When asked; most people claim that growing their business requires either New Customers or New Products. While these are indeed viable strategies; they are perhaps the most expensive. They might look at the above image and see themselves (or the company) as the character with megaphone and the others as customers.
CHALLENGES WITH NEW CUSTOMERS
Sales are the result of building trust. Because we have very little experiential trust on the first purchase; we often need to offer incentives to offset the risk – price discounts, additional features, and a variety of free goods often do the trick. Each of these comes at a cost.
This lack of context also opens us to a variety of judgment errors. When a new prospect says ‘price’ is utmost importance, it is easy to assume they want a lower price, and we begin whittling away at our margins. Context gives us the opportunity to find out if they mean that price needs to be low or high; inclusive or itemized; if they are willing to agree to long-term purchasing plans; or how interested they would be in premium upgrades versus considerations for downgraded priority. I don’t mind sharing that I personally learned each of these scenarios by assuming one way or the other – and getting it wrong.
We might ask about how they came to us; but again their answers are often misleading. The CRM program says that their first contact was in downloading a white-paper on a particular topic of interest. What we don’t see is that their first introduction was from a comment in a LinkedIn discussion group on an article we didn’t even write. It doesn’t tell us that Mrs. New Customer really struggled with service from a competitor who was offering low prices. We don’t get to hear how this new customer used to sell for our biggest competitor and left because she no longer felt connected to their direction, leadership, and policies.
This context only comes from dialogue and relationship building – as in with an intelligent sales professional. One of the most common statistics states that most sales transactions happen after the 6th meeting between sales and prospect. That represents quite a bit of cost just to get the first sale, and then an additional investment of time to secure their loyalty.
CHALLENGES WITH NEW PRODUCTS
Properly managed focus groups and market research can give us insights to potential new product offerings; but there are too many variables for these to accurately predict success.
Design, development, field tests with prototypes, and subsequent updates represent major investments to be made without any sales revenue in support.
Once a new product is approved, it takes quite a bit of education (likely new staff and equipment as well) to ramp up production. Then comes the communication investment in educating, promoting, incenting the market to purchase.
EASIEST ROUTE FOR GROWTH
Relationships with your existing customers are perhaps the most important assets to your business. They already trust you enough to buy on a regular basis. It costs very little to encourage them to purchase either larger quantities, or more frequently.
Existing customers not only give feedback about product performance and updates, they do so with a context of how it will be used. Simply saying that they prefer your product better if it were red is not the same as a customer wanting your product to be the same color red as their logo so that it gives them a more consistent look to their business. The contextual feedback gives the opportunity to color coordinate products for other customers (as a premium upgrade).
Current customers are not only the easiest to get to purchase more; they also provide a solid foundation for referrals, endorsements, introductions and all manner of valuable interactions that actively help you attract new customers who are already interested in your products. In my experience such referral customers do not need as aggressive price considerations – leaving you higher margins.
Referring to the above image; you can now see how your current customers are advocates for your business. They are the ones holding the megaphone, actively helping your company grow.
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