Increasing sales to existing customers
Tools & Resources
Key learnings
- Nurturing relationships with existing customers will allow you to make more sales more easily.
- Your customers are often the best advocates for your business and should be used for referrals and direct marketing.
- Customer Lifetime Value (CLV) is an important metric for understanding your customers’ journey with your business.
If you’re looking to increase sales in your business, then one of your first thoughts should be how to maximise sales to your existing customers. This is because it can be easier selling to people who’ve already bought products and services from you. Here, we talk about the simplest ways to increase sales from existing customers and explain the importance of Customer Lifetime Value (CLV).
The simplest way to increase your sales is to sell more of your products or services to the customers who are already buying them.
For most businesses, this involves:
- Persuading one-off customers to become repeat customers
- Finding customers who’ve stopped buying from you and trying to win them back
- Selling more of the same products or services to your regular customers
By keeping a record of who your customers are and what you’ve sold to them, you can work out who’s stopped buying from you, and who might consider buying more.
Targeting these customers is often a cheaper and more effective way to increase sales than trying to find new ones.
Below are some of the ways you can increase sales to your existing customers...
1
Review your prices
Regularly reviewing your prices and checking them against your competitors can be an effective way of increasing your sales, profits, or both.
You should try to estimate the effect of different pricing on the sales, cashflow and profitability of your business first before making any changes.
To do this successfully, you need to understand:
- The ‘cost structure’ of your business (including regular ‘fixed’ costs and ‘variable’ costs that change according to your business’ activity).
- The value your customers place on your products and services.
It’s worth bearing in mind that offering a discount can sometimes reduce your overall profitability, even if your sales go up. Equally, you might be able to make more profit overall by increasing prices, even if you’re selling fewer items.
Small changes to pricing like providing loyalty schemes or bulk discounts can increase sales to both existing and former customers.
For example, a car wash offers free cleaning every 10th visit if customers opt for the deluxe service. Even though they’re giving something away for free, the value of repeat business from loyal customers means that profits go up.
Checking your prices against what your competitors are selling similar products and services for will help you find out if you’re:
- Losing customers who get the same product or service elsewhere for less money.
- Sacrificing profitability because customers are willing to pay more than you’re charging them.
2
Market research
Carrying out market research with your existing customers can be hugely valuable. You just need to access the information available to you from their previous purchase behaviour and draw conclusions.
With a new product, the process is a bit more complicated and takes longer because you need to drum up the trade first and then collect the data.
For more information, check out our introduction to market research article.
3
Maintaining relationships
It is worth keeping relationships with existing customers strong to keep them coming back for more and to help spread the word about your business. You can help keep relationships strong in different ways:
- Communicate – talk to your customers, find out what they need and provide it to them.
- Exceed expectations - give your customers something to shout about. Go above and beyond for them and they will keep coming back. Their positive comments will also help generate custom via word-of-mouth.
- Ask for feedback - it is a valuable tool whether positive or negative. If you reach out to customers for feedback, it also shows them you are there to listen and be responsive to their needs.
- Give rewards - think about rewarding long-term customers with some of your more inexpensive branded items such as stationery, keyrings or calendars. It may be also worth considering a loyalty or rewards discount scheme to keep your long-standing customers coming back. You can hand out reward cards or use a loyalty programme app to track customer rewards.
4
Customer Lifetime Value
Customer lifetime value (CLV) is the total amount of revenue derived from a customer over the entire relationship with that customer.
For example, if a customer has a net spend on average of £100 a year with you, and they remain as a customer of three years, the CLV is £300.
*It is usually cheaper to retain existing customers and encourage them to spend, than it is to attract new customers.
5
Customer referrals
A referral scheme usually offers an incentive to an existing customer, in exchange for recommending your business to their friends.
Rewards can be in the form of vouchers, cash, or points that can be collected to claim later. Your customers are likely to refer their friends if you are giving something back in return.
Referrals are beneficial as they increase quality leads - after all, your existing customers know you well and are ready to shout about you.
Referrals also mean that no extra money needs to be spent on direct marketing, as the work has already been done by your valued customers.
Happy existing customers will be happy to share your story, increasing brand awareness and the reputation of your business.
Next steps...
- Look at whether you’re doing enough to make sales from your existing customers.
- Always keep your prices under review to make sure you are not being undercut by your competitors or underselling yourself.
- Offer rewards for returning customers and referrals as a way to make more sales.
- Conduct market research with your existing customers, listen to feedback and understand whether you are meeting the needs of your customers. For tips on how to do that, read our article on market research here.