Every business needs new customers, but don't ever forget that your easiest and most predictable source of new revenue is right under your nose: It comes from the loyal customers who already know your company. Acquiring new customers is expensive (five to 10 times the cost of retaining an existing one), and the average spend of a repeat customer is a whopping 67 percent more than a new one. So, sure, put some energy into new business development, but make sure your salespeople know that coming up with creative ways to sell more to your current customers is just as important. Here are 10 proven techniques to do just that:
1. Think lifetime value, not transactional value. To keep customers coming back to Zane's Cycles (and away from the superstores), Chris Zane offers a wildly attractive incentive to parents who buy their children's bikes from him: He'll credit the full cost of last year's bicycle toward an upgrade every year up to a 20-inch wheel. "We won't make money until they buy their second bike from us at full price," said the Branford, Conn., entrepreneur. In the meantime, parents buy accessories for their growing children and, predicts Zane, are impressed enough with his commitment to service that they become customers for life.
2. Go for a no-brainer upsell. "We started noticing that our clients wanted us to store their media files because they had a habit of re-editing their sizzle reels several times over the course of the year," said Scott Gerber, CEO of SizzleIt, a New York City company that produces short promotional videos. The process became time consuming and tedious for the company, so Gerber started charging clients monthly and annual fees to store their data. "This created a whole new revenue stream for the company," he said, "not to mention it allowed us to get rid of large amounts of media files when clients didn't want to pay."
3. Offer complementary products or services. Put a little thought into what your customers are buying and the other needs that those purchases might trigger. For instance, Language International's primary product is language study abroad programs. "But very often, our customers also need housing and travel insurance," said Karen Ong, CEO of the Boston-area company. Offering those complementary products has "helped us expand our gross margins from 21 percent to more than 25 percent," she said.
4. Stay in touch. Sometimes you may not see your best customers as often as you'd like, so you need to work extra hard to keep yourself on their radar screens. Jack Mitchell, the CEO of The Mitchells Family of Stores in Farifield County, Conn., has his sales people contact customers by phone, email, and handwritten note "not trying to sell them anything, but letting them we're available to do alterations, or to come to their home, look at their closet and see what is still wearable," said Mitchell. He knows that if he keeps in touch with customers in a low-pressure way, his best customers will find their way back his four luxury clothing stores when the economy improves.
5. Practice the art of the perfectly-timed pitch. What is a key day to reap additional revenue, and what can you do to capitalize on it? "We always have success with our yearly Black Friday email blast," said Zalmi Duchman, the CEO of TheFreshDiet.com, a healthy meal delivery service based in Surfside, Fla. So last year, on the day after Thanksgiving, the company sent an email blast to its database of clients, and generated an additional $400,000 in revenue in three days. "For us it's the best of both worlds," said Duchman. "Everyone is looking out for specials, and it's right after Thanksgiving so people are thinking about dieting and their New Year's resolutions."
For more tips, including reminding customers of everything you offer and giving customers a say in what you sell, click here.