Why there is a hole in your business

Why there is a hole in your business

This is Part 2 of a series of 3 posts that looks at one of the most effective ways of raising profit in your business
Communicating with your existing clients

In yesterday's post I looked at how clients leave a business without the business owner knowing about it. I put this down to two things:

1. An ignorance about client neglect and why communication with clients matters

2. New client euphoria

(See: "There could be a huge hole in your Business")

When a business owner doesn't know why their existing clients are their most important asset, they will probably experience 'new client euphoria' when new clients contact their business. This process creates 'The Gap'. The Gap is where clients leave your business and you lose money. Today, I am going to look at how a change in thinking needs to occur about the true source of business profits. This change of thinking will help to plug 'The Gap' in a business.

Consider these two paradigms:

"It is 20 - 25 times more likely that an existing client will buy from you rather than someone new."

"Existing clients cost nothing to acquire, new clients can be expensive."

These paradigms are often quoted and studied in business school and many business owners are at least familiar with both of them. What most business owners do not do is realise the full implications of these two observations. They ignore them as if they have no practical implication.

It is very important to understand that these numbers are not merely observations; they are realities that are critical to your business success. If they are ignored the business will fail. If either paradigm is not applied to your business you will most likely spend money on advertising instead of sending birthday presents or trophies to clients who have achieved something. There is, however, a far bigger loss involved when a business prioritises new clients.

If existing clients are not sold to then money is lost.

A business should be finding new ways of recognising, rewarding and selling to its existing clients

Making more money from existing clients is not limited to upselling. It is a creative process that should be at the heart of a business. A reward strategy for those that refer new clients is very powerful, as is providing a 'high-end' service to your wealthier clients. Different strategies of selling to your existing clients are virtually unlimited. The point is that most businesses jeopardise this crucial stream of income by fixating on obtaining new clients. The problem of losing money is compounded when ineffective advertising is added to the equation.

For several years 'traditional' advertising has, at best, become significantly less effective. At worst, it is a complete waste of money. The decrease in efficacy of traditional print advertising has drifted into Google advertising. The rate of return simply is not there. This makes a creative, inspiring and profitable strategy for selling to existing clients even more important. The diminishing returns from advertising also mean that new ways of finding new clients need to be found.
For sometime the inherent weaknesses of SEO have been exposed. People are simply not engaging with material that has been optimised for search engines in the way they used to. Stale, duplicated or spam based content is simply not attractive to anyone any more. Old SEO strategies simply put you at the top of a list and charge you for the privilege. (See "The End of SEO" & "It is time to be more interesting").

In tomorrow's post I will be looking at creative strategies that you can employ to obtain new clients. These strategies will work alongside and augment the strategies you employ for your existing clients.

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Apryl Parcher

REALTOR® | Licensed Delaware Real Estate Agent | Keller Williams Realty | Your Delaware Dream Home Awaits!

8y

Good points, Dan. This is just one of the reasons that businesses need to pay closer attention to their existing customers on social channels and concentrate on creating great customer experiences. Your existing customers can be some of your best brand advocates if you treat them well. Too many companies just aren't getting the implications of this--especially on social.

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Jason Finch

Managing Director and Independent Financial Adviser (IFA) at Pebble Financial Ltd

8y

This is a really good post Dan Travis. Could I ask where this stat comes from? "It is 20 - 25 times more likely that an existing client will buy from you rather than someone new."

S. Larry Schlesinger, MD

Board Certified Plastic Surgeon - The Breast Implant Center of Hawaii

8y

Interesting piece Dan Travis.

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Liz Bardolph

Accredited Aesthetic Civil Expert Witness

8y

Thanks for this Dan Travis - Making more money from existing clients is not limited to upselling. It is a creative process that should be at the heart of a business" - I think this is very important point and one that is overlooked by businesses.

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Dan Travis is spot on with this article, I have seen double growth in my Tennis business since dedicating 75% of my time to communicating with with my existing customers. The knock on effects are referrals, which are key to my growth, this wholey due to developing good relationships with my customers.

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