Friday 26th June 2009
Mine Your Existing Customers for New Business
It is so easy to focus on getting new business from new customers – but have you stopped and worked out what it actually costs you to get a new customer?
It’s not just about advertising and sales from prospects ratio’s – it’s your lost time, in other words what else could you be doing that was more profitable?
Something to consider is that 80% of your profit comes from only 20% of your customers – so surely it makes sense to find and work on those highly profitable customers you already have!
I have been focusing on getting more business from my existing customers, allowing the difficult, time consuming and poor paying ones to drift away to my competitors! That has freed up my time to focus on getting more business from the people who already know and trust me, by making time to talk to them and get to know them better.
If you currently specialise only in extinguisher servicing then why not offer your customers other complimentary services like fire alarm servicing, dry riser testing, sprinkler servicing, sign installations, fire training, manual handling and first aid training, PAT and 5 year electrical testing, fire risk assessment, building plans, etc. Your first reaction will be “but I don’t have the experience in all those areas” - you don’t, but other UK FA members do!
I have expanded my business in this way by concentrating on what I do best and keeping time free each day to project manage the other bought in services. Most customers appreciate that you can’t provide all these services alone but if you use trustworthy and reliable subcontractors they wont care or even notice.
So how do you start? Look at your typical customer base and identify the kinds of services they could benefit from. Then select the most popular service needed and make contact with the UK FA member offering that service in your area. The UK FA website will soon have a matching service to help you do this.
Now talk to your customers, ideally while on site servicing otherwise make the phone call – the worst that can happen is that they tell you they have that service already covered! With a few jobs under your belt you and your subcontractor will know how each of you work and your knowledge of the new service will be growing fast. Once you’re on top of this new product line offer another using the same process.
Typical pitfalls to beware of:
Ensure that you and the provider is adequately insured.
Negotiate prices in advance ensuring small details have not been overlooked.
Agree payment terms up font.
All work instructions to providers need to be in writing to prevent errors.
Check to find out if the provider ever uses subcontractors.
Is the provider using clothing and vehicles liveried in their own name?
Get and take up references wherever possible.
Agree and insist that the provider signs a confidentiality and trading restrictions agreement.
Watch the profit margins – you have to cover your business expenses.
Remember it has to be a win-win situation – your provider has to benefit from the relationship to make it work!
It takes time to set up and fine tune, but once in place you now have flexible and much larger resources at your disposal, without having to take on more technicians.
Alan Palmer
UK FA Secretary and MD of F.I.R.E LTD
|
Click here to download PDF Version
