How To Balance Existing Customers And New Prospects

Your current customers are your best single source of new business. They know you, they know your product, they have demonstrated their willingness to purchase. What’s more, you know them, you’ve learned about their needs, and you’ve invested a significant amount of your time in the success of their business. You should work to protect that investment and encourage it to grow the same way you manage your investment portfolio, making adjustments periodically to maximize the return on your investment.

Your current customers are also your company’s most profitable customers. The heavy start-up costs have been absorbed and written off already. The current customers have passed the credit checks, had their account data fed into your computer, been educated about your billing practices, learned how to use your customer support and service staffs, and otherwise incurred the typical back-office expense necessary to start doing business with a new account.

They’ve probably also passed the most expensive stage of incurring initial selling costs. You’ve used the get-acquainted offer, the short-term trial contract, and the sales promotion expense to bring them into the company. You’ve done your basic research, invested your time in preparing the initial proposals, tracked down the decision-makers, and made all the follow-up presentations to make the first sale. Once you’ve done these things, you generally don’t have to do them again. You can skip or abbreviate at least some of these time-expensive tasks.

You can concentrate on keeping the current customer happy and increase your business with them while you go about developing other new accounts. As you’ve probably guessed by now, you have to do both tasks to build a successful account list or territory. There is no rest in sales unless you decide you’re not going to grow your business both ways. And if that’s your decision, you’ll have plenty of time to rest—in the line at the unemployment office.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Customer For Life? Maybe!

Your goal for every customer should be to turn them into a customer for life, a popular concept that’s made the rounds in the last few years. Bowl them over with your service. Become such an integral part of their company that you have your own desk in their office. Know their needs so intimately that you develop solutions before the customers even discover the needs themselves.

Out of all your customers, you won’t have very many with that kind of relationship, but when you do, you’ll profit from it. I’ve been fortunate enough to have a handful of such customers with whom I’ve done business both when I worked for other companies and after I started my own. A few of them have represented millions of dollars in income over the years. You can enjoy the same kind of long-term relationship with your best customers if you practice just one thing: never stop selling them.

They may become your friends; in fact, I hope they do. They may come to rely on your service or products to the exclusion of all others. They may tell you that they’ll always be your customers and sign long-term contracts to prove it. But if you take them and their business for granted, you’ll regret it someday.

You’ll also be sorry if you rely on them as your sole or main source of income. Having one dominant customer is a dangerous situation because there are too many variables outside your control—and theirs. “For life” is a long, long, time.

Situations and people change. What was the foundation for a wonderful relationship two years ago may not mean anything today. Your relationship with your customer for life has to develop and change the same way your relationship with your spouse or significant other evolves over time. That’s the only way the relationship will stay vibrant, alive, and satisfying to both of you.

So never stop selling them. Every time your company comes out with a new product or service, pitch it to your current customers first. If it’s really a “new and improved” model, don’t you owe it to them? If there’s a limited supply, shouldn’t your best customers get first shot at it? That should be one of their rewards for being a loyal customer.

And always look for ways to add value to their current purchases from you. If your company sees fit to offer an inducement to new customers, shouldn’t your best current customers get the same deal? It’s a real slap in the face if they don’t. And if the new business incentive is a small price to pay for a new account, it’s an even smaller price to pay to keep a current one. That’s one of the management dilemmas behind sales promotions.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Continual Selling Cements Customer Loyalty

The best way to make sure the long term customer knows you’re not taking them for granted is to make it a practice to continually sell them. Advertising works best when it’s presented constantly over time. The message and the medium are important, but the repetition of the message—the frequency with which a customer sees the ad—is paramount. Good customer relations are built the same way: continual selling.

As you practice continual selling, watch out for a few pitfalls. In most businesses, long-term orders are encouraged. A contract to deliver the product or service in increments over a period of several months is generally considered more valuable than a series of contracts to deliver the same volume written one month at a time. The security of the long-term contract is often so important that the vendor will grant a discount or other special terms to the customer who signs one. Salespeople recognize the value, too, because they know that it’s much more efficient to sell one contract than twelve.

But there’s a downside risk in long-term contracts, too. The salesperson often believes, either consciously or subconsciously, that they’ve secured all the business they’re going to get from that customer, so they stop selling them until contract renewal time comes around. In some cases (which are all too frequent), the customer won’t even hear from the salesperson again until it’s time to renew. This attitude not only impairs the relationship with that customer, but it blinds the salesperson to many good opportunities in the interim.

I’m sure that your company has a continuous stream of new products, repackaged lines, sales promotions, and maybe even a price change or two. The first place you should prospect to sell these is among your current customers. They’ve already shown their willingness to buy from you, so keep the boiler stoked by continually feeding it new fuel.

Your customer’s needs may have changed or new ones arisen since they signed that long- term contract. The contract itself may have left some money on the table or there may well be a “contingency fund” in the customer’s budget held back just for last-minute opportunities. You’ll never know unless you constantly offer them additions to their contract.

Another advantage of continual selling is that you are trying out new ideas on the customer all the time. That gives you frequent feedback on what the customer likes and doesn’t like, needs and doesn’t need. Whether you sell any add-ons or not, this is very useful information when it comes to renewal time.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Successful Contract Renewal Strategies

If you’ve been selling for any period of time, you’ve learned that contract renewals, even with your very best customers, are far from automatic. That’s why you should develop a renewal strategy that’s as complete as your plan for selling a new major account.

