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New Business vs Existing Customers

Any business starts out with a particular target market. These are the individuals or businesses that are or might be the most interested in purchasing your products. However the moment you actually begin selling, that target market rapidly gets divided into two parts and an important distinction exists between them.

Not long ago, we did some work for a relatively small software company. We soon discovered they were mailing only to their existing customers and doing very little to gain new leads. They did receive a few new customers per month through referrals, but with no regular promotions reaching new prospects in volume, they were growing only by a small percentage each year.

Another of our clients markets facial care products and is fairly successful. They have a winning formula for gaining new business by selling products directly at fairs and shows. When a sale is made, the new customer fills out a card with all of his or her contact information. Imagine our shock when we found they had literally thousands of these cards boxed up on a shelf and had done nothing with them! They were sitting on an untapped goldmine and yet were at times struggling to pay their bills.

These are illustrations of two sides of a pendulum-swing. The first only handled existing customers, and the second only focused on new ones. As might be obvious, both were wrong in their own way.

The real trick in maintaining steady and rapid growth is to address each of these customer types consistently but separately, as each has its own particular value.

New Customers

In the case of the software company above, they were doing the right thing by staying in touch with and regularly promoting to their customer base. However, they needed to add the vital step of reaching out to new prospects, and reaching out broadly.

You will only expand your company if you reach out widely and abundantly for new customers. Unlike existing customers, who have already heard of you, new customers don’t recognize or know who you are. You must spend much more to get through to them and to make that first sale. Though sometimes difficult, money spent in this direction is vitally important and if neglected, can cause your business to struggle.

For this reason, the majority of your promotional dollars must be spent on gaining new business and it must be done regularly. Allocate a budget each month and then invest it to reach out to the greatest number of potential customers possible, as often as you can. Make it a monthly goal to really get out there!

Customer Base

However, while you are promoting like crazy to new prospects, don’t lose touch of your existing customers. You went to the trouble and expense of obtaining them – don’t waste all that hard work. As they already know you, they will respond to your promotions at a higher rate. And most importantly, they have demonstrated they will buy from you.

You can and should think of ways to strengthen your relationship with these customers. Consider sending a monthly or quarterly newsletter, or just collect their email addresses and have your staff frequently write them personal letters asking how they're doing, how they like your product, if they need more. These avenues allow you to offer them helpful information and develop personal relationships with individual customers. This will build their loyalty and create unshakable income stability for your business.

No matter how you do it, communicate to your customer base often. It is money very well spent. Just a simple postcard every month keeps them in touch. And if you stay in front of them, you will be the first on their mind when they have a need. Neglect them and you are leaving easy sales on the table.

Maintain the Balance

So the rules to keeping an expanding, profitable business are:

1. Always promote broadly for new business, and always spend the majority of your marketing dollars in this direction.
   
   
2. Never neglect your customer base. Reach out to them regularly, stay fresh in their mind and they will buy from you again and again.

Do these two simple things, and you will see your business and income BOOM!

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