Sell New Products to Current Customers
Now that you’ve completed your sales plan for 2014, (usually by copying the numbers dictated by management) it’s time to think strategically about how you are going to execute to make those numbers. Let’s assume that your goal is to earn the greatest possible profit for the company.
We all sell to basically two groups: Current Customers and New Customers. Likewise, you can divide your catalog of offerings into New Products and Old Products.
Many sales managers insist that you should go out and hustle up new customers. Sounds like a good strategy, except that it takes as many as 27 touch points to develop enough confidence with a new customer that they will choose to business with you. Longer if they’re already buying from a competitor. You have to pay to market to new audiences. Extensive prospecting and qualifying means a long sales cycle, and high cost-of-sales. At the same time, mature products are more competitive and sell at reduced margins. And while this may help make your revenue goal, after marketing and sales costs, there is simply no profit left in it.
A better strategy would be to sell Old Products to Currents Customers. You’ve been doing this for a while. You know these customers, and you’ve earned their confidence. All you have to do is beat the competitor’s price and take the order. But even though your cost-of-sales is less than going after New Customers, your competition is entrenched as well, and they will meet your lower prices until there is little or no profit in the transaction. You can increase sales revenue while driving the business into bankruptcy.
Or consider selling New Products to New Customers. You’ll have to advertise extensively to tell the world about your new offering, and educate an audience of new prospects who don’t know about you. This arena is also highly competitive, but new products typically sell at better margins, so there may be some profit in this approach.
The best strategy is to sell New Products to Current Customers. These products command higher prices, and competitors have not yet caught up with the new technology. Current Customers know you, they trust your judgment, and will often switch to the New Product on your recommendation alone. The result is a short sales cycle, low cost-of-sales, and the best possible margins. This is by far the most profitable way to grow your business.
So take another look at that sales plan, then look for New Products you can offer to your Current Customers in the new year. Help them upgrade. Start by asking about their strategic plan, and help them meet those goals.