To Grow Your Buinesss Befriend Your Customers, Part 2
Apply great sales strategies with existing customers to grow your business.
In part one of this post, We left off with great business sales strategies by discussing the Pareto Principle and Dr. Joe Juron’s work, that proves that 20% of your very best customers are responsible for 80% of your sales. Existing customers contribute 50% of your new sales, and refer 35% of your new business to you. So, your very best customers bring you 85% of your business.
What are you doing to communicate with them on a regular basis, and how do you deliver amazing, exceed their wildest expectations service to them, so they scream “Wow?”
It’s important to understand that the sbest sales strategies take into account the time-tested four (4) stage sales process:
1. AWARENESS: Your marketing efforts reach out to your ideal prospects and let them know all about you, your products and services.
2. EXPLORATION/EXPANSION: Once they know you exist, you have to get them to “try” you, using strategies like free trials, free consultations, limited time special offers, etc. There is a natural “attraction” that the potential customer has with you (your firm.) Then your relationship with that customer experiences “norms” or patterns of behavior” which are typically how the customer becomes comfortable engaging with you. You begin to build their trust every experience they have with you. At that point you can begin to exert some power, defined by your company’s ability to influence potential customers.
Lastly comes customer satisfaction with you. This is absolutely mandatory, before they can emotionally commit to engaging you in the ‘Buyer/Seller’ process .
3. COMMITMENT: Here comes the challenging part. Once they know you exist and they have tried you in a non-committal way, you have to get them to commit to you by making that always critical first time purchase, then the second, and third, and subsequent purchases until they become your raving fans. A key consideration is how much does each party contribute to the relationship, how much do you and your customers invest in the relationship, and how consistent are you in nurturing the exchanges you have with your customers. This is where most of my clients fall short.
4. DISSOLUTION: Sadly ALL relationships come to an end. At the last stage either your customer leaves you, or you decide that it’s no longer worth it from a profitability standpoint to retain them as your customer. Better options come along for your customers, or perhaps you neglect your customers (esp. online), or they experience a major failure by your organization (typically poor service.) Sometimes, your customers will outgrow your products/services.
How Your Customers Create Value For You
Your customer relationships increase your business’s profitability the following THREE (3) ways:
1) It costs MUCH less to service existing clients than it will for you to generate new ones.
2) Your existing clients are willing to pay a higher price for your products and services.
3) The strong buyer-seller relationships you have with your best customers increases the likelihood that customers will share their personal information which can help you customize offerings and sell more effectively to them.
Define Each Customer’s “Lifetime Value.”
In order to know how much a client may contribute to your firm, you need to determine their “expected” lifetime value. Remember the PARETO Principle matters, and you MUST be able to identify your top 20% of customers – they create 80% of your business. You MUST have a database of past customer purchase activity to complete this exercise successfully. Remember that a profitable/unprofitable customer today is an unprofitable/profitable one tomorrow. In order to tell the difference, you have to KNOW about each customer, which requires ongoing…COMMUNICATION! Consider how many referrals each customer has made to you. The more referrals…the MORE valuable they are.
Use The RFVP Model to Size Up Your customers
R – Recency, when was the last time they purchased from you.
F – Frequency, how often do they buy from you.
v – Volume, the average size order they place with you.
P – Profit, how much do they contribute to your business profitability. The sweet spot for profitability
are those customers that buy a lot from you but don’t place many demands on you to service their account.
Create an Action Plan to Develop Your Apostles (Raving Fans)
Conduct a formal needs assessment to see what needs your best customers have. Develop set of CUSTOMIZED solutions just for them.
Convince these existing clients to implement even a few of your recommendations. Review your service plan WITH THEM every year.
Target an initial list of twelve existing customers to convert to Apostles.
Three Steps to Gain Apostles
1) Write down the names of all your existing apostle clients.
2) Write down a comprehensive list of what it takes to keep them with your business.
3) Write a list of clients to convert to apostles NOW. The number should be roughly TWO TIMES your existing apostle clients. Why 2X your existing number of customers? Research shows you will be able to convert 50% of your repeat clients into apostles every year, so you’ll keep this up until you reach the MAGICAL “12.”
How To Sell to Your VERY Best Customers
Follow your customer conversations online by checking in regularly with social media, your customer online user forums, chat rooms. Align your sales, marketing, & product management efforts so they are in perfect harmony and all support each other/work well together. “Touch” / communicate with your customers
several ways, including phone calls, email, direct mail, tweets, instant messaging, Skype, etc.
Focus (TAILOR) your presentations on their specific challenges, NOT what you offer. Become more visible to them by attending the same trade shows, industry events, and annual conferences they go to. Nothing shows them you are there for them by being there with them. Write definitive articles in the publications/blogs
they read so they see you as the resident subject matter expert in the fields, industries, sectors, trends that matter most to them.
Facilitate roundtable discussions with your best clients to talk about the trends and developments (healthcare reform, small business employee benefits, cloud computing, etc.) that will have a direct bearing on their future business success.
Here’s to your business success. Have a GREAT fourth quarter!