Everyone knows that it’s generally easier to sell to your existing customer base than it is to sell to new clients. Still many salespeople and business owners focus a lot of attention on getting new clients. But what are some of the best ways to earn more from your existing customer list?
David: Hi, and welcome to the podcast. Today, cohost Chris Templeton, and I will discuss earning more from your existing customer base. Hi Chris.
Chris: Hi David. You know, it does seem like many people focus a lot more on attracting new business than to selling to their existing customers. Why do you think that’s the case, David?
David: Good question. I think a lot of it may have to do with just the idea of new customers. It’s a lot more fun, a lot more sexy. People tend to gravitate toward that. Where the idea of selling to existing customers may seem a little bland compared to that. It could be some of that. It could be old habits dying hard. If you had a sales manager that you reported to, very often, you would be flogged for not bringing new customers through the door. So it could have something to do with that. The focus of the sales management or ownership, if the goal was to bring new people through. But I think a lot of it is just the idea that once we’ve conquered a particular account, once we’ve gotten that order, the tendency is to move on to the next one is to find the next customer, the next customer, the next order and that sort of thing. And sometimes we forget that it’s been a while since we’ve gotten that order from the previous customer, and maybe it’s just time to go back.
Chris: It just seems to me like a major disconnect that selling to existing customers is something that just doesn’t get near the attention that it should. And we all know, we all know that it’s the easiest sale. The most rewarding sale is the repeat sale, isn’t it?
David: Yeah. And everybody can quote that. Everybody knows it, intellectually. We all know it. Probably anyone who’s been in sales for any length of time knows that every business owner probably knows it. And yet it’s just not practiced.
Chris: When you think about it, how costly do you think it is for people who fail to maximize that value of their customer base?
David: I think it’s extremely costly. If you’re not doing it, there’s no question that you’re missing out on revenue that you could otherwise have. In fact, one of the things that I focus on with my clients, whenever I take on a new client, if we’re working one-on-one, or even if we’re working in a small group, one of the first things that we’ll do is to address that. Because if you want to grow your sales and profits, the way that I look at it is your existing customer base is going to account for some sort of percentage of that. So very often what I’ll do is I’ll say, okay, let’s say I’m talking to somebody and they’re doing half a million in sales and they want to get it to three quarters of a million in sales. One of the first questions that I’ll ask them is what do you think you’ll do with your existing customer base over the course of the next year?
In other words, if you did half a million dollars with them last year, what’s it going to be this year? Is it going to be 550? Is it going to be 450? Is it going to be 250? Right? Are a lot of them going to have gone away? What’s that going to be? And a lot of times it’s just spit-balling. You’re just sort of trying to figure out roughly what might be. But very often people will have a good idea of that. So they’ll say, okay, well I did half a million with them last year. Maybe I’ll do 525 or maybe I’ll do 550 with them, depending on a couple of different things. And then I’ll say, okay, well, if you really decided to focus on trying to get the most from them, what’s the most you think you could get?
And in some cases they’ll go to, you know, 575 or 600 or 650. And that tells you, right there, that a lot of times we know that there are dollars that could be had, and we’re just not going after them. But then after that, once we’ve identified that we say, okay, so if you think you can get to 550 or 600 with your existing customer base, and your goal is to get to 750, now we’re going to supplement the rest with new customers. So it makes sense to do that, but it really makes sense to start with identifying how much your existing and your previous customers could be worth to you over the course of the next year.
Chris: When you look at this and see this as such a common issue, I mean, my sense from what you just said is that most of your business owners who talk about this, it’s something that just doesn’t get first play in terms of my planning. What do you think is a better way to monetize existing clients?
David: Well, I think a lot of it has to do with the fact that we tend not to requalify our existing clients as often as we should. In other words, somebody buys something from us. Sometimes we tend to assume that they’re going to be all set for a while. We think, okay, well, I don’t have to go back to that person for a while, but that may not be the case. So one of the things that I encourage my clients to do is to make sure that we are constantly requalifying our existing clients., Are they done for the year now? Have they spent what they’re going to spend? Do they have more things they need? And if so, when is that? When we look at qualifying clients, in general, whether they’re new clients or whether they’re existing clients, we want to find out the same things. What do they need?
