27 Sep Don’t Define Your Marketing Success by New Leads
Most people would agree that marketing’s primary purpose is generating leads at the top of a sales funnel. Marketing success is evaluated on the ROI of activities: the number of leads and qualified leads generated and how fast those conversions happen. What happens after that is usually up to another team or department entirely.
But this focus on generating new leads is leaving as much as 65% of potential business behind. What?!
Marketing Success Means Converting Existing Clients
Yes, this is happening when marketing activity is focused on new business. What about marketing and selling to existing clients? When you’re looking at new business acquisition costs, winning new business from existing clients is, of course, significantly cheaper and therefore more profitable. Remember you’ve “sold” them before.
Forbes cites a study from Bain & Company (out of Harvard) that shows a 5% customer retention rate can translate into 25 – 95% more profitability. This study is a little out of date, but I think we can all agree that a client who has already purchased is both a) more likely to purchase again and b) much less expensive to convert into new opportunities. Even if you don’t have a product or a service that lends itself to repeat purchases, existing clients can still yield potential new business.
Of course, this model for marketing success is dependent on your product or service being a quality one. If it’s not, please stop right here and tend to that before you spend any more money on marketing.
Increase Your Revenue, Your ROI and Your Profitability
So why do so many organizations put all their marketing dollars into chasing the shiny new thing? How often do marketing budgets include specific funds allocated for generating new opportunities from existing clients? Sadly, not often enough.
As the numbers above tell us, the acquisition costs for brand new business compared with new business from existing clients don’t even compare when we’re talking about profitability.
A Bird in the Hand Really IS Worth Two in the Bush
Remember that old saying, “A bird in the hand is worth two in the bush”? What if marketing budget allocations reflected that? What would happen if you shifted some marketing dollars into generating new business from existing clients?
And here’s another idea: What would happen if you spent just a little of that marketing budget training account managers, client services managers and other employees in client-facing roles in basic sales skills? I’d be willing to bet that the increased profitability realized would more than pay for itself.
It might be so successful that you begin reaching your business goals faster – or even exceeding them altogether. Now there’s a thought worth contemplating.
Meet guest blogger Kim Fredrich
Kim Fredrich helps businesses grow sales revenues by helping “non-sales” staff get comfortable with sales and selling. Her one-on-one sales coaching, consultancy and workshops focus on building relationships and having conversations with purpose. She has conducted workshops for Howard University’s In3 Incubator, Hera Hub and the Maryland Women’s Business Center in addition to her private clients. Connect with Kim here.