I first learned of Russell Conwell years ago when listening to a self-development tape from Nightingale-Conant. Conwell became famous for a speech he would go on to deliver more than six thousand times around the world. In his speech, he recounts the story of Al Hafed, a moderately successful man who, after hearing about diamonds and the riches they could bring him, leaves his home and his family in search of fabulous wealth. After searching the world over for the riches he never finds, he dies penniless and heartbroken at having never achieved his goal. Following his death, it was discovered that the farm he sold was sitting on top of one of the most lucrative diamond mines ever discovered. What’s the morale of the story? Remember to look in your own backyard for the acres of diamonds you are sure to find.
In most sales organizations the focus remains on securing new accounts with less emphasis placed on developing opportunities inside current accounts. Yet, your customers are the acres of diamonds waiting to be mined and developed into the goldmine they truly are.
There are several areas you can focus on to drive revenue and growth.
- Increase the number of customers you serve.
This is where salespeople are typically spending their time. Marketing too. Pressure is high to consistently drive new business into the pipeline. That gets expensive. In the Harvard Business Review article – The Value of Keeping the Right Customers – author, Amy Gallo reminds us that new customer acquisition costs are 5 to 25 times more expensive than the cost of retaining an existing customer. Companies make sizeable investments in chasing after new business, and research done by Frederick Reichheld of Bain & Company revealed that the probability of converting a new lead is 5% – 20%, at best. A reduction in the resources used to constantly chase new deals is worth considering.
- Increase deal size and win rates with new and existing customers.
Even a small bump in deal size can increase revenue considerably. Increasing deal size and improving those win rates relies on a salesperson’s ability to demonstrate true value throughout the buying process. Pitching product features isn’t bringing value to the table. In The RAIN Group’s whitepaper – Increase Win Rates and Beat Your Sales Goals in 2016 – they say, “When sellers uncover needs thoroughly, craft the right solutions, inspire buyers with ideas, and communicate value persuasively, they can increase their average size of sale considerably.”
- Develop repeat business with current accounts.
When you already have a positive relationship with a customer, a more effective way of growing revenue is to continually mine for new sales opportunities with them. Doing so reduces the investment needed to constantly attract, educate and convert new customers. Reichheld discovered in the course of his work that the likelihood of converting an existing customer into a repeat customer is 60% – 70%. If new lead conversion averages in the 5%-20% range, it is clear from the numbers that focus on winning repeat sales with existing accounts should command more attention.
- Reduce account churn.
After all that effort, expense and time spent acquiring new customers, many of those relationships die on the vine due to lack of attention. Invariably what tends to happen is that sellers get complacent once a deal closes, running off to chase new business, while ignoring the customers they worked so hard to close. Customers have choices. They can, and do, leave. Estimates vary depending on the industry and the type of business, but a typical business may annually lose about 15 to 25 percent of its customer base.
Jill Avery, a senior lecturer at Harvard Business School and an author of HBR’s Go To Market Tools defines customer churn rate “as a metric that measures the percentage of customers who end their relationship with a company in a particular period.” Many companies measure churn annually, however, you might also measure by month or quarter depending on your industry and the type of product you sell. Often companies will focus on the percentage of customers retained, because it sounds more positive. Looking more closely at why customers choose to leave might be more important than understanding why they opted to stay. Opportunities may be uncovered that you had not considered.
- Reawaken dormant customer relationships.
All businesses lose customers, but few seem to notice or even measure how many of their customers become inactive. What’s the point, asks Robert Clay of Marketing Wisdom, “of dedicating massive resources to generating new customers when 25%-60% of your dormant customers will be receptive to your attempts to regenerate their business if you approach them the right way, with the right offer.” Now might be the time to contact customers who’ve gone dark. That can be as easy as picking up the phone to let them know you appreciate their business, reconnecting with them on LinkedIn, offering to update them on new industry trends, or to find out why they are no longer buying from you. It may not be what you think. As the old saying goes, out of sight, out of mind.
Should salespeople be prospecting for new business? Of course. But before dashing off in the constant search for new deals, remember that your customers are your own acres of diamonds. Why chase something out there, when all you need is right in front of you!