When do they need it? Are they looking to buy something within the next three months? Are they looking to buy something five or six months down the line? And you can ask those questions. You can literally ask those questions right after someone has purchased something. Okay, what are you looking to do next? What’s your timeline? And you can then get that into your tickler system so that you can follow up with them at the appropriate time to make sure that you’re in front of them when they actually need your help. So a lot of that is just not built in. It comes from the idea, I think, of salespeople just being so happy that they’ve made a sale, that they just want to run onto the next one, rather than planning what’s next for this particular client. And I think that’s a big mistake.
Chris: I agree. And I think that one of the things that I just want to take a step back on, is talk about requalifying a little bit, because I think that there’s, requalifying where some people are going to hear that and say, well, what do you mean ask them for another sale when you’ve just completed that? I think in what you’re saying, there’s a broader element of what’s the relationship? How do I maintain the relationship moving forward? Because one of the things that I think is also a huge issue, with marketing to existing clients, is that sales people fall out of touch. And I think they feel guilty that they have. And I wonder if part of this is just about, do I have a standardized system that’s going to help me to stay in touch with very little effort with my existing clients where I’m then even more comfortable with saying, Hey, I hope you got the last thing I got you. What’s new? Anything we should be talking about? I mean, something that’s more relationship, a little more relationship, and requalifying.
David: Yeah. And in some sense, we’re talking about two different aspects of the sales process. One, when we talk about requalifying, for me, that’s a very specific thing. And with the clients that I work with, when we talk about requalifying, what we mean is finding out which of the five levels of qualification a particular prospect or client is on. Are they ready to buy right now? Very few are, but that’s the first level of qualification. Second level is, do they have a specific date in mind when they want to buy again? And some people will have a date in mind. And then when we know that,we can make sure that we get that scheduled and follow up with them appropriately, third group are the ones who are just generally receptive. They’re open to the idea, but they’re not quite sure exactly when. The fourth group are the ones who are just disqualified. And then the fifth group are the ones who are unresponsive. We try to find out what they need and when they need it. And they just won’t get back to us.
Every single prospect we ever come into contact with, every single client we’ve ever had, will fall into one of those five categories. And so, when I talk about requalifying, all I mean is simply finding out which of those five categories are they in now? If they just completed purchasing something from us, then, chances are, they don’t need to buy anything right now, but who knows, maybe they do. And so what we want to find out is, if they don’t need to buy something else right now, then what is their timeline? Or are they just open to it? Or are they no longer open to it? Or are they not going to get back to me? That’s all I mean, by qualifying. And then, what you’re talking about is essentially what I refer to as a drip campaign. Being in touch with someone on an ongoing basis so that they can be in touch with you and you can be in touch with them when they might be ready to go. That’s another aspect of it.
Chris: Well, and I also think that the advantage of the drip campaign is it keeps people moving toward level one, because I feel like, as a client, I’m not forgotten, I’m getting regular communication from my sales guy. And so I’m more likely to be able to be ready now, or, you know, whatever be receptive because I’ve maintained that relationship. So I love both sides of this in terms of here are the things that you do to make sure that you’re nurturing that relationship, the drip campaign, and at the same time, really looking at where somebody falls in terms of qualification. The other thing that really comes up for me is that the quality of clients we have really has to plan this in a big way. What sort of criteria should we look for when targeting clients?
David: Well, I think you need to decide exactly what type of client you want. I mean, ideally you want somebody who has the ability to spend money with you, the desire, somebody who understands and appreciates the value you bring to the table. It’s good for most people to have an idea of sort of the level of sale they’re looking for, depending on what it is that they’re selling. Are you looking for somebody who’s going to spend a thousand dollars with you $5,000, $10,000, $100,000? Because the clients you target are ultimately going to be the ones you eventually get. That’s not to say you’re going to get all the clients you target. But if you target a bunch of people who have the ability to spend $500 with you, chances are you’ll get some. And if you make a sale, it’s going to be a $500 sale.
