How much time have you spent thinking up new ideas to generate new business? Do you have a system? How much do you invest in marketing to bring new customers to your business? Statistics prove that the cost of acquisition of new customers (CAC – Customer Acquisition Cost) far exceeds the cost of growing sales from your existing customers.
The CAC is the cost of turning anyone in the population into a paying customer. It is usually calculated by taking your total marketing spend and dividing it by the number of new customers in a period. EG: If a company spent $100 on marketing in a month, and acquired 100 new customers in that month, the CAC = $1. That may be a good number or a bad number. All depends on what value each customer brings you.
For a full explanation, here is a great article by Chase Hughes in the Kissmetrics Blog if you would like some more detail.
So back to the topic – mining the gold from your business.
Think about your customers for a moment. They love you. They think you are great. They are satisfied with your product or service. They might only buy once or they may buy every month – or some regularity in between the fact is, they bought. They assumed there was enough value in the transaction for them to buy from you rather than anyone else. Your relationship began.
How have you managed that relationship since then? Have you stayed in touch? Do you let them know you care? Do you deliver any value ongoing?
The CAC of your existing customers is zero. That’s right. Zero, Nil, Nada, Zilch. Here are three ways to mine the gold from your existing customer base:
1. Up-sell
I know you are thinking, yes, yes I’ve heard it all before. But, your existing customers have already accepted you as their supplier. Aim to provide further value with an item or service of increased price. They will be much more open to it than a new customer that has not tested you yet. If they say no, at least you offered. Imagine they come back to you in six months and say, “if only X would do this!” and you say “Well our Y does do that.” How do you think they would feel? What would it do to the relationship?
2. Cross-Sell
If your offering has a range of “components” that complement each other, Cross Selling is a real option for you. There are different ways to do this. It may be that you offer the complimentary items after the sale, on a time schedule that keeps your business front of mind and in a timeframe, that you know your customers would benefit from the purchase. This drip feed approach is best as extends the number of contact points. And every contact point with a customer is an opportunity to provide value in the relationship. The other way obviously is to provide the options at the time of the original purchase. Perhaps offer an incentive if the customer buys a “bundle”, or offer extended payment terms.
3. On-sell/Affiliations
If you have completely up-sold and cross-sold your entire customer base, there is always other opportunities. Think about your in-house resources. This about your suppliers. Think about the business network you have. Start to brainstorm if there is anything that you currently have access to through your network that your customers would need. It may not be completely aligned with your products but it may be beneficial to your customers. Here are a few crazy ideas:
· Offer to assist with email marketing with your in-house marketing team
· Your software platform (managed live chat service or other SAAS products) may suit your customers – set up an affiliation and sell it to your customers
· You may have a great contract for utilities given your scale, set-up an affiliation with your providers and refer them to your customers.
Not only will you be adding value for your customers, you are generating a new revenue stream for yourself as well.
