There’s a lot of noise about marketing in the recession today, and I don’t want to be one who adds to the noise level, so I did some homework on what others are saying and doing out there…
The one consistent theme that keeps coming up is focusing in more on installed base marketing – selling more to existing customers. And from my own businesses, I can tell you for sure that’s what’s
working the very best for me right now.
So what are the ways we can best leverage our installed base?
* Cross-selling new products to customers who don’t yet own them
* Up-selling customers to higher-priced products that deliver more value (both to you and the customer)
* Down-selling customers on lower-priced versions of products that better fit their needs (instead of them not buying at all)
* Going deeper into accounts with repeat business, either by selling more capacity, consumption or finding new groups within larger accounts who aren’t yet using your products
* Getting referrals from existing customers, so you can bring some new customers aboard without starting from scratch
All of these strategies involve leveraging the good will and the relationships you’ve invested in over the years of being in business and serving these customers.
Given the importance of farming these existing customer accounts right now, I’m going to spend some time in future posts discussing each strategy, along with some best practices, and how and where Precision Marketing applies.
Everyone knows that it’s much less expensive to sell to an existing customer than to acquire a new one. The reason for this is simple, and can be expressed with two words:
Relationships and Trust
The biggest barrier to acquiring new customers is the lack of trust and no relationship being in place. This barrier becomes a nearly insurmountable gulf during challenging times, like a recession, because customers become extremely risk-averse.
This increased risk-averse profile stems primarily from fear…
- Fear of making a mistake and getting fired (and not being able to find another job)
- Fear of making a bad investment decision in an unknown company
- Fear of an unknown company failing due to the recession, which in turn creates impacts
- Fear of wasting precious budget dollars
- More basic fears associated with dealing with “strangers”
Experience teaches us that many of these fears are well-founded and based, in part, upon good judgement that comes from many prior (often bad) situations that arise when working with someone new.
In addition to fear, many companies are simply conservative by nature, and become incredibly conservative during tough times, recessions or economic contraction. These companies are conservative for a reason. They are still in business for a reason, while others are not. It’s because they are conservative and careful during such times.
So, if so many companies and decision makers become increasingly conservative and risk-averse, how can we deal with this effectively?
As I said, by focusing 80% of your marketing and sales efforts on leveraging the trust and relationships that have already been established with your existing customers.
Think of the trust and relationships you’ve built up as a “trust bank” – one that it’s time to make some withdrawals from (and continue depositing into, as well).
There isn’t a guarantee that all of these customers have budget available for your particular product – not at all. In fact, many of them do not. They have instituted blanket hiring freezes, may have been forced to let some of their people go, and are likely “hunkered down” awaiting this economic storm to pass.
Fortunately, there are some of your customers who still have budget available, and are willing to entertain buying from you. But here’s the rub… (there’s always a rub of some kind, isn’t there?)
Right now, most customers actually want and expect to get a “good deal”. You must be prepared to offer them some extra incentives and very compelling reasons to buy now (versus deferring their purchase until later). This means finding some creative ways to boost the value you deliver.
For example, I recently ran a one-week discount promotion in one of my businesses that doubled my sales for the month. Of course, be very careful with such sales, as it often has the effect of “draining the sales pipeline”, especially if done publicly or programatically. In my case, Holiday season is typically a bit of a slow period anyway, so I decided to pull in as many sales as possible during Thanksgiving week here in the U.S., ahead of Christmas and New Years.
Instead of discounting, you can find creative ways to “increase your service level and/or value” as an extra incentive for customers to buy now. This can be accomplished with extra “bonus” items. For example, figure out what’s not selling right now (what you have an excess of) that’s still of value to these customers, and offer to give them that for free if they’ll buy now.
So, I hope that’s a helpful bit of guidance. It’s what I’m seeing and hearing from all the ‘experts’, and it’s working in my businesses. It’s also what I’m hearing our customers are doing. For example, I’m hearing a lot more about companies wanting to do more cross-selling right now – a topic we’ll do a deeper dive on in an upcoming post.
Finally, keep in mind that farming your existing customer base can be very time-consuming and resource intensive, and you also need to keep your costs down right now, as well.
Along those lines, consider running some inexpensive email campaigns to your customer lists that are designed to identify the qualified customers and get them to respond directly to you, alerting you to who’s actually interested and worth investing your precious time and resources on in the first place.
Of course, I believe you should be using Precision Marketing to do this kind of farming (my own self-serving statements here, obviously). This is because it’s tougher than ever to break through and get the attention of anyone right now, and Precision Marketing is designed to do just that.
And you need to be highly-targeted in these email marketing and other campaigns to gain the attention and interest of qualified customers who are most likely to buy, and then motivate them to act – to contact you, to accept a phone call, an appointment, and to buy.
And then there are those who believe a recession is a good time to turn up the marketing volume. Well, that may be good for cash-laden behemoths like Wal-Mart, Intel and others, but most companies, this may not be an option.
For more great tips on marketing during a recession, check out John Quelch’s Marketing KnowHow blog.
Until next time, happy hunting in your existing customer base.
Rick
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