The typical approach when looking at generating more profit for most people, is to focus on lead generation and getting new customers.
Yet it is a well-known and proven fact that it is cheaper and easier to get existing customers to buy more from you – between five and eight times cheaper – than it is to generate business from someone who doesn’t know you.
So why is it so common that the focus is on new customers?
Part of the problem is that our natural tendency is to stick with what we know, rather than stepping out of our comfort zone. Learning how to develop profitable client relationships isn’t exactly difficult, but for many business owners it is something that IS outside their comfort zone, and in a lot of cases they don’t really know how to approach it.
But building profitable business relationships is a lot like dating…
If you’re looking for a long-term, meaningful relationship, then you are not likely to go to a bar, start chatting up someone you like the look of, and then go all-out to get them into bed with you.
You’re much more likely to start talking to them, to get to know them, and then ask them out on a date. One date progresses to a second date and then onto a series of dates, which ultimately end up in a meaningful relationship.
And so it is with business…
If you offer your product or service to a business who has never had any dealings with you before (nor has ever heard of you), then it is very unlikely that they will jump into bed and immediately buy from you, without having got to know, like and trust you beforehand.
They need to be wooed.
Now I’m not saying that you don’t have to focus on generating new business and getting new clients – every business has a natural attrition rate where they will lose customers to their competitors, and there are a number of reasons why this happens.
But “one-stop” or “scatter-gun” marketing brings haphazard results at the best of times, while focusing on existing clients and what their needs and wants are, is far easier and a much better way of spending your time, money and effort.
Just for a moment, imagine you are sitting on a rowing boat in the middle of a big lake…
You have just noticed that the boat has sprung a leak.
Luckily you have a bucket on board, which you use to start bailing out the water.
Because you are only focused on getting the water out of the boat, and not doing anything about the root cause – the hole – then the hole in the boat gets bigger, and you start to find that the water flows in more quickly.
Suddenly you realise that you are having to bail out faster, with a lot more effort just to stop the boat from sinking.
An alternative approach would have been to see if you could find something with which to plug the hole, or at least stem the flow of water into the boat.
Yes, you would still have to bail the water out, but you would be able to do so a lot easier and with a lot less effort.
For the majority of people the instant reaction is just to start bailing, and then they find they have to keep bailing just to stay afloat.
In business it is far easier, much less costly and a lot less effort to build better client relationships with your existing customers, to stop them leaving you in the first place – a 5% reduction in the number of customers leaving you, can mean as much as 35% increase in bottom-line profit, sometimes even more.
So, are you ‘company-focused‘ where you are looking at what you need from the customer or do you want to be ‘customer-focused‘ where you look at what the customer wants and needs first and then work out a way to deliver a solution?…
… a true win-win.
Taking this approach is not as difficult as you might think, yet you will find the results you get – and the money you bank – far more appealing.
If you would like to share any of your personal experiences, observations or the results you’ve achieved using these or similar tips, please leave your comments and/or thoughts below. I always love to hear from you:
Featured Photo by Timo Stern on Unsplash.com