Every business needs to thrive and grow – but how can incentives and reward can help you to win new business?
Simple sales and marketing maths shows it is much more costly – in money and time – to win revenue from a new client than generating incremental or additional revenues from companies that you already have, or had, a relationship with. There are a small number of organisations who only think about growth as an acquisitive objective. In most cases, companies already have the data, a relationship with the customer and the knowledge that they are interested not just in your products but in your business too. For those lapsed clients, the data may also help understand the reason for the attrition. That’s a lot of positives over the resource-intensive approach of speculative new business.
The best way for organisations to unlock revenues from an existing customer base is to apply the same sales and marketing rigour you would do for new client acquisition.
This should start with segmentation. Nearly every business can analyse the spending patterns of its customers; frequency of orders, quantity and total volume, price etc. The Pareto principle will apply here; the 80-20 rule. So the key to winning more revenue from existing clients is to use that data to categorise the groups of customers you want to target and apply an appropriate strategy. Typical customer types will include lapsed clients, low/mid volume and infrequent purchasing clients as well as the top 20%.
You then need a plan. Looking at the segments will tell you a story about who you should be targeting. It will also give you insight around the action you need to take in order to grow revenue.
At this stage, thinking about how you can use incentives to reward loyalty, increase frequency of purchase and lure back dormant customers is a critical tool for generating extra revenue while reducing the cost of sale. Get this right and it will also open up less expensive routes to customer acquisition. Here the choice of reward or incentive right is critical. Well-designed loyalty cards or electronic reward schemes allow you to gather the data you need to improve your understanding of your customers and their purchasing habits.
With these basics in place, the incentive strategy becomes aligned with the sales and marketing plans and can be activated with the similar rigour you would apply to customer acquisition in any other segment: targeting the prospects, analysing revenue patterns and refining your approach.
For most organisations, targeting your existing customers in this way won’t only result in an increase in revenues but should reduce customer churn and the average cost of sale while increasing loyalty and barriers to leaving.
So if you want to have some real shine on your revenues, it’s the existing customers, not the new ones you should be targeting!