Want To Increase Sales? Target Your Existing Customers
Yes, of course, gaining customers and/or market share is inevitably a goal of every marketing campaign and communications effort we undertake.
But as you go about crafting those efforts, make sure you are paying attention—and, I would argue, a lot of attention—to the customers you already have.
There are three key reasons.
1. If you gain a customer through your marketing efforts but lose one you already had because you weren’t paying enough attention to him/her, you end up with the same number of customers—but lower margins–because it costs far more to gain a new customer than to keep an existing one.
So, staying even—by adding one customer to offset every one who goes away—is actually causing you to lose ground (in the form of decreased profits that come about through increased marketing costs). That is no way to run a business.
2. Conversely, there are times when, by remaining in place, you actually gain ground. Let’s use a straightforward example:
Let’s say you have 14% of a $100 million market. Your sales: $14 million. (Add a bunch of zeroes if you think the example is too simplistic; divide by 10 if you the example is too big.)
Now assume two additional competitors enter the field, increasing the size of the total market to $110 million.
If you can just keep your market share at 14 percent, your sales will climb to $15.4 million. Even better, since your share has remained the same, it means some of your competitors will have lost ground to the new entrants, i.e. their market share willl have declined while yours increased.
3. It is far easier to sell products and services to existing customers than to someone you don’t have a relationship with.
If you have done a good job taking care of your customer in the past, and your products have performed well for them, they are usually willing to give any addition to your product line a try. Because the relationship is in place, far less (expensive) selling is required.
The two takeaway points here are simple, even if we tend to forget about them.
A key part of creating a growing business is making sure you don’t lose the customers/clients/members you already have.
And once you have them, make them your first option when you have an additional product or service to sell. Your costs of sales will be less and you will find it easier to gain momentum.
Once you have sold all you can to your existing customers, you can start reaching out to gain more.
But I wouldn’t make trying to gain marketshare my first move.