How to boost sales from existing customers

January 22, 2013 by Okechukwu Nnodim 1 Comment

How to boost sales from existing customers

Existing customers are more profitable than new ones, experts say. In this report, Okechukwu Nnodim writes on how small business owners can increase sales by dealing with their existing customers

Many entrepreneurs believe that the only way to increase sales is to find new customers. But experts say this strategy leaves out an obvious potential source of new sales. According to them, it’s much easier to get an existing customer to buy from you than to convince a new customer to take the plunge. They note that entrepreneurs who pursue new customers at the expense of existing ones are forgetting the low hanging fruit, which is their existing customer base. Professionals say if you want to expand sales, the number one place to go is the existing customer base, as they already trust you.

Business owners often talk about the lifetime value of customers, without realising that their value is far more than just the sales value of them staying with the same model car, as an often quoted example gives. Existing customers are more profitable than new customers, yet businesses are constantly extolled to sell more, without any qualification whatsoever. It is quite true that revenue is tied to sales volume and no one would argue with the proposition that business begins with the sale, but which sale and to whom can be important. The wrong sale can cost you profits either directly or as an opportunity cost.  By opportunity cost, the same sale elsewhere might have made you a higher profit. Remember the 80/20 rule, which states that 80 per cent of your profits as an entrepreneur always come from 20 per cent of your customers.

Small business analysts say it’s infinitely easier and always more profitable to work at increasing the purchasing of your satisfied customers than it is to go out and add new ones. They note that there are many reasons for this, but amongst the most important are that you have established your expertise, credibility and trust. It costs money to acquire new customers and to set them in your system. And new customers tend to buy in smaller amounts. Businesses often spend a small fortune to get new customers. Think of your advertising. Some of it is intended to remind people of your business, but mostly it is intended to encourage new customers to buy. Some of the reasons why it is important to concentrate on existing customers include the fact that they cost less to service and are easier to deal with because you are more likely to know and understand their requirements.

Experts say this is because they trust you they are likely to buy more often, and to buy more expensive products or services. If they become raving fans they are also more likely to refer others to you. Word of mouth is the most powerful form of promotion which you are will enjoy from existing customers. The benefits of intentionally focusing most of your selling and marketing efforts on your current customers, according to experts are: lower costs for additional sales, greater customer loyalty, higher customer satisfaction scores, and more profits. So just how might you go about increasing sales to existing customers, and increasing the profits to your business by more than if you just got out on the street and chased more sales. If you could keep the same number of customers but increase the size of their orders you’d increase your revenue, and if you managed to do that without reducing your margins, you would increase your profits. Or if you could keep the same number of customers, and the size of their order, but persuade them to consume more often and therefore order more often you would also increase revenue. Below are other means to boost sales from existing customer base, according to experts:

Offer some products in bundles

You can offer some of your products or services in bundles for a special price to try to get an existing customer to try some of your other offerings. Look for ways to boost sales and draw your customers the more to your services. Convince your sales employees to go back to existing customers and try to sell those clients related products or services. A common example is a warranty, experts say. Think of how many times you’ve purchased electronics and a sales person has tried to sell you on an extended service plan. Customers sometimes take the bait, expert say.