Business ownership is a never ending chase after new revenue. If we don’t get new revenue we won’t get revenue growth. And if we don’t get revenue growth we will get revenue decline. And revenue decline is a nasty thing.
But where should we focus our marketing and sales strategies. All too often business owners are all over the map. Looking for new customers; trying to get existing customers to buy more; creating new products; rushing here and rushing there. With so many efforts going on at once the results are often diluted.
So we have created the Revenue Growth Quadrant (see below) to help our clients focus their strategies in the right place.
The term product is being used in its generic sense. It encompasses physical products and services.
Sell existing products to existing customers
This is without doubt the “safe zone”! Your existing customers love you and your products or services. They see the value and happily write cheques to your company. So why not just focus on existing customers and thrive with that? Because some of them will leave you! So there must be strategies dealing with customer service or customer education around products they may not have bought yet. A classic example is the retail industry placing point of sale products right by the cash register.
Sell new products to existing customers
One way to prevent customer leakage and have your existing customers buy more is to be constantly finding new products for them. BUT, and this is a big but, make sure the new products are consistent with your core business and make sure they reflect your company’s mission. If you buy your products for resale then there should be strategies to search out new suppliers; to attend trade conferences. If you develop your own products then include new products in your plans. However new products are worthless if nobody knows about them. So they need to be supported by marketing strategies like launch campaigns, advertising, viral marketing etc.
Sell existing products to new customers
If your business is in its early years the chances are high that you don’t’t have enough customers. However, if you do have enough customers the reality is you will lose some; some estimates are as high as 30% of your customers leave each year. So this option should be part of the mix. You must be executing strategies that bring in new customers; for example, networking, cold calling, referral programs etc.
Sell new products to new customers
Selling new products to new customers is often the way to bring in new customers. There are those out there who know about you but have no need for your existing products. The new product might be just the thing they want! But unless you tell them about it they won’t know they need it; so tell them! Strategy examples include Groupon or a Steve Jobs type fanfare launch. Or more modestly some advertising supported by email sequences.
So when you are creating your plans for revenue growth bring out the Revenue Growth Quadrant to make sure you have strategies for each quadrant. You need your existing customers to buy more and you need new customers to replace those that wander off.
You need to add new products and you need to constantly inform your customers about your products they haven’t yet bought. The other day I was working with a client who was extremely upset because one of her customers had gone to a competitor for a particular service. Why was she upset? Because her company offers the same service but her customer didn’t know about it!