If you target people who have the ability to spend $50,000 with you, then the likelihood of being able to get a $50,000 sale dramatically increases, because you’re not targeting $500 buyers. So a lot of it is about identifying what is the type of customer that I want to have? What’s the type of client that I want to build a business around? And then working to attract that type of client. But you’re exactly right. The quality of clients that we have, is going to be huge in terms of determining the type of customer base that we can ultimately build.
Chris: I also imagine that part of this is that we get stuck in the ways of when we started out in sales and kind of like, I’ll take what I can get right now. And we forget to kind of up that ante, as we go and really, as we become more confident and more proficient in what we’re doing, that we raise those standards for what we want in a sale and in a prospecting client,
David: Very true. And also we tend to take the business that we get. So if somebody refers someone to us and they want to place a small order, we feel guilty if we say no. So we end up taking on customers who may not be spending as much with us. It may take more time than it actually results in revenue with some of those clients. And so some of it is about being somewhat discerning about the types of clients that we’re willing to accept, and the type of business that we want to have and the type of business that we want to grow. But when we look at the idea of earning more money from your existing customer base, a lot of it goes back to making those calls early about the types of customers that you actually want, and then making sure that we’re present and getting back to this idea of the requalification aspect of it, recognizing that if somebody is generally open to buying with us, then the next thing we want to do is to find out when, right?
And then that moves them from generally receptive to a specific date, which is the second level of qualification. When we have that specific time, when we have that specific date in mind, then we can work toward actually having them get to the point where they’re ready to buy now, when that date approaches. So we know when we need to be in touch with them. We know what we need to be providing them in terms of information, so that when they’re ready to buy, they can actually do it. So recognizing that of those five levels of qualification, three of them are good. If they’re generally receptive, if they have specific dates, if they’re ready to buy, now, those are great. If they are disqualified or if they’re unresponsive, then they’re sort of qualified out at least for the time being. But it tells us exactly who we need to focus on right now.
And so if you want to maximize revenue from your existing customer base, get back to your customers, requalify them, find out where they stand right now with the understanding that some of them are not going to be ready to buy right now. Some of them might not be ready to buy for three months, six months a year, but you’ll know. And it’s such an advantage to know that stuff in advance rather than trying to just keep going back to people again and again, and again, if they’re not going to be ready at that particular point.
Chris: And I think the thing to wrap up with, on that point, is that it’s really easy to do these kinds of qualifications in a way that’s conversational, that doesn’t come across as just, Oh, I’m being a typical salesman. In other words, if I can blend those kinds of questions in with general conversation and then checking in, in a nice and easy way, I think that you’re also helping to keep people in the first three levels a whole lot better, at least in receptive, if I can make it a little more conversational, right?
David: Yeah, definitely. And when you have a customer that you’ve got an established relationship with, it’s very easy to be conversational about it, just to try to find out what they have coming up when they have it coming up and how you can help them.
Chris: Well, it sounds like what we’ve determined, is that there is money to be made in your existing clients. And there are ways to do it by being consistent and relational, and also really focusing on the solid questions of when, that sort of thing, that we can really take our existing client base and have them be an even greater source of income for us.
David: That’s the idea.
Chris: Okay, David, we got to wrap this one up, but what do we have coming up in our next podcast?
David: All right, Chris in our next podcast, we’ll talk about how many prospects you have in your pipeline versus how many you should have.
Chris: Okay. In the meantime, if you need help growing your top line sales and bottom line profits, go to TopSecrets.com/call and schedule a strategy session to find out how David and his team can help you. That’s TopSecrets.com/call.
David: Thanks for listening to the podcast. Right now, I’m working with a small group of private clients to get things going in their businesses again. So if you’re no longer willing to settle for unqualified prospects and unpredictable clients, and you’re ready to start this week, then head over to TopSecrets.com/call. We’ll get on the phone with you and make sure you’re crystal clear on 3 things: 1.) The market or markets you need to start dominating right now to accelerate your results, 2). What’s kept you from doing it so far and 3.) What’s broken or missing? Remember, in this business environment, sitting around, waiting for things to get better is NOT the answer. And if you knew what to do, wouldn’t you have done it by now? To see if we’re a good fit to work together, go to TopSecrets.com/call.