The most common roadblock on the way to growth and profitability is the lack of alignment of basic metrics which marketing and sales executives often overlook when planning their sales strategy. However, businesses that achieve and exceed their revenue goals use the following:
The cost of winning a customer
Customer Acquisition stands for the entire marketing and sales cost in a given time period from allocated staff and office expenses to travel and prospect meetings set up, to be more precise.
The value of a customer
The value of a won customer is equal to the revenue or profit for the duration of the relationship your company has had with a customer.
The cost of customer retention
Keeping a customer overtime is also relevant because it measures all the business activities related to retention, reference programs, etc.
Analyzing the above metrics combined will show you if a customer is worth the sales expense. To put it in other words, are they really valuable for your business. Undoubtedly, having the answer to this question is central when developing customer profiles, and designing a sales strategy tailored for a specific customer journey.
So, what is an ideal customer?
One that pays off within a year of acquisition. The valuable customer should bring three times more revenue than the sales expense. You are probably spending too much on a customer if the ratio is less than 3/1. If the customer value is 6 times higher than the sales expense, you might want to invest more in marketing and sales.
By default, you focus on the customer’s perception of your company and his experience. What is his buyer experience like? What about satisfaction? Does the customer experience change overtime? Here is the catch: as much as you focus on your customer experience, you need to focus on being in control of the cost to win and retain a customer against a set revenue goal.
Minimize Customer Acquisition Expense
- Optimize sales expense and use inside sales rather than field sales staff.
- Outsource sales tasks to accelerate sales
- Bet on non-traditional sales channels and partnerships to generate new leads
Increase Customer Value
- Streamline acquisition with post-sales processes to make sure your buyers become happy customers
- Enhance your account management teams with advocacy and customer satisfaction programs.
- Educate your account management teams to identify opportunities for cross and upsell
- Leverage digital re-touch activities for each type of customer engagement that ensure smooth interactions.
Reduce Customer Retention Cost
- Group your buyer profiles to high and low profit potential and target high propensity first.
- Trust and educate your customers: give them autonomy by leveraging self-service tools.
- Provide spotless customer support but ideally, give your customers less reasons to seek support.
In sum, marketing and sales execs need to consistently align on their sales expense against customer value and retention cost over time. Keeping a close eye on these numbers, can help navigate more successful sales strategies in the future.
Contact us for a free sales strategy assessment with one of our experts. OnboardCRM can work with you to identify revenue leaks and design more effective sales strategies.