Revenue Growth From Customers Is Often Easier To Mine Than Revenue From Prospects
When you start looking at revenue generation, sales and marketing leaders almost always lean on revenue from new customers. But that is the most expensive and hardest type of revenue to generate. These people don’t know you, your company or your products/services. They are going to need a lot of nurturing, and it's going to take time and money to deliver that revenue.
But there is another source of revenue, and it's typically an underserved part of your company when it comes to revenue generation — your current customers. You have a 5% to 20% probability of selling services to new prospects, but you have a 60% to 70% probability of selling additional services to current customers, according to data from Help Scout and Marketing Metrics.
We surveyed our own clients and prospects, and we found only 24% reported that their customers purchased the full suite of products or services. This leaves a huge opportunity to drive revenue from the people who already know, like and trust you.
Here are some recommendations for activating your current customer base to help you hit your revenue goals.
Speed Is Everything
When it comes to customers, how fast you respond to their challenges is critical. If you leave a customer unattended and their issue is urgent, they could kill you on social media.
53% are irritated if they don’t speak to a real person right away. (NewVoiceMedia)
You must be able to respond to their outreach regardless of how they connect, and you have to do so quickly. The longer you wait, the higher the probability of a negative service experience.
Provide clients with a wide variety of connect options, including phone and email. But consider online chat and text options, too. Let your customers pick the channel that is the easiest for them and the one that is the most comfortable.
Make sure you're monitoring these channels. Nothing is worse than emailing customer service only to have no answer for hours (or days). I recently sent an email to Sunglass Hut regarding an overnight delivery charge and heard nothing for 24 hours. The longer I waited, the more upset and frustrated I became. This is what you want to avoid. A simple response that said “we're looking into it” would have been enough. This is a great example of a service failure for a loyal customer.
Communication Is Everything Else
Some companies communicate very effectively; others, not so much. Think about how you feel when you get a crappy email or a snippier-than-necessary response from a customer service person.
Just like sales and marketing need to create disruptive, compelling and emotional messages, stories and copy for their email communications, customer service reps need to provide remarkable support. How many times have you received a shipping notification? Do you ever find anything interesting, educational or even remotely close to helpful beyond the obvious tracking number?
Some of you might remember a company I used to talk about years ago called CD Baby. Still around today when most music is digital, this company specializes in CDs of less popular musicians. Order a CD from them and their shipping notification looks like this:
Thank you so much for your order. The team at CD Baby loves the item you selected; it’s one of the team’s favorite new bands. We went into the warehouse, hand-picked the CD off the shelf and put it into our special velvet-lined sleeve for delivery. We then carefully packed it up in a box and walked it down to the shipping department to wish it well on its journey to your home. You can keep track of your package with tracking number 214-777-7777. We hope you enjoy the music as much as we do.
Your friends at CD Baby
Wow, right? Not only are you impressed, but you might be forwarding this message to friends who also like less popular bands and CDs. This is one way thinking through the service experience the same way you think through your sales and marketing experience can drive revenue.
Businesses Are 100% Transparent
Today, business is much more transparent than ever before. People are checking out reviews on your business right now.
If you don’t have any public reviews yet, give it another few months and you will. People are less interested in checking references and more interested in reading what people wrote about your company on the web. They view these reviews as objective.
As a business leader, you have to get out ahead of this trend. You do that by actively controlling, influencing and monitoring what people are saying about your business. You make this part of your process. Instead of letting it happen to you, you make it happen.
For example, you could develop an advocacy marketing program, where happy clients are encouraged and rewarded for saying positive things about you. You participate in this by actively monitoring what people are saying and responding when appropriate.
Consider Glassdoor, where most of the people leaving your company like to provide one last parting gift a poor review. Had they given you the same feedback while they worked at your company, you might have had a chance to respond to it or help out with their issue. Instead, they wait to do it anonymously on their way out. Welcome to the new world order.
We have to make sure our service experience is exceptional, so there are far more positive reviews than negative reviews, and more people saying wonderful things about your company than the one or two people saying negative things. Even the best restaurant on the planet has a handful of negative reviews. Even the best company in your industry is going to run into a challenging customer from time to time. You have to make sure that your true story is out there and you’re actively managing it.
One of the best ways to actively manage your customers' experiences is to ask for feedback more frequently.
The more you ask, the earlier you get ahead of any issues and prevent them from becoming a negative experience. The more you ask, the more data you collect to show trends and identify service challenges. The more you ask, the more opportunities you have to talk about advocacy and request a positive review. The cycle of asking, responding and asking again helps ensure you’re always putting your customers’ experiences first.
That is going to produce a lot of positive reviews, advocacy and revenue-generating stories in your industry.
Create Proactive Campaigns Targeting Prospects
Even your happiest, best customers are busy, and they don’t always pay close attention to your marketing. They might not be aware that you provide additional services. This is especially true if the one time a sales rep discussed these services with them they didn’t have any pain. In that case, they might have dismissed the conversation completely.
But now that something has changed and pain is acute, their awareness of your full suite of services would present an opportunity for your company to drive revenue. You need to have active marketing campaigns for current customers.
Consider campaigns that help with upselling customers to the latest and greatest versions of products or services they might already be using. Consider campaigns that introduce them to add-on products targeted to companies like theirs.
This example shows exactly how it works: One of our clients is a large, regional John Deere distributor. They never actively marketed to their existing clients. People who bought tractors were rarely contacted after the initial purchase. Yes, people came back in, but it was 100% reactive.
With little effort, we created an email campaign that presented additional products based on previous purchases and a campaign that promoted ongoing services specific to products purchased. This delivered a 90% close rate on new business and helped lead to the best March in the company's history. This kind of customer-focused, service-oriented marketing works, and you should be doing something similar.
Integrate These Closely With Sales And/Or Customer Service
Yes, your integration and alignment challenges just became exponentially more challenging. Before you had to align marketing and sales. Now you have to align marketing, sales and customer service.
Unfortunately, if you’re looking to redesign your entire customer experience, this is a nonnegotiable. When you run campaigns to customers, the service team has to be integral and aware. When you start asking for advocacy, your service team might be on the front lines asking a client to write a positive review. These are all new motions and new playbooks designed to take full advantage of your customers' experiences.
New revenue from businesses you’ve never worked with before is great. I’m not dismissing that revenue generation strategy in any way. What I am saying is that you need to take advantage of the opportunities available, and right now, revenue is locked up in your customer base. You can unlock this revenue in less time and with less effort than focusing on new companies that don’t know, like and trust you.
By upgrading your service experience, by integrating advocacy into your plans, by creating ongoing communication with existing customers and by starting to track how satisfied your customers are, you'll be able to influence the net new revenue from a group of people who already know, like and trust you.
That revenue is going to be easier to generate, faster to realize and more profitable, because the cost of acquisition is dramatically lower.
In their annual SaaS benchmarking survey, Matrix Partners and Pacific Crest Securities found the median customer acquisition cost (CAC) for $1 of new annual contract value (ACV) was $1.18. This means that it would take a company more than a year to earn back the costs of acquiring new customers.
The median CAC per $1 of upsells was $0.28, or about 24% of the cost to acquire each new customer dollar. The payback period for upsell revenue is only about one quarter, almost a year less than for new customers.
This is dramatic data that should not be ignored simply because you never looked at your customer base this way or you never actively targeted current customers for revenue. This is how you generate profitable revenue.
Square 2 Marketing – Revenue Is Earned Through Experience, Methodology And Insights!
Posted By Author Mike Lieberman, CEO and Chief Revenue Scientist
Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.