10 ways to sell more to existing customers. It's the cheapest way to increase revenue!
If your company is anything like the average, it will cost you 10-20 times more to acquire a new customer than to sell more to an existing one. Sometimes, the rush to acquire new customers, supported by incentive schemes and promises of promotion, means huge reservoirs of profitable sales with existing customers are never tapped – at least not by you, but maybe by your competitors.
You wouldn’t tolerate a machine running at 50% efficiency, yet management teams and investors somehow find it easier to accept a customer that’s only producing half of what it should.
Of all the reasons for this, two stand out: you don’t know when a customer is under-producing, and you don’t know how to fix it.
Why don’t you know customers are underperforming?
Management teams don’t know there’s a problem because they’re happy with the customer’s performance. It’s on budget; it’s up on last year; it’s growing in line with the market. The real problem? None of these measures takes into account potential.
Here are some examples of companies who thought their customers – and hence their sales forces – were performing well.
An insurance broker offers 18 different types of insurance to its commercial clients (e.g. personal accident, buildings, contents, motor vehicle, marine and transportation, directors’ and officers’ liability) yet, on average, individual customers buy fewer than two. The company estimated that, if each customer bought just one more type of cover, profits would increase by over 100%.
A paper converter that sells rolls of blue paper to a wholesale chain that use it to clean spillages in their warehouse, yet don’t sell them the exact same product for resale to their customers despite them having the same needs.
A wholesaler sells high-visibility and other personal protective equipment to a County Council but doesn’t sell them the hazard control and safety equipment, such as signs and barriers, that they also need – because the buyer doesn’t know the wholesaler also sells these items.
A consumer goods supplier to Sainsbury’s who doesn’t try to increase sales through their e-commerce platform because they are happy that growth through this channel is already higher than through the stores - despite their share of ecommerce being much smaller than that in stores.
If you are thinking of selling your company (or you’re an investor who wants to exceed the return you promised in the investment case), identifying customer sales shortfalls can increase your profits and your value.
If you’re an investor looking for target acquisitions with high growth potential, finding these gaps during your sales due diligence can give you a huge jump on your ROI.
10 ways to sell more to existing customers
Here are ten of the most common ways to increase sales to existing customers.
Cross-selling means selling different types of product to the same customer. This is what our insurance broker and the high vis clothing supplier did.
Persuading customers to buy a more expensive version of the product or service.
There are examples of up-selling everywhere. Buying express delivery rather than the free standard option; the premium version of a service, like LinkedIn, rather than the free standard; the more expensive antibacterial cleaner with a 30 second kill time rather than the standard 5-minute option.
Helping your customers sell more to their customers.
You can achieve this by creating demand among end-users, training your customer’s sales staff, offering incentives to your customer’s sales staff.
The important point is to see your customers as a link in a chain rather than the end of it.
Steal share from other suppliers to the same customer
Customers will often have more than one supplier for a product or service. Your aim here is to take a greater share of your customer’s total requirements at the expense of a competitor.
Broadly there are two approaches.
The pull approach means creating demand for your products with your customer’s customer so that they specify your product when ordering. You can do this through direct selling, advertising or other promotions. It helps to have a strong brand and differentiation that’s valuable to end-users.
The push approach means making your product more profitable for your customer to sell, usually through lower prices or higher discounts (but it can also be achieved by offering better service or longer payment terms). This only works if your customer helps to generate demand for your products lower down the chain.
In the long-run, the pull approach is usually more sustainable since the push approach can lead to a price war and a downward spiral for profits.
Sell to an additional division
If your customer uses your product in their education division, sell it to their commercial and industrial divisions too.
Sell to an additional region
If you sell it in the south, sell it in the north; if you sell to their UK business, sell it to their French business.
Help customers increase their customer base
If your customer can’t sell your product type to a large segment because you don’t produce the right format, produce the format they need. You can even develop a totally new product for them, if it was worth your while.
Manage customers how they want to be managed
For your largest customer, or those with the greatest growth potential, you might consider a key account management approach to uncover and exploit the latent demand.
For smaller customers, a more hands-off approach might be what they need – make it easy for them to order online rather than having to deal with a rep.
Improve customer experience
Make your company easier and hassle-free to deal with. Even if you are not the cheapest, the lower cost of working with you – because ordering is easy, there’s a named customer service rep who is always available to answer questions, invoices are always 100% accurate, deliveries are always complete and on schedule – mean that customers will prefer you to competitors and are more likely to buy new products and look favourably on your proposals to grow your business with them. (in a future post we’ll make the point that a value proposition is about much more than product and price).
Sell to the people who actually buy
Don’t just deal with the buyer at head office if the regional offices are actually where people place orders. Fish where the fish are.
There are almost certainly other ways for you to sell more to your existing customers, ways that are specific to your unique situation.
Your first step is to be positively dissatisfied with current sales, even if they are on target or ahead of last year. You’ll achieve higher revenue, profits and company valuations when you refuse to settle for what you already have.
Peter Reynolds has 30 years’ experience in sales leadership and general management in Europe and Asia, and a reputation for finding creative and practical ways to increase profitable revenue.
You can email Peter on firstname.lastname@example.org or call him on +44 7857 264720.