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 you or your company. Marketing Research has shown that acquiring new customers is expensive (five to ten 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, you may sure put some energy into new business development, new customer acquisition, but make sure you and your salespeople know that coming up with creative ways to sell more to your current customers is just far more important.
Here are 10 proven techniques to do just that:
1. Think lifetime value, not transactional value. To keep customers coming back to Kid’s World (and away from the superstores), Chris Jonathan 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 barely cover our cost in their first purchase but significant profit rolls in the second at full price,” says the Lagos entrepreneur. In the meantime, parents buy accessories for their growing children and, are impressed enough to buy many more items that are not even on this price slash promo
- 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,” says Michael Olamide, CEO of MikeSystems, a Lagos company that produces short promotional videos. The process became time consuming and tedious for the company, so Mike started charging clients monthly and annual fees to store their data. “This created a whole new revenue stream for the company,” he says, “not to mention it allowed us to get rid of large amounts of media files when clients didn’t want to pay.”
- Offer complementary products or services. Put a little thought into what your customers are buying and the other needs that those purchases might trigger (think printers/ink cartridges). For instance, Language International’s primary product is language study abroad programs. “But very often, our customers also need housing and travel insurance,” says Karen Uchendu, CEO of the Lingual International. Offering those complementary products has “helped us expand our gross margins from 21 percent to more than 25 percent,” she says.
- 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. Mitchell Emmanuel, the CEO of Family Cleaning Services in Ikeja, Lagos, 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,” says 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 cleaning services stores when they need.
- Help your customers sell more to their customers. If you’re selling to other businesses, the best way to get more revenue from them is to help them increase sales to their customers. Nick Okoro, the CEO of Web Nigeria, a Lagos-based company that provides white label web development services to graphic design firms, developed a free credentialing system for the designers who are his customers. “This not only gives them the knowledge and confidence to sell more and bigger contracts, but also positions them as experts in their market,” says Nick. He launched the educational program six months ago and has since seen new client requests quadruple. “We are sending out many more estimates—20 to 30 per month—and about two thirds are closing,” he says. “It not only provides more sales, but more profitable sales. We are spending less time coaching designers and less time doing non-billable revisions.”
- Remind customers of everything you offer. Never assume that even your most reliable customers are completely aware of all the products and services you offer: you need to remind them regularly. Kenny Ukandu, CEO of DesignWorks, a graphic design and marketing communications firm, sends a personal letter to every customer once a quarter, 4 times a year. She includes a list of her services with the ones they’ve used check off. “It reminds them of the types of projects we’ve worked on in that past year and shows them what services they did not use,” she says. “It’s an excellent cross selling tool.” In recent years, clients who received the letter have signed on for additional projects such as annual reports, website design, and marketing strategy.
- Create incentives for in-house referrals. Mike Olamide’s video production company, Mikesystems, often works with large companies, and he has found a way to effectively turn one client into multiple clients. “We inncentivized our current clients to recommend us to the project leaders in other parts of the company by offering them steep cash discounts for successful referrals,” says Mike. At a time when corporate budgets are tight, that lowered the cost of doing business with Mikesystems, strengthened customer relationships, and generated more income without the cost of attracting new clients.