It is a well established fact that reselling to your existing customers is the best way to maximize your profits. In this article, I shall elaborate on the finer points of this technique.
Most businesses are out to generate new leads. Their primary aim is to attract as many customers to their business as possible. As a result, all of their advertising and promotion efforts are modeled to generate a greater number of prospects. This, however, is a cardinal mistake that can spell doom for any particular business.
If the last sentence seems a bit too exaggerated, it is time for you to wake up and smell the coffee. I have personally seen the gradual decline in sales figures for many businesses trying to create new business.
The first impression is the last impression:
Let's look at the importance of the existing customer base from another perspective. Usually, the first purchase made by a customer is actually a test made by the buyer to evaluate your ability to deliver. And it doesn't represent the total capacity of a customer to do business with you.
If you are able to deliver as per your promise and in accordance with the customer's requirements, it is a sure-fire indication that the customer may return. The customer has faith in your product or service and there is no reason why you should not use this to you and your customer's mutual advantage.
Now, I state below a tried and tested method of dividing your marketing efforts for you to understand and implement. If you follow the this, you can rest assured that this course will be worth tens, even hundreds of times what you have paid for it.
1. Devote 60% of all your marketing efforts towards reselling to your current customers.
2. Spend 25% of your marketing efforts in converting dormant customers to active buyers.
3. 15% of your marketing should be devoted to gaining new prospects.
However, it is important to keep in mind that the above proportions may vary depending on the stage of development of your business. If you are just setting up your business, almost all your marketing energies will go towards developing new clients. These figures will continue to fluctuate for about two years, beyond that, your most lucrative profit center will be your current customer base!
If you actively persue follow up sales to your current customers, instead of treating them as one shot single sales, you will soon discover that your customers have a life time value (LTV) far exceeding the single sale. The life time value of a customer is defined as "the total value of your average customer over the entire period that they're likely to do business with you."
For example let's say that your first sale to a customer is generally $50. If you treat every customer as a single sale and do not make any follow up offers to that customer, then that will most likely be the lifetime value of your customers.
Now let's assume that you understand the lifetime value of a customer, so you continue to follow up with you current active customers and make them additional offers of increasing value and that your customers are on average active for a period of three years. Over that period of time your average customer buys $1,500 worth of products from you. Now the lifetime value of your customer is $1,500 instead of $50. Knowing this figure will allow you to much more accurately judge what you should be willing to pay to acquire a new customer.
There is one additional term associated with customer value that you should also be family with and that is Total Customer Value (TCV). You can think of total customer value as the lifetime value of a customer plus the value of the number of new customers they refer to you. Thinking of customer value this way will encourage you to develop some sort of referral system to encourage customers to refer their friends, family, or business colleagues to you. Realizing what the LTV of your customers is will help you determine how much you should be willing to spend to acquire referrals from your customers realizing that referral leads are your best leads with the highest level of conversion to active customers.
Treat your customers right, follow up with additional back-end product offers and establish a referral system and watch your business growth accelerate at lightening speed.
Article Source: http://www.upublish.info
About the Author
George Dodge offers a free Magnetic Marketing CD by consultant Dan Kennedy "Amazing Advertising, Sales & Marketing Techniques Proven To Boost Your Sales & Profits By 100% To 500% -- FAST!." Get yours today.