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 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, 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," says the Branford, Connecticut 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.
Dig Deeper: Chris Zane on Attracting the Best Customers
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," says 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 says, "not to mention it allowed us to get rid of large amounts of media files when clients didn't want to pay."
Dig Deeper: How to Upsell Your Customers
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 (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 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 says.
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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, Connecticut, 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 four luxury clothing stores when the economy improves.
Dig Deeper: Keith Ferrazzi on Making Business Personal
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 e-mail blast," says Zalmi Duchman, the CEO of TheFreshDiet.com, a healthy meal delivery service based in Surfside, Florida. So last year, on the day after Thanksgiving, the company sent an e-mail 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," says 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."
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6. 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 Villaume, the CEO of The Dev Department, an Atlanta-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 Villaume. 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."
Dig Deeper: 5 Ways to Connect Customers with Buyers
7. 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. Kelley Briggs, CEO of DesignWorks NY, a graphic design and marketing communications firm in Westchester County, New York, sends a personal letter to every customer once 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.
Dig Deeper: A Pitch for Marketing Multiple Services
8. Create incentives for in-house referrals. Scott Gerber's video production company, SizzleIt, 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 Gerber. At a time when corporate budgets are tight, that lowered the cost of doing business with SizzleIt, strengthened customer relationships, and generated more income without the cost of attracting new clients.
Dig Deeper: Using Sales Contests to Get Employee Referrals
9. Give customers a say in what you sell. Last October, ModCloth (No. 2 on our Inc. 500 list this year), started an initiative called Be the Buyer, which allows shoppers to vote online on clothing samples. If a garment gets enough votes, the online clothing retailer will add it to its offerings, and then send emails to visitors who voted for the item. The program allows the company to confidently gamble on items it might have thought were risky choices, plus it encourages a high level of customer engagement with leads to repeat sales. Co-founder Susan Gregg Kroger says the initiative has also significantly boosted web traffic to the Pittsburgh-based company.
Dig Deeper: How to Use Crowdsourcing for Business
10. Put some skin in the game. Greg Alexander, the CEO of Sales Benchmark Index, an Atlanta company that helps clients increase the effectiveness of their sales forces, says that the percent of his compan's revenue that came from existing customers jumped from 20 percent to a whopping 80 percent in two years. His secret: he started writing performance-based contracts. "We said if we don't deliver don't pay us. If we do deliver, pay us a percentage of the gain," he explains. He also started compensating his team according to the results they delivered for customers. "The 'skin in the game' technique resulted in our firm doubling revenue," says Alexander.
Dig Deeper: Pay for Performance and Nothing Else
The oil lobby has spent tens of millions lobbying Congress.Let's review. We just lived through the worst accidental oil leak in history. And we're at the tail end of a summer of cataclysmic weather that top climate scientists tell us is a taste of the globally-warmed future. Yet the United States Senate failed even to pass a climate bill so tepid that it qualified as what a Republican (South Carolina Sen. Lindsey Graham) once would have described as "half-assed."
How does this happen? The Center for Responsive Politics offers a whopper of a clue. It reports that during the first six months of this year alone, Big Oil spent $75 million lobbying Congress. The report also points out that last year, when green groups retaliated and spent a record $22.4 million on their own lobbying, they still were outspent 7 to 1 by fossil fuel lobbies. The Center's Open Secrets Blog has all the dirty details as part of a weeklong series on how Big Oil fuels Washington.
Target practice: For BP, the Gulf oil leak has been the gift that keeps on giving -- and not in a good way. At yesterday's hearing in Houston on the Deepwater Horizon explosion, federal investigators nailed the oil giant for not addressing hundreds of maintenance problems on the rig. BP's erstwhile partners pointed one finger after another at their beleaguered colleague. Even Brad Pitt unloaded on BP, saying:
I was never for the death penalty before; I am willing to look at it again.
Dirty business: If you think clean coal is an oxymoron you've got plenty of company. Turns out a lot of utility companies don't buy the concept either. According to AP reporter Matthew Brown, 30 old-fashioned dirty coal plants have been built since 2008, or are under construction:
The expansion, the industry's largest in two decades, represents an acknowledgment that highly touted "clean coal" technology is still a long way from becoming a reality and underscores a renewed confidence among utilities that proposals to regulate carbon emissions will fail.
Waiting to inhale: And while we're on the subject of the air we'd rather not breathe, the EPA is postponing the announcement of tougher smog regulations at least until late October. More likely the agency will stay mum on smog until after the November elections, because any announcement would provide ammo for Republicans who have been accusing the federal government of running amok. Even November would be way too soon for some on Capitol Hill. Why rush asked a group of seven senators in a written complaint to EPA chief Lisa Jackson earlier this month? New smog regulations can wait until 2013.
We take it all back: Feels like you could use a little positive spin right about now, so how's this? Bob Marshall, in the New Orleans Times Picayune, reports that some enviros think the BP gusher in the Gulf may actually save more Louisiana wetlands than it destroyed:
... three months of daily newscasts have dramatically increased national awareness of the state's real coastal disaster, and the billions in fines BP is expected to pay could bankroll critical projects Congress had refused to fund.
Whine and punishment: And here's another little pick-you-up. During a visit to a remote research base in the Russian Arctic, Russia's prime minister, Vladimir Putin, suggested that too much has been made of man's role in global warming, pointing out that climate change helped kill off woolly mammoths long before the age of human industrialization. German scientist Inken Preuss set him straight:
Climate change has never happened like now and man is making a huge impact.
He got told.
eric seiger
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