What’s more important to the future of your business: acquiring new customers OR retaining current ones and selling them additional products and services?
It’s a question every sales and marketing organization must address.
In most cases, the answer they come up with is: Both.
However, the best solution for most businesses is not that simple. If you have limited resources, you owe it to yourself to do the math and figure out what percentage of your sales and marketing staff time and budget should be put toward selling versus re-selling (or up-selling).
Did you know: It’s rare that a fifty-fifty split provides the best bottom-line payoff for most organizations?
Why you need to acquire new customers
It may seem obvious, but expanding your customer base is the quickest way to grow your business, earn additional revenue and achieve immediate sales goals. However, it’s not the only way to accomplish these things. Re-selling or up-selling to your current customer base is often more profitable than closing deals with new clients.
Despite this, businesses should always be acquiring new buyers. They have to replace ones lost to attrition. New customers help maintain your current revenue stream and increase potential earnings over time.
Businesses know this, which is why there is so much focus on inbound marketing and sales enablement today.
Why you must sell to current customers, as well
Retaining current customers is critical to the health of your business. It’s a clear sign that it’s providing products and services they value while delivering a quality customer experience. If you have too much customer churn and turnover, it’s an indicator that something is wrong and you need to fix it.
Did you know: Your sales enablement system can be used to identify problems in your selling — and reselling — processes?
Strong relationships with your current customers are valuable because they can be leveraged to:
- Attract new prospects by featuring them in case studies
- Acquire new clients by earning referrals
- Close more deals by getting positive references
- Sell more and better products and services.
Retaining clients is an important part of planning for the future of your business and ensuring consistent growth over time. Committed customers you can depend on makes it easier to set solid sales goals and make sound decisions about budgets and spending.
Did you know: One of the biggest advantages of current customers over new ones is that they usually require less time and attention from your sales and customer service teams? This contributes to better profitability.
The importance of lifetime customer value
Lifetime value is a calculation of how much total profit you expect to earn from a customer for the entirety of their relationship with your firm. Coming up with this number for every type of client you serve helps you see over the long-term the value of your current customer base to your business.
Understanding the lifetime value of your customers versus the value of a new first sale will help you decide how to assign your sales and marketing resources and budgets. A greater percentage should go toward what’s more profitable, whether it’s retaining customers or acquiring new ones.
Did you know: Your lifetime customer value calculation should also be used to define your long term plan for growing your business?
Selling versus re-selling: By the numbers
If you’re still not convinced of the value of your current client base, check out these interesting facts and figures from a survey sponsored by Invesp, a company that helps improve sales conversion rates:
- Acquiring a new customer costs five times more than retaining an existing one
- The success rate of selling to current customers is between 60 and 70 percent, while the rate of selling to new prospects in the sales pipeline is generally less than 20 percent
- Increasing client retention rates by five percent adds at least 25 percent to the bottom line.
Despite these compelling numbers, the survey reports that 44 percent of companies put a greater focus on client acquisition versus only 18 percent focusing more on retention. The rest of those surveyed reported paying equal attention to both.
Did you know: According to the Invesp survey, 76 percent of organizations view customer lifetime value as an important part of their future success?
The importance of sales enablement in setting priorities
How can you decide whether to assign more resources to acquisition versus retention if you don’t have good data to guide you? You can’t.
A sales enablement system with solid data-reporting capabilities, like the one offered by Mobile Locker, will give you the information you need to set priorities. It will also help you identify the best selling, re-selling and up-selling opportunities, along with breakdowns in your sales process.
If you’re serious about maximizing your sales and marketing resources and improving your bottom-line results, you owe it to yourself to talk to the sales enablement experts at Mobile Locker. They’ll explain the value of a sales enablement program and system can have in optimizing your client acquisition and retention equity efforts.