Business Sales Growth Occurs Through Rhree Fundamental Customer Growth Strategies

Growing your business comes down to growing sales by executing one of three fundamental customer growth strategies.  You grow sales by going after more new customers, getting more money from existing customers, winning back lost customers, or doing some combination of the three.

No matter what terms you use to describe how you plan to grow your sales, they will fall into one of the following three growth strategies:

1. Consumer attention is about attracting more new customers.
2. Customer maximization comes down to getting more money from existing customers.
3. Win back involves persuading lost customers to come back and buy.

When everyone involved in executing your sales growth plan is clear about which fundamental growth strategy you are trying to execute, you will improve your likelihood of growing your business.  Below is a breakdown of the three fundamental growth strategies, from surest to riskiest in execution.

Customer Maximization

The surest sales growth strategy to execute is customer maximization.  The reason why it’s the surest has its roots in a theorem in geometry.  That is, “the shortest distance between two points is a straight line.” Applying this logic to your customers, “the people who have bought from you in the past already know what solutions you offer and where to connect with you.”

You are the shortest line for your customers buying from you to solve their problems or satisfy their needs.  Because of this, one of the most valuable assets of any business is repeat customers.  Straight-line transaction connections make up the surest business your business does.  Getting more money from existing customers through “customer maximization” is the most efficient growth strategy for your business.

Customer maximization is about helping your valued customers realize their goals and aspirations over the life of the relationship they have with you.  Maximization can only occur when you seek to truly understand who your customer is and what you can offer them.  The efficiency of a straight line transaction occurs when what your customer buys from you next is of greater value to them than what they have purchased from you in the past.  The risk of this strategy is anytime you fail your customer, this strategy becomes unobtainable.

Customer Maximization Requires You to Up-Sell or Cross-Sell

Creating greater value that leads to customer maximization starts by identifying what additional products or services a particular customer could be buying from you that they are currently buying from someone else. The sales tactics employed here are often described as “up-selling” or “cross-selling.”

Here’s an example: Financial services companies are famous for wanting to become your one-stop source for all your financial needs.  What they sometimes fail to realize is that just because you bank with them doesn’t mean you will also allow them to manage your investments or insure your assets.  Yet, these companies continue to bombard you with their different financial product offerings because they can identify what you aren’t buying from them.

You will never maximize a customer through a one-size-fits-all approach or by utilizing generic marketing promotions. If your growth strategy is customer maximization, it is much more useful to deploy varying strategies that are highly personalized to your customers and their unique needs.

Those who successfully execute the customer maximization strategy are successful because they apply some form of the 7-P Framework to their business model.  The key to their success lies in knowing what exactly their customers most value about their business.  Do they value the purchase itself?  Or, is it the convenience of your location or the speed with which you can fulfill their order?

Once you know the sources of value for your customer, you can then create the appropriate “hooks” for your best customers and maintain your position as their supplier of choice.  Your best hook lies in getting your existing customers to buy more of your product portfolio.  Knowing your customer inside and out is the only way to get there.

The challenge of customer maximization is to make sure that all of your customers’ purchases add an acceptable level of profitability.  Too many businesses pursuing a customer maximization strategy lose sight of what it costs them to meet every customer’s need.  Anything your business isn’t cost-effective at providing represents an item you might not want to offer because selling what you do at a loss creates profit problems.

You can guard against this by having a well-thought-out matrix for all customer touch-points.  These are the places where a customer is engaged by your product promotions or where they might be expected to make a purchase.  Once you have identified these touch-points, you can map them out in a targeted plan to maximize top-line revenue and bottom-line profitability. It is only through effective management of these touch-points that you can achieve your customer maximization goals.

Amazon is an excellent example of a company succeeding through the strategy of customer maximization. There are many reasons why Amazon succeeds, yet one of the most important reasons is their obsession with connecting customers to new items to buy.  Amazon carefully tracks its customers’ previous orders, product searches, wish lists, shopping cart contents, and returns.  They even know how long its customer’s cursors hover over particular items. This allows Amazon to anticipate its customers’ needs, even before its customers know them. It’s a highly effective strategy.

Attracting New Customers

Capturing new customers is the most expensive of the three growth strategies to execute.  The “more new customers” strategy always begins with attracting their attention first.  It is impossible to get a new customer until they know you exist.  The inherent problem with awareness-building activities is that they cost money.  The other problem is that, more often than not, your awareness-building investments fail to generate sufficient sales to cover the expense of the promotion.

The insights of John Wanamaker show how promoting to attract new customers is difficult.  In the 1860’s he said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”  In 1861, in partnership with his brother-in-law, John Wanamaker opened his first store in Philadelphia.  In 1869, he opened his second store, capitalizing on his name due to the untimely death of his brother-in-law, renaming his business John Wanamaker & Co.  In 1875, he purchased an abandoned railroad depot and converted it into a large retail store called John Wanamaker & Co.

“The Grand Depot” was the first department store in Philadelphia.  John was a creative innovator, a merchandising genius, and a proponent of the power of advertising.  We still quote him on the challenge of advertising because he identified an inherent challenge in promoting your business that is still true today.

The sixth organizing principle in the 7-P Framework is associated with how vital Promotion + Packaging decisions are to your business success.  Unless your business is “impulse-based,” you are constantly battling the “awareness” obstacle.  Remember, creating awareness is the first difficult step in capturing new customers.

Getting Customers to Come Back to You is the Hardest Business Growth Strategy.

Acquiring new customers is one of the hardest things to do in business.  Getting people to buy from you who have already experienced what it’s like to do business with you is even harder.  The degree of difficulty associated with convincing people to buy from you again is shaped by the quality of the experimentation experience they have with how well your products and services solved their problem.

If, after their purchase, your product or service fails to deliver as promised, your odds of getting this customer to buy again from you is tough because what they expected from their purchase didn’t match what they experienced.  As shown through the consumer to retained customer progression model, customers who have failed experimentation get here because someone along your sales process over-promised.

An overpromise resulting in an under-delivery will never result in a customer bonding with your company through their purchase experience.

The other most common reason for a customer not to continue to do business with you lies in your employees.  Whenever a customer feels that your employees don’t care about them or their company, they will stop buying from you unless you are the only game in town.  Customers stop buying from you based on how they are treated.  You have a problem if you employ people who don’t care about the customer and their experience with your company.  If this is the case for your business, the customer win-back strategy will never be a business growth option for your company.  For that matter, the customer maximization strategy won’t work either.

The key to getting and retaining more customers lies in your people and their belief in the value they place on what they do for your company and, ultimately, your customers.  Before adopting the customer win-back growth strategy, revisit your customer value proposition to ensure your employees align with your promises to your customers; otherwise, all you will have is more problems.

Which sales strategy do you need to do more?

Click here to confirm which of the three customer growth strategies makes the most sense for your business.  Within twenty-four hours of receipt of your sales by customer summary, you will receive back by email your free analysis of which business growth strategy you should pursue and why.