I recently met with an independent consultant who casually mentioned he charges $400+ per hour. Naturally, that got my attention. But what I found fascinating was that he had the same issue most entrepreneurs and small business owners have. Most of us are practitioners in our business. So when we’re providing our service, we’re bringing in cash – but no new customers. And if we’re focused on prospecting and sales, we’re not ringing the cash register. Creating a predictable, ongoing stream of business can be quite the challenge. So let’s examine what we can do.
Think of your marketing in terms of a machine. There’s a front-end piece where we bring new business into the company. There’s a mid-section where we’re providing our service. And there’s a back-end where we’re marketing to existing customers and contacts for ongoing revenue opportunities.
The part of the marketing machinery that is most often neglected is the back-end. Studies have shown that a 5% increase in sales from your existing base can increase your profitability anywhere from 25 – 85%. That’s a significant number. Why? Because it’s far less costly to sell to an existing customer than to acquire a new one. Usually it costs approximately six times more to sell to a new customer. Also, keep in mind that current customers are already doing business with you. They like you and they prefer you. It’s a much easier sell now that they’ve experienced one of your products or services.
For some types of business, working the back-end is relatively easy. Accountants, for example, will most likely get your business for ensuing years once they’ve completed your tax prep for the current year. That’s a nice, healthy, recurring revenue stream. With other types of businesses it’s quite a different story. With Web designers, for example, once a new site is up, most companies don’t change it regularly. So after the initial sale, additional sales are somewhat limited. Regardless of which type of business you’re in, here are some things you can do:
THE single most effective way to increase back-end sales is to ask for referrals. You have a customer or prospect that’s excited about doing business with you. Who else do they know that you might likewise be able to delight? Give serious thought to instituting a referral “system”. In other words, create a routine in your sales or fulfillment process that includes asking for referrals.
How else can I be of service? If you’ve got a slow period, there’s no better time to examine each of your existing customers and ask yourself that question. For example, what other products in your portfolio could help them? With what you know of your customers’ business, you may have the perfect solution to a pressing issue. Be proactive on their behalf.
Be visible. Periodically connect with something of interest or educational. This e-zine is one such example. It allows me to carry on a conversation with many businesses. By the way, I get so much back in return. I hear wonderful stories from individuals about how a particular piece resonated with what they’ve experienced, or how it was just what they needed to hear at the time. What a great reward! Naturally, another benefit is that I get my name in front of many business people every month. And I can trace that to an increase in my business.
Make them an offer.
Oftentimes we assume our customers know all of our offerings because they’ve done business with us. I’ve had clients that I know VERY well not know about a particular service they were looking to outsource and I could deliver. In addition to communicating regularly, feature a different product or service periodically.
Make a connection with your customers and ask, “What can I do for you?” By asking questions and being focused on your customer’s business, you’re not selling in the traditional sense – you’re solving problems. The support they need may or may not have anything to do with your products. But, you’re strengthening your relationship and being a partner. And that’s good business.