More Clients Is Not The Answer

If you think that the best way to grow your business is to get more clients, think again. So many businesses that we work with tell us that their growth issues stem from not having enough clients. But what if the answer to your revenue growth is not about getting more customers, but its really about serving your Top Clients better? What would you do differently?

The truth is, 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 additional income – the clients they already have!

The key strategy in the book The Pumpkin Plan focuses on finding and growing your Sweet Spot – the intersection between your Top Clients, your Unique Offering, and your Systems. If you know who your Top Clients are, you have a Unique Offering that your Top Clients want and need, and you have the efficient systems to reliably deliver that offering, your clients will be willing to pay higher prices for your product or service.

Pumpkin Plan

Here’s the fact that most small businesses miss: it is much cheaper and easier to sell to an existing client than it is to acquire a new one. In his book Never Lose a Customer Again, Joey Coleman notes that “when selling to a new prospect there is a 5 to 20 percent chance of making the sale. When selling to an existing customer, that probability skyrockets to 60 to 70 percent.” If you’re a service company doing a good job, or you’re selling a good product, then your customers already know, like and trust you. This is a major hurdle that you need to spend time and effort overcoming with new prospects. As 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 those 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.

If you’re not convinced, take a look at the travel industry. Airlines offer a range of seating and other higher end offerings, such as special airport lounges, fast security entry, and more because they know that a certain percentage of their customers will pay above, and significantly above, their basic economy class offering. The same is true for hotels, which offer different price points for basic rooms, rooms with a view, floors with higher levels of service and exclusivity, bigger and better rooms and high end suites. They do not offer an equal number of rooms at the higher levels. As the price increases, the number of rooms available at that level decreases.

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!

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Donna Leyens Pumpkin Plan your BizWritten by:

Donna Leyens

7 replies
  1. Donna Leyens
    Donna Leyens says:

    I would love to hear about different ways you have increased your business by selling more to your existing customers, and how this has increased your profits (or not – always willing to hear a counter argument!).

  2. Edwin Soler
    Edwin Soler says:

    Donna, I read this and I’m like OMG! I am currently reading that book and it has BLOWN me away. Because of it, I started an excel spreadsheet that will have close to 800 past and current customers with well over 25 different factors such as total amount spent, how many times have they come back for more orders, etc. Once completed, it’s SO EASY to sort from highest to lowest amount paid per customer. Then I simply look at the top 20% and I know that is where I need to start concentrating more of my marketing efforts. I’ll still reach to the rest but will concentrate on the top 20%. It’s also important to point out that the top 20 % could change over time so it’s important to keep updating a list like this since some will fall and others rise within that top 20%. Thanks for writing this article.

    • Donna Leyens
      Donna Leyens says:

      Edwin, that is so great that you’re doing that! I would love to hear what additional products/services you offer your top 20% and how it goes. One great tip (out of the Pumpkin Plan) is to interview those top 20% and see how they’re not already being served, and provide that to them. Thanks so much for sharing!

  3. Rodrigo Laddaga
    Rodrigo Laddaga says:

    Great comment Donna! this is a critical topic on small business it could be de difference between struggle and thrive. This could change the way a business do business on a total new perspective and with a “small change”. As the Pumpkin Plan mention, most of the time is just about changing 5% of what we are doing and/or how we are doing it, but this 5% could be the difference between a regular small business (struggle) and a colossal business (thrive).

    • Rodrigo Laddaga
      Rodrigo Laddaga says:

      Thanks for that comment, Rodrigo. I love that you pointed out that a small, 5% change can make a huge difference. It’s so true!

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