A combination of customers and cashflow is the lifeblood of any enterprise. But even if your company has a strong customer base, it’s always sensible to keep cultivating new relationships to maintain business growth and to defend your operation against being vulnerable in the future.
Too many SMEs depend on a small number of clients for their livelihood, and if one of these valuable building blocks suddenly crumbles then a business can find itself in trouble very quickly. Necessity has driven many companies to look for new customers in recent years. Since 2008, three out of four SMEs have lost money as a result of an entity they work with going bust, according to recent research from credit agency Experian. Not only are these small firms left out of pocket, but they must also fill the gap where the failed business used to be.
But whether you’re looking for new custom to replace that which you’ve lost, or you want to expand and achieve your growth plans, finding potential customers isn’t magic and needn’t cost a fortune. There are a few tips to follow and several avenues to pursue that could yield great rewards for ambitious business owners.
How to identify new customers
First ask yourself, who is my customer? You want to sell your goods and services more widely, but where should you start to target your efforts? Business experts talk about the 80/20 rule, a belief that about 80 per cent of a business’s sales come from just 20 per cent of its customers. It’s certainly worth finding out who your most profitable customers are. Consider:
- Which ones buy high-margin products?
- Who places large orders rather than a series of smaller ones?
- Which customers always pay on-time, and, better yet, at a full rather than discounted price?
Once you know who your most valuable current customers are, you’ll be better able to identify the target market that has the potential for the greatest profit. You could also conduct your own market research by asking existing customers what they like about what you do, and what else might improve your service. This has the double benefit of helping you polish your offering for your current client base, and suggesting ways that you might pitch yourself differently and appear more attractive to new customers.
The Federation of Small Businesses estimates that most of its members trade within 50 miles of their business base, but the internet has opened up a world of opportunities for firms to cast their nets more widely – and to be able to transact 24 hours a day. Having a website is an essential in this day and age, yet one in three small firms still say that being online is irrelevant to their operation, according to findings from Lloyds Banking Group. And 45 per cent of SMEs that do have a web presence don’t have mobile-optimised websites, internet services group Hibu has found, potentially losing them £77 billion of annual revenue.
Creating a website is a must, as is ensuring that it has all of the functionality that a modern-day consumer would expect. This means making sure it’s an up-to-date transactional site, not just a shop window, as well as setting it up to take mobile transactions made via the smartphones and tablets commonly used by consumers today. Business owners can employ tools such as Google My Business, which incorporates Google Plus and Google Places, to share information about their company online, to push their business up search engine rankings, and to win custom from near and far. Social media is also a valuable conduit to new business. We’ve discussed some of the best ways to engage with social platforms on this blog before, but a good place to start is to look at how rival firms present themselves on the likes of Twitter and Facebook, and see what does and doesn’t work for them.
Some firms have decided to search for new business far beyond Britain’s shores, particularly in recent years when the UK economy suffered. Growing overseas markets have looked increasingly attractive to many business owners, and more have been keen to reach foreign countries and clients with their goods and services.
Research is vital before taking the big step to start exporting. UK Trade and Investment (UKTI) is the best place to start your search, asking its international trade advisors for help with identifying potential markets and customers. It’s sensible not to be too ambitious, but to focus on one or two markets at first, getting to know them, their cultures, and their currencies, rather than spreading yourself too thinly and diluting your efforts.
You’ll also need the infrastructure in place before you can begin to look into winning business overseas. Revise your business plan, and talk to your bank and the Government’s UK Export Finance department (UKEF) for support and advice on capital requirements for expansion. Plus, take advantage of trade events and foreign visits organised by UKTI, UKEF and business bodies such as the Confederation of British Industry and the British Chambers of Commerce to test potential markets and meet would-be customers face-to-face before committing yourself to becoming an international operator.
Don’t forget existing customers
While developing new relationships is important, you must also maintain those you already have. Selling more to those you already know is still easier and more cost-effective than starting from scratch with someone new. Be sure that you’re dealing with the key decision makers, and continue to cultivate those relationships. Keep talking to your long-term customers about new deals or products that you have to offer, and consider preferential pricing or a discount to reward loyalty. You might even give a financial incentive for them to introduce new customers to you. Never make the mistake of neglecting your established clients in favour of new professional friends. Dedicate time to your key accounts, so that all customers feel valued, and train your staff to treat them with the same care. Just one bad interaction with a client could have terrible ramifications for your business’s reputation and future profitability.
Finally, it’s important to measure your success when forging and maintaining customer relationships. Set yourself targets, such as increasing profit by a certain amount over six or 12 months, then, keep checking to see whether you’re on track to achieve your goals. After all, you don’t want new customers just for the sake of it. They should bring something concrete and beneficial to your business. Understand who your customers are now – and who they should be in the future – and you’ll be in a powerful position to sell more, plan, and, of course, grow.
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