existing clients and customers.
They already know us, they’ve already bought from us, and assuming we gave them a good service first time around, the research suggests, they’re ready to buy from us again – if only we’ll ask them!
Really successful companies are brilliant at selling to their existing customers. As is often the case when you’re trying to think of a great example, think Apple.
You bought the iPod – remember those? They then sold you on the idea of iTunes and the iStore. Of course, once the iPhone came along, you didn’t need your iPod anymore, but you continue to buy and stream music, only now you do it on your iPhone. Next, along comes the Appstore – giving you countless ways to enhance your iPhone user experience. All controlled by Apple. Oh, and the iPad would really compliment my iPhone, especially when I need a bigger screen experience. So, you buy one of those too!
Whatever you think of Apple, they have a brilliant product eco-system and are arguably the best in the world at selling more stuff to their existing customers.
All to say, as you look at your own business, what product or service can you offer to your existing customers and clients that would enhance their experience of your business, whilst at the same time increasing your revenue and giving you a much better ROI on your marketing spend.
– Keep in regular contact with your existing customers and clients – email them (but don’t spam!) or give them a call every month or so.
– Think of other products or services that you sell that would be a good fit for your existing customers and clients.
– Have a system in place – in following up with existing customers and clients, don’t be random – put a system in place that enables you to follow-up with them regularly and effectively.
Remember, you’ve already spent “marketing dollars” to get them as a client in the first place – it therefore makes sense to ensure that on an ongoing basis, you put some of your marketing effort and spend in to retaining them.