First, when you start working on that renewal, try to move the decision date earlier every time. There’s a real pragmatic defensive reason for this. Just as you monitor your competition, they’re constantly monitoring your accounts, too. And they’re probably just waiting for the opportunity to get in there with your biggest account at renewal time. Can’t you just see them lurking in the shadows?

The best way to foil their attack is to preclude it by locking up the renewal early. If you wait for the prospect to tell you it’s time for renewal, it’s too late. You should be the proactive party in the transaction.

Do your estimate (or re-estimate) of their spending potential, study their needs as you now know them, and put that proposal for the renewal on the table as early as you can. You’ll stand a good chance of getting an early renewal at the best and will have set the standards for the competition at the worst. It’s generally better to be defending your position than assaulting someone else’s.

And when renewal time rolls around, make sure you set your sights high enough. Don’t let your expectations be limited by the size of the last contract. Human beings have a bad tendency to categorize each other. In sales, you tend to sort your current customers into boxes—and the size of the box is not based on their total potential as a revenue source but on what they spent with you the first time you sold them.

This system of classification is even worse when you take over an account that had been handled by someone else, like your predecessor in the territory. There’s a particular danger of improper classification, by the way, with some computerized sales automation systems since they can’t take into account what should be, only what has been. And many time management systems  encourage you to rank your prospects by dollar volume and allocate your time accordingly, so the error can be compounded.

If you sort your customers into boxes based on their previous spending with your company, you’re putting yourself into a box, too. And that box limits the potential for growth in your commission check. You should have no more pre-conceived ideas about your current customers than you do about new prospects. You must not let past spending be the sole determinant of the size of future proposals.

Remember, too, that the stereotyping process works both ways. Just as you’ve classified the account based on its past spending, the buyer has probably classified you based on the size of the proposals you have offered. If you’ve been selling them small deals, you’re grouped (mentally at least) as an unimportant vendor. If the amount they spend with you “moves the needle” on their income statement, you’ll be in a much larger box.

I recommend periodic reviews of current account potential along the lines of the initial research on prospective new accounts described in The Dynamic Manager’s Guide To Sales Techniques. There’s no law that says you can’t do that same kind of research into your current accounts. In fact, you would be doing the customer a real service if you took the time to analyze them that way.

Start with a fresh needs analysis as if you were getting ready to pitch a new account—then add the knowledge you’ve gained during the term of the current contract. Has the competitive scene changed? Has the customer made any changes in their business? The list of questions is endless but they should all give you a clearer map of the route to a sizable renewal.

Then look outside the box and estimate their revenue potential. If there’s a discrepancy between the estimate and their actual spending, you may have identified an opportunity.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.

Don't Miss the First Westchester Digital Summit

The inaugural Westchester Digital Summit will be held on Tuesday, May 14, 2013, according to organizer Chris Dessi, CEO and Founder of Silverback Social.  The event has been named by Forbes as on of the “Four Lesser-Known Conferences That Deserve Your Attention in 2013.” The summit will be a global gathering of the most innovative minds in the digital economy today, bringing celebrities, global digital marketers and the most compelling industry personalities impacting the digital world today to Westchester County Center in White Plains, New York.

With an impressive roster of speakers and presenters including Brett Prescott, Global Marketing Strategy at Facebook, Shripal Shah, Senior Vice President & Chief Strategy Officer at The Washington Redskins, Josh Glantz, VP & General Manager of Publishers Clearinghouse Online, Brandon Steiner, Founder and Chairman of Steiner Sports, Geoffrey Colon, Vice President Social @Ogilvy, Sandy Carter, Vice President for Social Business and Collaboration Solutions, IBM, Michael DiLorenzo, VP of Social Media, Rue La La; Rick Burnes, Product Marketing Director, HubSpot; New York Times and Wall Street Journal best-selling author Gary Vaynerchuk; and digital media impresario, author and educator David Kidder, the innovative summit will bring attendees face to face with the digital change makers of today.

The Westchester Digital Summit will feature a panel discussion led by powerhouse media personalities Dari Alexander, Fox News Anchor and Author; Ed Butowsky, Managing Partner, Chapwood Investments; Jeff Pearlman, author and Sports Illustrated contributor; and Mike Edelhart, CEO, The Pivot Conference, SVP and Chief Digital Strategist Shripal Shah of The Washington Redskins where they will tackle how digital marketing is changing the face of traditional media.

Silverback Social is producing the summit in conjunction with Zanzarella Marketing Consultants. Embracing the drastic change in the way that we, as a culture, aggregate and disseminate information, Silverback CEO Chris Dessi was inspired to organize an event that could offer marketers the proper tools to engage with their clients like never before.

“Through my public speaking endeavors, I have been asked to share my techniques for efficiently engaging in social media at some of the biggest and most celebrated conferences in the country and I see first hand that they are all concentrated in cities. No opportunity exists in suburban areas like my hometown of Westchester,” Dessi explains. “I took it upon myself to create this opportunity for the many local business owners and entrepreneurs that truly stand to benefit from having this caliber of knowledge and insight right in their own backyard. This was the inspiration for the summit, and it will change the face of business in Westchester forever.”

The Westchester Digital Summit will begin at 10AM on Tuesday, May 14^th, and will continue throughout the afternoon with panel discussion and keynote speakers.  General Admission Tickets are currently $215, with student admission beginning at $35 and sponsorship opportunities available.

The event will take place at the Westchester County Center, located at 198 Central Avenue in White Plains, NY.  Tickets can be purchased at westchesterdigitalsummit.eventbrite.com. 

Dave Donelson distill the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.