Customer Base Or New Business?

Customer Base Or New Business?


Entrepreneurs know that they do not have unlimited sales and marketing resources. So, they face the question of how to get the maximum output from what they have.

Should their energies be directed at more sales to customers, or more customers? And is it wise to split one’s resources between these?

The nature of your business

A partial answer can be found in the nature of the business. If you sell things that customers buy very seldom, such as flooring or wedding facilities, your effort should go towards positioning your brand as one to consider and delivering beyond expectations to grow word-of-mouth and referral business.

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Similarly, if your product set is applicable only to a small total market and you are the major supplier, you want to ensure that all customers use as much as possible of your product range.

In cases where you offer highly differentiated products or have a unique market focus, your priority should be on new business, lest imitators become a problem.

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Where you have a ‘me too’ product set — very similar to that of your competitors — your first priority should be to ensure the loyalty of your customers and differentiate by excellent service.

Some new business is obviously essential. Customer attrition will happen through closures, relocation and competitive attack.

Costs will increase and, without new business, you will have to cover this increase through price hikes, which makes one less competitive.

Follow the opportunities

A good starting place is a reflection on the nature of your business, determining exactly where the best opportunities lie. For instance: How easy is it to sell your products? Do you win most sales cycles, or is there a low strike rate and many postponed decisions? In the first case, you want to get more new business sales cycles through great marketing promotions and more sales people.

In the latter case, you may want to improve the products, review the pricing, upgrade your sales force’s skills, or put major effort into making existing customers into enthusiasts (so you get referrals).

Try reviewing all existing marketing promotions and sales efforts, asking the question: “Is this the best way we could spend this resource?” Does the company golf day, the newsletter, participation in a customer’s pet project or that exhibition stand really produce revenue?

In my view, there are four measurements you can apply: Immediate sales leads, measurably increasing customer loyalty, measurably increasing the brand repute (so that future customers will favour you when it is time to buy) and building networking relationships (which, in turn, lead to traceable sales and referrals).

These are hard measures, but applying them will stop you believing that the advert in the school magazine is going to increase your turnover.

Moving forward

Start with a clear set of objectives for new business, additional sales to customers, or both. Then deploy and train the right people and develop appropriate campaigns and initiatives.

A highly targeted efficient campaign followed up by knowledgeable and customer-centric sales people is likely to give a much better return for a given spend than a shotgun approach followed by careless and ignorant sales people trying to pressure prospects.

If you are in a market that is well serviced by competitors, you should either find and exploit an under-serviced niche, or target the customers of the weakest competitors.

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If your focus is on growing sales to your existing customers, institute a dynamic cross-selling campaign, upskill your sales people in account management, and increase customer service from all staff.

Ensure you have performance measures in place for people and campaigns. Get rid of the people and projects that do not support the objectives, or transfer them to CSI or entertainment.

Ed Hatton
Ed Hatton is the owner of The Marketing Director and has consulted to and mentored SMBs in strategy, marketing and sales for almost 20 years. He co-authored an entrepreneurship textbook and is passionate about helping entrepreneurs to succeed.

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