If you think that the way to grow your business is to get more clients, think again. There’s another, better way to grow you income. Many business owners are so focused on getting more and more clients, they ignore their most profitable source of income – the clients they already have!
Existing clients are much cheaper and much easier to sell to. If you’re a service company doing a good job, or you’re selling them a good product, then they already know, like and trust you. This is a major hurdle that you need to spend time and effort overcoming with new prospects. And time and effort equal money, they’re an expense.
Because your existing clients have already bought something from you, they are much more likely than a stranger to buy from you again. Spend your marketing time and dollars on current and past clients to yield a much higher percentage of purchases.
Your client list is easily accessible to you. You do not have to spend time and money “finding” them, through ads, social media, public speaking, etc. You can contact them directly through email or phone. And because they know you, and are already a client, they are much more likely to read your email or answer your call than a stranger is!
Perhaps you have heard of the 80/20 rule? This rule applies throughout life – in nature, in business, in the world in general. It basically says that 20% of your efforts produce 80% of your results. In this case, it has an interesting application. We know that 80% of your profits are going to come from the top 20% of your clients. Those 20% are the ones that know and love you. They are willing to spend more with you, as long as they perceive that what you have to offer is worth the price that you are charging.
The key is to identify your top clients – the ones who spend money with you, refer business to you, talk up your products on social media, who are easy to deal with and don’t take up a disproportionate amount of your time and resources. (Hint: “problem” clients who are always complaining and taking up your customer service time are never top clients, regardless of how much money they spend with you). Once you identify these clients, spend your time and energy developing higher value offerings for them.
In his book “80/20 Sales and Marketing” Perry Marshall demonstrates the “Power Curve.” The Power Curve reveals that if you introduce higher value, higher priced products and services, 20% of your customers will be willing to pay 4 times what they are already paying you, as long as your offering is seen as worth it. In other words, if you have 100 clients paying you $1,000 each for a service, then 20 of them would be willing to pay you $4,000 for a better, higher end service. And of that 20 clients, another 20% – 4 of them, would be willing to spend $16,000 with you. And if you could split a person into fractions, .8 of them would be willing to spend $64,000 with you.
The travel industry gets this concept really well. Airlines offer a range of seating and other higher end offerings, such as special airport lounges, fast security entry, etc. because they know that a certain percentage of their customers will pay above, and significantly above, their basic economy class offering.
If you are looking for more, higher profit revenue, try looking first within your own client list. Spend your time developing a range of product offerings, and identify those most likely to purchase your highest end offering. Going back to the previous example, if you have a 100 clients paying you $1,000 each, and you want to increase your revenues, by $64,000, would you rather spend the time, money and effort prospecting for 64 new clients to pay you $1,000 each, or work at a higher level with 4 of your existing best clients who will pay you $16,000 each? I know which I would prefer!