Does it cost ten times more to sell to a new customer?
This is a figure that has been bandied around for years in B2B circles. Is it true? As in “accurate”? Of course not, because each business is different. It’s an attention-grabbing statement; a headline.
The cost of a sales person is salary plus government costs (company contribution to National Insurance in the UK) plus car, plus lap-top and ‘phone, plus hotels and flights and training, plus back-office support and a desk, and the associated on-costs of overheads associated with that desk. Not forgetting marketing and advertising and lead-generation and Google Adwords and trade shows and exhibitions.
And that simply covers existing products in existing geographic areas. When you start looking at new product development costs and research for new markets then where does your budget stop?
Compare that with the much-welcomed e-mail: “Hi, we’d like to place another order. We’d like to increase the quantity. Could you please advise if the unit price still the same?”
As they say, the cost of sales in this instance is two tenths of naff all.
It makes the 10 to 1 argument look silly, doesn’t it? It might actually be thousands to one.
A well-structured survey asking lots of questions with a high-response rate which is followed up by the right actions will address three areas of revenue generation:-
- Reduced Customer Churn
- More Sales to Existing Customers
- Increased Selling Prices
If you’ve got this far, please take a look at the Your Customers page for where the increased profit comes from.
