Hands down, the owners and chief executives I work with worry the most about how they’re going to find their next clients or customers. This pipeline stress drives marketing and sales efforts, yet the return is disturbingly low. The chances are that 80% of prospects will say no to your company.
This high rate of rejection is especially true when the company is offering services and products based on intellectual capital. This includes the usual suspects such as CPAs, business lawyers and consultants of all types. It’s also true for designers, architects, website designers, graphic artists, writers, HR experts, financial advisers, trainers of all kinds, speaking coaches, business coaches, and the list goes on.
Over time you do succeed in attracting clients and customers. The most powerful relief for pipeline stress is right there, within your current buyers. Your current buyers embody the cure for pipeline stress, yet the vast majority of companies don’t take it.
Follow this example to see how current buyers provide pipeline stress relief.
Scenario #1: $2.5 million revenue; 500 buyers, annual average spend is $5000.
The company creates an effective Cultivate & Nurture plan and implements it rigorously. 90% of current buyers buy again the next year. They increase their spend to $6000 each.
90% of 500 buyers = 450 buyers X $6000=$2,700,000
The company effectively recruits 100 new buyers. Their average spend is $5000, or $500,000 total.
Total revenue: $2,700,000 + 500,000 = $3,200,000. This is a 28% increase from the prior year.
Scenario #2: $2.5 million revenue; 500 buyers, annual average spend is $5000 (same as above)
The company does not employ any retention or Cultivate & Nurture efforts.
40% buy again the next year. They increase their spend to $6000.
500 x 40% = 200 x $6000 spend = $1,200,000
Recruitment efforts attract 300 new buyers.
300 x $5000 = $1,500,000
Total revenue = $1,200,000 + 1,500,000 = $2,700,000. This is an 8% increase from the prior year.
Why would any company—your company—put so much effort into recruiting new buyers and no effort into retaining current buyers? And this example doesn’t even reflect the profitability of sales to current vs new buyers. The cost of Cultivate and Nurture is a tiny fraction of the cost of recruitment.
Commit to big revenue goals from current buyers. Don’t wait until the time is right, or your fiscal year starts, or you’re less busy. The right time is now. Here are the only three steps you need to get started:
- Make a good list of your current buyers, roughly segmented into Testers, Regulars, Enthusiastic Fans and Best buyers. Refinement can come later, do enough to get started.
- Write a 12 month Cultivate and Nurture Plan. If you’re not sure what this includes, download the sample from my website. Fill it out: the C & N action step, the person responsible and the date.
- Implement the C & N plan immediately. You only have to do the first month’s action step right now. Start by making it an appreciation message. The appreciation message must come from the Owner or chief executive, and needs to reflect the buyer’s segment. Companies don’t thank their buyers nearly enough. This one tactic will entice many buyers to buy again.
Once started, keep the implementation of your 12-month C & N Plan going. Your leadership and enthusiasm will be contagious and your employees will do their part.
The bottom line of your bottom line: imagine how satisfying it will be to have your own 25-30% revenue increase next year.