For any sales organization, prospective buyers come in two flavors: those who have already bought from your company, and those who haven’t. It’s no secret that many companies expend tremendous resources – in time, money, and sales rep blood, sweat, and tears – focused on selling to new prospects. While new customer acquisition is essential to driving sales growth, too many sales teams ignore an often simpler and more cost-effective strategy: focusing on strategies to increase sales to existing customers.
But before you can determine how to get more business from existing clients, it’s essential to understand why this matters:
Reason #1: To Strengthen Your Existing Customer Relationships – For Their Benefit and Yours
Helping your customers achieve their goals, whether financial, operational, or a mix of both, should be paramount in your sales efforts. Whether you are selling to existing customers or new buyers, productive communication is essential from the beginning. This means listening and exchanging ideas to find client solutions. By continuing to be a trusted resource who is responsive to the needs of your existing customers, you can enhance satisfaction and build brand loyalty.
Reason #2: To Boost the ROI of Your Sales Efforts
Do you know your Customer Acquisition Cost (CAC) for new buyers? Whatever it is, it’s almost certainly higher than your CAC when selling to existing customers. Therefore, when you increase sales with current clients, your lower CAC yields a higher Return on Investment. Your marketing efforts – and related costs – are drastically reduced as well. This all adds up to a better ROI. How much better?
A recent real-world focused analysis by McKinsey showed that, when upselling and cross-selling, “overall marketing ROI rose nearly 30 percent,” along with “an increase in overall yearly sales of about 20 percent.” Numbers can vary by industry, market, and company, of course, but the simple point is this: upselling or cross-selling to increase sales with existing clients is ROI-smart!
(But take warning: Don’t aggressively upsell or cross-sell too early in the relationship. This can quickly sour a relationship and undercut the hard work that went into establishing the relationship in the first place. Customer trust is a fragile thing, so don’t push too hard too soon or you risk breaking that bond.)
Reason #3: To Save Time
Time is a precious resource. So is your sales team. Asking your sales reps to always start at ground zero (which, ironically, is the top of the sales funnel) with new prospects is asking them to dedicate often enormous amounts of time and effort to lead prospects deeper into the funnel where conversion rates are higher.
On the other hand, when seeking strategies to increase sales, it pays to remember that selling to existing customers gives your reps a head start: The need has been identified. Solutions have been deployed. The relationship has been established and is being nurtured. When you direct sales efforts toward existing customers, you “Advance to Go” and simplify problem-solving for your client. Everyone wins because everyone saves time – and time, of course, is money!
Reason #4: To Support Sales Efforts to New Prospects
It is always important to cultivate balance in your pipeline, with different prospects of different types in various stages of conversion. Selling to new customers must always be part of the equation if you want to foster long-term growth. One way to financially support selling to prospects near the top of the sales funnel is, perhaps ironically, to offset these lower conversion probability efforts with cost-effective, efficient, high-probability efforts aimed toward existing customer conversions.
Another important way that nurturing and expanding current client relationships is that these loyal and satisfied customers tend to be great sources of referrals to new clients!
Reason #5: To Improve Your Sales Efforts to Customers of All Types
Success breeds success. Thus, learning from what worked to secure past customers can inform and enhance how you sell to new and similar customer types. CRM data and customer specifics can help, but it can also be advantageous to simply talk with your current clients! Because communication has already been established, it should be easier to find out why they bought from you in the first place and why they continue to support you. This ongoing dialogue can provide easier insights to help refine your processes in ways that can increase conversion rates at all stages of the pipeline.
The Bottom Line:
Sales is a balancing act, both at the strategic and process levels. As a strategy, it is essential to balance selling to new prospects with selling to existing customers for sustainable growth. Very often the reasons and methods for targeting and selling to each group are different. But the goal is clear for both targets: to offer and deliver real solutions that create a foundation for long-term provider/client relationships. And loyal customers, in turn, often provide easier and more cost-effective sales opportunities.
For a closer look at how sales funnel activities relate to conversion rates, click here. For insights into how well your sales organization is performing compared to benchmarks for excellence, take our free Sales Agility Assessment. And to learn more about how to improve your sales pipeline balance and related processes, reach out to a Sales Xceleration Advisor today, or contact us at 844.874.7253.
