Managing growth is one of the biggest challenges of running a business. The biggest problem is that many entrepreneurs lose sight of their primary objective. They focus on growth as a goal in and of itself. Instead, they should be focusing on sustaining profitable growth. One of the best ways to maintain profitable growth is by focusing on squeezing more value out of your existing customer base.
You need to consider the 80/20 rule of business. This idiom states that you will get 80% of your revenue from 20% of your customers. This means that you need to focus on two things to scale your business:
- Focus on developing a sound customer retention strategy. It costs up to 25 times more to find new customers then it does to keep existing ones.
- Focus on extracting as much revenue from your existing customers as possible. You can accomplish this by upselling them and offering a wider range of products and services.
Here are some strategies to consider as you strive to get more revenue from your customers through a customer retention and market penetration strategy.
Build closer and more personal relationships with your customers
There are so many business relationships that are cold and impersonal. While this doesn’t usually detract from the relationship, it doesn’t add a lot to it either.
Your customers will be more loyal to you if they get to know you on a personal level. Of course, you can’t become close with all of your customers, unless you offer a specialized set of services to a handful of large organizations. You want to focus on building more personal relationships with your three or four most lucrative customers.
Sending them holiday gifts or inviting them to concerts can be a great idea. One of my former colleagues invited all of her major clients to her birthday party. This helped her build longer-lasting relationships with them on a professional level.
Develop a loyalty program
Loyalty programs have two major purposes. First of all, they help you get customers to spend more money. Your business will be operating on a slightly lower margin, but will increase the volume of purchases that your customers make. Many customers actually increase spending out of fear of missing out on rewards.
Loyalty programs also increase customer loyalty. They will feel special when they qualify for rewards that are not available to lower-paying customers.
Know how to upsell your customers
Ryan Deiss, one of the most authoritative figures on Internet marketing, has frequently talked about the benefits of upselling. Deiss said that you can get a new customer to subscribe to a service for just a couple of dollars. While the cash flow that you generate from small payout offers can add up over time, the real value is with selling higher-ticket items to them down the road.
Once customers have paid for a small ticket purchase, it will be significantly easier to sell a more expensive package to them. This is especially easy if you have an email list of customers. You can develop email marketing campaigns to inform existing customers about other offers that they will be interested in.
Think of other products and services that you can sell to your existing customers
There are a lot of ways that you can monetize your existing customer base further. The easiest place to start is by finding other products and services that they may be interested in.
You need to think of overlapping products and services that align with your brand image. It is better to sell complementary products that support your existing services.
