Helping Your Small Biz Grow

Selling More to Existing Customers Is Vital to Profit

Selling More to Existing Customers Is Vital to Profit

Let me ask you a question.  If you had $1,245 to invest in marketing, how would you put it to work?

I know that you were probably expecting me to complete the “If you had $1,245 to invest in marketing….” with something like “I would recommend you do a marketing plan.”  While this is the case, that’s not what I want to talk to you about today.

Instead, I want to pretend that you already had a marketing plan  or that you were me and you had to design a marketing plan for a client with only $1,245 to invest in marketing.  In other words, you had to make some choices as to where to put that money to produce the biggest bang for the buck.

What would you do?

Before you jump to try to answer that, you need to ask another question.

Are you an established business or just starting out?

Why should that make a difference since you are still confronted with the same budget challenge?

Well, the answer is simple.  If I had a business with an established customer base, I would probably recommend you invest about 60-80% of that marketing budget to reach out to your existing client base and between 20-40% on trying to get new clients?

“What? Have you been drinking?” you may ask.  “Shouldn’t you be focusing your attention as a business on getting more people in the door rather than trying to spend money on people who are already your clients?”

And the answer is NO!

The worse thing you can do as a business, in my opinion, is to ignore the people who already know and like what you are doing.  The reality is, however, most businesses do exactly that.  And it is costing them thousands of dollars!

(Perhaps I need to mention that marketing dollars don’t always mean advertising dollars.  They can also be used to reward existing customers and enable them to use your business even more.)

The more people use your business and like it, the more they are going to do some of your marketing for you.  With the right encouragement by you, they are going to talk about you on social media, to their friends and family, and people they work with, especially when someone is looking for your product or service.  And that third party credibility is going to have more of an impact that most of your advertising is going to do to people who haven’t yet experienced all you have to offer.

So, you are going to accomplish what you wanted, which is more customers or clients, without the hassle of dealing with too many new clients or customers who are not yet familiar with how you do business.  You are going to get a greater return on your investment too.

Don’t believe me?  Perhaps an example will help.

(Note, I have changed the amounts, but not the percentages, to protect the privacy of my client.)

Last month, Darb did two direct mail campaigns.




The first was to SOME of his existing customers and offered them a loyalty rebate based on what they spent the past year.  He invested $3,000 in the campaign, including rebates and postage.  From that investment he generated $17,000 in revenue, after taking account the mailing and rebates.  The Return on Investment was 566%!  Assuming a 50% profit margin, he made more than 280%!  And he also got one new customer immediately.

The results for the second campaign were not as good, at least upfront.  He invested that same $3,000.  From that investment he generated $2,000 in income.  So he had a return of -33%.  The positive side is he got seven new people in the door.   It remains to be seen whether they will become long-term customers, but based on how he runs his business, there is a good chance.

Now, this client, has the marketing budget to reach out to old clients and get new clients.   While the results of the first mailing to get new business aren’t great, there is enough there that, with some improvements in the piece and the repetition factor, the decision to continue with it was made.

The results show, however, that the biggest return came from reaching out to existing clients.  And doesn’t that make sense?  Aren’t our warmest and closest relationships with those we have known for a long-time?  So, that’s where we need to devote our time and energy to on a consistent basis.  If we don’t, our lives will suffer.  In the corporate world, our businesses will suffer.

Now, for a business that is just starting out, the challenge is different.  Your dollars have to be devoted on getting new customers and clients.  So, you need to reverse the percentages until you have a sustainable base of clients that you can take care of well.  That takes time.  But once you get there, you need to adjust your focus.  I hope that happens for you sooner rather than later.

And remember, don’t ever ignore your current clients.  They are your gold and will go somewhere else if not treated with respect.


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