Focus to sell to your existing customers - should you?
Sales is a tricky business. It is the archetype of a money driven reward system where your quota and your ability to achieve it determines your reward. Selling software is complex and goes beyond a simple repetitive task, where science has proven, financial rewards might not work the way expected. Anyway a lot of sales people struggle to meet their quota. A recommendation they get to hear over and over from their sales leader is: "Focus to sell to your existing customers. It is so much easier (it is) to sell to an existing customer, than acquire a new one". Sound advise, isn't it? Not so fast. When looking at the problem with recently refreshed thinking the core pattern of Shifting the burden jumped at me. And that's not good!
Let's have a look:
Let's have a look:
- The challenge is to meet the sales quota. If the sales person struggles the problem is most likely a too narrow customer base. However the symptom is a lack of sales orders. It is like tooth ache: the problem is a hole in your tooth, but the symptom is pain
- Focusing to sell more licenses or additional products to you existing customers is like taking a Panadol: the pain goes away but the problem remains. The quota is met for one quarter, but the struggle will resurface in the next
- The fundamental solution is to widen the customer base. The snag here: it takes more time and effort to get there and with the myopic focus on the quarter feels rather scary to go there. However one can't sell indefinitely to the same customers - after all they have been promised to save them money will all the stuff sold to them. Catch 22
- With the total focus on existing customers more and more effort is required since selling additional stuff is subject to the law of diminishing returns. Further more an "existing customer" is something very different from "an entry in the list of corporations that once did buy stuff from us". The best way to turn a customer into a "former customer" is to show up only for sales. A relation to a customer includes genuine care for their success (that unfortunately isn't a tickbox in your CRM)
- The side effect is a consequence of focusing on the upper loop: the delay to get the result of the lower loop increases (often dramatically) up to the level that it doesn't happen at all