For any business looking to grow, clients are an essential part of the process. They not only contribute to the bottom line but also improve the brand’s visibility and generate referrals.
Given the importance of this, it’s no surprise that many companies prioritize client acquisition activities. However, this can come at a cost if not balanced properly, as neglecting existing clients can result in high churn rates, with them moving on after a short period of time.
So this brings up an important question for businesses. Should they spend more time and resources on client acquisition or retention? There are a few things to consider when answering that question.
Why is Client Acquisition a Top Priority for Businesses?
The importance of getting more clients isn’t hard for most businesses to grasp. Without clients, there is no revenue stream. And without revenue, the business cannot sustain itself.
For younger organizations, new business development is critical, and most budgeting is put toward this area. This is because they are just starting out and need to start establishing their foothold.
However, client acquisition is important for more than just filling the pipeline. Client acquisition also brings new perspectives to the business. Each client comes with their own set of expectations, which helps to challenge the business to evolve. This evolution is what helps organizations set themselves apart from the competition and stay ahead in the market.
Why is Client Retention Equally Important?
Although sales teams are often associated with “bringing the company more revenue,” a sales department has two very important functions – bringing in new clients and keeping the current ones. In fact, client retention can be a major key to long-term success.
Current clients are more than just a revenue source – they’re trusted partners of your business. For example, if you business sells public safety solutions, then your clients are the best people to provide you with feedback on how effective these solutions really are.
Current clients are also more willing to share candid feedback and insights that help fuel business growth. With a strong trust foundation in place, they are more receptive to new offerings and can provide genuine feedback, making them essential for market analysis and product improvement.
Achieving the Perfect Balance of Sales Growth and Sustainability
Over time, companies go through various growth phases, each bringing its own set of evolutions and improvements over time. However, growth without the ability to maintain it is short-lived.
To achieve sustainable growth, businesses need to balance new client acquisition with retaining their current ones. This balancing act becomes trickier as a company expands. Yet, with the right strategies in place, businesses can benefit from both tactics.
Don’t Neglect Forecasting
Anticipating future business sales is important. Instead of making rough estimates about your sales trajectory in the upcoming months or years, devote time and effort to accurate forecasting.
Forecasting can be straightforward. By knowing your customers and being alert to upcoming opportunities, you can accurately project your yearly sales growth. This clarity helps sidestep costly errors, such as budgeting resources into projects that don’t fit your broader business targets. Take the time to separate your business data into risks and opportunities. This will help you set more realistic expectations of your growth year-over-year.
Also, forecasting enables you to better understand tangible revenue streams. When you’re aware of what regularly fuels your business, the decisions you make become data-driven, and not made on gut feel alone.
Know Your Clients’ True Value
All clients should have a value associated with them. In many cases, businesses rely on the CLV, or Customer Lifetime Value, to determine this. This metric considers the potential revenue a client can generate over their entire lifespan with your company.
By taking this value and factoring into it the cost of acquisition, companies can better understand whether or not a certain client or segment of clients is viable for the long term.
Also, when comparing new opportunities that often take a long time to close, businesses can directly compare them against the performance of other clients they currently serve. This is especially helpful when selling public safety software or other cloud-based services that use a subscription-based model. Having clear benchmarks is a great way to ensure new clients are bringing in the ROI the company needs to grow and sustain itself.
Optimize Your Sales Efforts
Each company has its own approach to organizing their sales departments. Some operate with a unified sales team overseeing the entire selling process, while others segregate duties between new business outreach and account management.
No matter your team’s setup, optimizing their potential is essential when developing dependable revenue streams.
Often, companies place too much emphasis on obtaining “new business,” gauged by the number of new clients and their potential revenue. While securing new clients is undoubtedly crucial, building up current ones and tapping into upsell or cross-sell opportunities shouldn’t be overlooked.
Striking the right balance between “hunters” (new business development) and “farmers” (account managers) can be the cornerstone of a successful sales strategy. It’s essential to value the reliable income from long-standing customers as much as the upside of prospective clients.
Create the Perfect Growth Strategy for Your Business
Top-performing companies recognize that long-term business growth comes from a blend of regular new business and strong client relationships. Because markets are constantly evolving, yesterday’s profitable areas might not guarantee tomorrow’s success. This emphasizes the need for a comprehensive growth plan that respects both new and loyal customers.
By taking the time to understand the real value of your client base and implementing the right strategy for steady, but sustainable client growth, you’ll ensure that you’re able to sustain the growth you achieve.
Kevin Ruef co-founded 10-8 Systems after exceeding multiple companies’ sales records (both domestically and internationally). With more than a decade in sales, his experience ranges from B2B, B2G, and B2C. Since the company’s start in 2019, Kevin has been responsible for business development, strategic partnerships, and business operations.