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How to mine for your company's gold
In the early 1900s, Reverend Russell Conwell - founder of Temple University - gave a popular speech called “Acres of Diamonds.” The moral of the story is this:
Your diamonds are not in far distant mountains or in yonder seas. They are in your own backyard - if you but dig for them.
Personally, I don't love the diamond industry. And while, arguably, gold mining has its own historical and environmental issues, I tend to refer to Reverend Conwell’s concept as ‘Mining for Gold’ when I work with clients.
The “gold mine”
In business, one of your largest assets is your “Gold Mine,” which consists of all the current relationships you have in your network. That means your customers, your opportunities, and your leads are all a part of your Gold Mine. It also includes your business partners, suppliers, referrers, and your centers of influence.
Unfortunately, many business leaders overlook their Gold Mine – seeking riches that are farther away – and (in many ways) more challenging to reach. In this article, I discuss why ‘Mining for Gold’ is a viable strategy in any business, and why you should focus on your existing customers as much as your funnel.
Acquisition is expensive
Many companies come to us and are deeply interested in launching lead generation campaigns to find new customers or clients. They want to know, “How can I get more people and businesses into our pipeline?”
Of course, this is a crucial conversation – every organization needs effective marketing and sales tactics to bring in new customers. I fully agree that you should work to create multiple pillars of marketing that bring fresh opportunities to your sales people.
And, let's admit it – lead generation is a seductive route for growing revenue. Acquiring new customers involves the thrill of the hunt and the close of the sale. New customers can energize your team and create a lot of initial work that keeps everyone busy. In many ways, you feel like a new customer makes your business more money even though onboarding and ramp-up time means less profit.
But here’s the kicker – it is a mistake to focus most of your efforts on front-end sales in lieu of mining the gold in your own backyard. Why? The most profitable, inexpensive, and consistent revenue comes from the loyal customers who already know and like your company.
It’s a mistake we see all too often, especially in service-centric businesses. Acquiring new customers is expensive (five to seven times the cost of retaining an existing one), and repeat customer spends an average of 67% more than a new one! According to a Harvard Business Review study, a 5% increase in customer retention can increase a company’s profitability by 85%.
Why is acquisition so expensive?
In almost all businesses, acquiring a new customer requires a big up-front investment. Whether you’re using Google AdWords, direct mail, cold calls, or traditional advertising, there is a large price associated with bringing new prospects into your funnel – this includes the cost for the marketing (i.e. strategic planning, design time, copywriting, postage, materials, printing, advertising fees, etc.) as well as internal staff time associated with closing the deal and learning about your new client. And, as I mentioned, new customers will not spend as much as existing customers because they are just getting to know, like, and trust you.
How to mine the gold in your backyard
In a study by Marketing Metrics, researchers found the probability of selling to an existing customer is 60-70%. Compare that with the probability of selling to a new prospect (only 5-20%) and you’ll see that the numbers show compelling support for mining the gold in your backyard.
There are many ways to deepen relationships with your existing and past customers. When you focus your attention on your Gold Mine, seek out ways that you may be able to provide customers with new value and services. Having helped client after client dig into the Gold Mine, I have identified an effective methodology for uncovering additional opportunities to serve and add value to your existing relationships.
- Develop a systematic sales process: Start by examining the way you sell your services and products. In most cases, companies lack a systematic sales process or account management system that allows its customers to know the entire breadth and depth of its offerings. It’s common for employees to assume that their prospects and customers understand everything your business offers – and this assumption is almost always wrong.
- Educate your clients on your offerings: Your next step is to develop an ongoing process where your prospects and customers are educated on your offerings - this should start at your initial sales conversations, continue to their onboarding, and be a lasting part of their account maintenance. It isn’t up to your customers to figure out or remember the full scope of your offerings – it’s up to you to keep them continuously informed.
- Make everyone a salesperson: Your entire team must be able to upsell and cross-sell your products and services. That’s right – not just your sales or marketing teams – it has to come from every department. I know that some of you are squirming – many business leaders struggle to imagine every member of team on their sales force. I'm here to tell you that it is possible – and it’s actually essential for effectively mining the gold in your backyard! When you’ve got your entire team helping to sell, you can work collaboratively to analyze and improve upsell patterns.
- Provide amazing customer service: According to a survey by Dimensional Research, 66% of B2B and 52% of B2C customers stopped buying after a bad customer service interaction. That means amazing customer service is non-negotiable and must be prioritized from the highest leadership to the front line. Make sure everyone in your company has a deep understanding of what is important to your customers (on-time delivery, exceptional tracking abilities, regular reporting, quick service turnaround, etc.) - and then consistently deliver it.
- Set up a customer retention program: Customers don’t owe you their loyalty – you have to continuously earn it. Create a retention program that allows you to identify, track, and promote the clients who are most likely to be loyal, long-term sources of profitable revenue. Your mission? Reduce customer pain points and friction, make it a delight for your customers to do business with you, and find ways to thank them often.
This methodology for mining the gold in your backyard has proven to be a strong strategy for many of our client businesses. Time and time again, we see that providing a higher level of value to your customers means that they are more satisfied, more willing to invest in your services or offerings, and are more excited about providing referrals and word-of-mouth marketing.
Increased profitability from your existing customers and higher levels of revenue and retention... all at a lower investment? No wonder we call it a Gold Mine.