Is it possible to grow your bottom line without adding new customers?
Yes, in theory, it is possible for your B2B business to grow both revenues and bottom line profits without adding more customers. How? By retaining the customers you already have and growing revenues from those customers!
First, let’s look at retaining existing customers. No one keeps 100% of customers. Some customers go out of business. Some move outside your catchment area (at least if you are not online). Some will switch to a relative who has started a business just like yours. Some change their business model and no longer need you.
Let’s imagine that a reasonable turnover is 5% to cover the situations I just mentioned. That leaves you with a maximum potential of 95% customer retention. Of course, we know that keeping the customers is not sufficient – you must keep and grow the revenues from the customers you already serve.
When you keep 95% of your customers and grow the revenues from those customers by 10%, your top line revenues will increase by 4.5% without adding one new customer. And, we expect the impact on the bottom line will be even greater as the cost of servicing an existing customer is sure to be less than the cost of capturing and a new customer.
When customer retention results in both top and bottom line improvements, new sales will accelerate performance even further!
If you have ever questioned the value of investing in customer retention, I hope you see the potential impact now.
The Dunvegan Group works with B2B companies to improve customer retention using The Platinum Rule®, “Treat other people the way they want to be treated.” Learn more about our solution.
Anne Miner founded The Dunvegan Group in 1987 as a full-service marketing research consulting firm. Under her leadership, the company has adapted to changes in the markets, advances in technology, and economic ups and downs. The firm developed its own processes, metrics, and software to support the services it delivers to Business-to-Business corporations, as well as smaller companies, including start-ups. The company serves clients across North America and around the world as they thrive and grow through serving their own customers according to the insights customers provide.