Should you focus your valuable sales time on getting new customer accounts or developing and investing in current accounts? It's a common question among sales professionals, and the answer is frustrating for some: you have to do both. It's not as simple as a 50/50 split of time and resources. It’s really a balance of sales activity based on priority.
Spend your time wisely when nurturing current customers and expanding your business.
Why It's Important to Focus on Current Accounts
It’s tempting to focus on the next customer account and then the next but this approach will leave little time for developing current relationships. Return customers are the foundation of a profitable business, accounting for 25 to 40 percent of total revenues of stable businesses.
With each subsequent purchase, customers are more likely to come back. Customers who've made their first purchases are only 27 percent more likely to buy again, but for someone who's made three purchases, the odds are at 54 percent for making a fourth purchase. Additionally, marketing to current customers is more cost effective with shorter lead times. The increased interaction helps businesses improve customer service and brand recognition to develop customer loyalty.
As you invest your time and resources into your current customer base, you begin building loyal brand ambassadors. You'll naturally attract some new customers with this approach as current customers provide referrals through word of mouth marketing. Of course, true to consultative selling, you should look for opportunities to help your customers grow and reach goals whether they have expressed the need or not. That is one of the best ways to build loyalty.
Why New Customer Acquisition is Essential
Despite the benefits of nurturing established relationships and marketing to existing customers, it’s also important to add new business. No matter how talented your sales team is, you will lose some customer accounts. And it's clear from the numbers above that a significant chunk of a business's revenues can be attributed to new customer accounts.
The problem many salespeople face is that acquiring new customer accounts requires two things they're short on: time and resources. In order to expand and develop your customer base effectively, you will need to prioritize and direct sales activities.
Plan your sales activities to ensure you're spending your time wisely with prospective customers.
Determining Where to Allocate Your Resources
In order to spend your time wisely, you need to learn more about current and prospective customers. Customer modeling can help sales teams determine what the ideal customer profile looks like. For example, modeling can help you predict customer behavior, probability of purchase, frequency of purchase, loyalty, spending potential and more. Knowing this information ensures that you get the greatest ROI because you'll be targeting the ideal customers for your business.
If feasible, you could also consider assigning your maintenance accounts to your inside sales team. This leaves outside sales people free to actively pursue new business.
Finally, prioritize your sales activities to efficiently allocate your time. This requires establishing sales objectives and making it clear which tasks are most important. It also requires effective time management, which can be enhanced by utilizing pre-call planning techniques and other time savers.
Developing your relationships with current customer accounts and getting new ones are both important to the success of your business. Customer modeling and prioritization of sales activities can help you balance your time to achieve both goals.