Vantage Point Article Library

Vantage Point: Ideas and advice to improve your marketing

The Easiest, Least Risky Way to Grow Revenues

By Kirsten Chapman, Principal

IT companies are generally centered on only one strategy for growing revenues: customer acquisition. Their business plans focus on growing market share; sales plans focus on getting new business; development plans focus on making sure product/service offerings keep up with competition; and marketing plans focus on generating new customer leads and market-facing brand awareness.

Customer acquisition is an important revenue growth strategy—especially for emerging companies and those targeting high-growth markets. But such a single-minded focus on acquiring new customers often means a company has a blind eye toward another, less difficult way to grow revenues.

Customer growth (deepening existing relationships), as opposed to market share growth, is the most overlooked revenue growth strategy in our industry. By ignoring this, companies risk not only losing revenue opportunities, but losing their customers, too (e.g. the battle between Oracle and SAP).

Customer growth is the easiest and least expensive revenue growth strategy out there. You’ve heard it before—it costs up to 70% more to generate revenue from a new customer as it does to get an equal amount from current customers. There are two reasons why: First, you know who your customers are. You know their needs (assuming you stay in touch), what products they have, what their buying process is, and you know how to reach them. Imagine if you had that information for every prospect in your market! Second, your sales cycle is shorter. Customers made a conscious (and likely informed) decision to buy from you, and that makes them predisposed to do more business with you—as long as they’re happy.

How to Achieve Customer Growth
View customer growth just as you do customer acquisition: Make sure your business plan has customer growth objectives; your sales plan has a customer revenue goal and compensation tied to achieving the goal; your product/service development offerings keep up with customers’ needs (not just competitors’ offerings); and make sure your go-to-market (GTM) plan includes marketing initiatives targeted specifically to existing customers. For example:

  1. Regular, focused communications—develop newsletters and/or email programs that keep customers informed of your products and capabilities—but make sure editorial is focused on what’s important to them.
  2. Website—look for ways to evolve your website into a portal for information or tips that help them do their job.
  3. Say ‘Thank You’—tell your customers you appreciate their business. Some software companies do this as part of their user conferences, but if you’re too small for one or are a services organization, do what KCA does—throw a client party once a year to say ‘Thanks’ (BTW, mark your calendars for Sept 13th!).
  4. Telemarketing—every outbound promotion into your customer base for add-on products or services needs to be followed up with an in-person call—not just to secure sales, but also to build on and leverage the bond with your customers.
  5. Customer satisfaction study—whether you conduct a full-blown formal study of your entire customer base or perform more informal personal interviews with a few representative customers, soliciting their feedback—and acting on it—sends a powerful message that their input actually drives your strategic business decisions.
  6. Special promotions—tie add-on product sales to loyalty programs with special price or other advantageous incentives. Let your customers know you’re giving them an extra good deal.

Obviously, the list could go on and on, but our purpose here is only to get you thinking about how, as a marketer, you can do a better job deepening your relationship with your customers. It’s the easiest and least risky way to goose revenue growth.

copyright 2005, KC Associates, LLC

 

Upcoming VantagePoints