Effective Business Development
Effective business development is a valuable skill for any person in a sales role. The ability to maximise new business opportunities alongside existing clients is crucial for the growth and success of any business.
Do You Want Fries With That?
The chances are if you have purchased some fast food recently you may well have experienced up-selling. The process of up-selling and cross-selling is used by a wide variety of industries, ranging from financial institutions to fast-food restaurants. Indeed, any progressive business will understand the value of cross-selling and referrals as a critical component for promoting both client retention and revenue growth.
The good news is, cross-selling is one of the most profitable and least risky actions a business can undertake. Rather than trying to gain potential valuable clients, businesses have come to realise that it is easier to maximise profit by cross-selling services to existing clients rather than to attract new customers. The cost of winning a new client can be five times that of retaining an old client, and the profit achieved by winning over ten new clients often cannot offset the expense of losing a valuable client.
The bad news is that cross-selling remains notoriously difficult to get right. Most businesses still fail to operate a functional cross-selling system and actually run the risk of losing more clients and business than they gain. Many businesses choose to focus their business development efforts in the wrong area and fail to target the clients with the highest return on investment (ROI).
Where to Focus Your Business Development
|Existing Client||Prospective Client|
|Aware of New Need||Surpleasing
|Not Aware of New Need||Nurturing||Broadcasting
Too much time spent on ‘Broadcasting’ or ‘Courting’ prospective clients can be costly and time-consuming. Focusing on existing clients, that have the potential to take on new products and services (Surpleasing) is a much more effective use of time and resources.
Successful business developers will ensure that as part of their planning process, they identify and target existing clients for new business. They then spend their time actively squeezing every opportunity for new revenue from that client.
Getting referral business from your existing clients is another cost-effective and efficient way of increasing business.
It also allows you to take advantage of a key marketing principle: maximise the full potential of what you already own (a valuable client base) before you spend money looking for more customers or clients.
Another advantage of referrals is that the sales conversion rate is much higher. It is claimed that the average sales closing ratio for non-qualified leads can be only 10% compared to a 60% close ratio for referred leads.
A referral has the built-in credibility that reduces the risk new clients might feel in doing business with you. The client is half-sold on doing business with you even before contacting your business.
Utilise the 20/80 rule
Which clients should you concentrate on to get referrals? All of them, but particularly the 20% of clients that (in most businesses) provide 80% of your business. These clients are likely to be the most enthusiastic advocates of your business.
Keep them happy
Another key area to getting referrals right is to make sure that your clients are more than happy. Clients who are less than satisfied are very unlikely to refer others to you. People like to talk about excellent, unusual or outstanding businesses they have encountered. But they also spread the news of unhappy experiences even more widely.
The golden rule is to go out of your way to make sure your existing clients are very happy.
Check out further content on Upselling and Cross-selling.