Organizations that make sales to potential customers and then move their sales team to look for more customers could be missing on the value that could potentially be generated from post sales service and product offerings.
One could not only build brand loyalty and retain more customers but also generate more revenue through support / maintenance activities – And also by suggesting and selling products that could be a natural extension of sold products and of interest to the clients. One of the key tool at hand that could be of significant help is customer feedback and how the team is reacting to it. Its important to hear out the customer and resolve issues in the existing product before trying to sell new product to the same customer or selling same product to anyone in the existing customer’s network.
Consider these stats mentioned below, on recurring revenue opportunity available with strong customer retention and after-sale maintenance and services annuities, which are actually being reported from a blog on Customer Lifetime Value:
• It costs 7 times more to acquire a new customer than retain an existing one (Source: Bain & Company)
• A 5% increase in customer retention can increase profits by 25% (Source: Bain & Compay)
• The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%. (Source: Marketing Metrics)
• 30% of new products are not covered by contracts and 50% of original contracts are not renewed. (Source: McKinsey & Co.)
• Companies growing recurring revenue grew revenue 20% faster and enjoyed 25% higher profit margins than their peers.
• Recurring revenue on average accounts for 30-40% of revenue and 50% of profits for technology companies (Source: Morgan Stanley)
• Customer profitability tends to increase over the life of a retained customer (Source: Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy)
Efforts undertaken to add more and more logos on the business list are good investment, however, the real measurement of how the business performed, is not limited to one time sales with a customer and realistically covers the overall value generated during a customer’s lifetime.
Focusing on intangible services and benefits are as important as focusing on the tangible ones. A CEO of a very successful kitchen appliances manufacturing unit mentioned to his sales team : You are allowed to drop a call from a new customer or me or anyone seemingly important , but do not drop a call coming a from an existing customer who bought a product from you. Speak to them, support them , take necessary action until the customer is happy again.
While buying a cake I look at the pretty designs of icing on it, but what defines whether I comeback to the same vendor to buy another cake is the after taste it leaves in my mouth. Though, once I go back to the shop I may again start comparing the icing designs — trusting that cake under it is worth it!! 🙂 🙂