Selling more stuff to existing customers

So how does senior management increase revenue?  There are only two ways to do this: sell more stuff to new customers, or sell more stuff to existing customers.  Selling more stuff to new customers is the harder of the two paths, by far. 

Let’s start with selling more stuff to existing customers.  Good management will have a significant focus on its existing customer base.  An existing customer is worth five times the revenue of a new customer.  That’s the reason there are so many loyalty programs in business today – you have to keep the customers you have today – and sell more to them – by making them unconditional happy partner/customers! 

What does this mean for marketers?  These are the “easy putts” on the golf course of business.  You’ve already got a relationship with an identifiable revenue stream.  Your focus will be on retention and loyalty – you’re not concerned (for the most part) with mass media channels – in fact, you’re more concerned with targeted communications directly with this base.  So think like a C-Suite person for a moment and develop a question they would like to have marketing answer.  Perhaps there are questions in their mind like, how much revenue is attributed to this portion of our current business?  What is the retention rate?  What are we spending to communicate with this critical group?  How are we engaging them to generate word of mouth sales?  They most certainly will not be thinking about GRPs, page views, etc.!

Maximize Revenue

So some of the “making money” goals are rather obvious – some are not.  Let’s take a look a the fundamental equation of the vast majority of companies C-Suite focus:

Profits  =  Revenue  –  Costs

Brilliant in its simplicity!  In order to make money there are really own two things you can do: maximize revenue or reduce costs.  Everything else is subtext – mere footnotes to the primal objective.  Let’s take a look at these two major players first.

Maximize revenue.  The goal of maximizing revenue is nearly universal in the business world.  There are exceptions in the not-for-profit, non-profit, foundation and gifting world, but nearly all companies are trying to at least move to increasing revenue – even if in the short term the metric of new subscribers acts as a proxy for the eventual need to show revenue to the investors.  Senior management is often manically absorbed in this goal – particularly the finance, sales and general management functions.  This may not directly be a big goal of human resources or operations functions, but everyone they report to will have this myopia. 

Goals of management

Goals of Management

Managers in all companies have common characteristics.  We can generalize that in for-profit companies, these goals focus on increasing the “success” metrics of the business.  This success metric varies wildly depending on the business growth cycle they are in and how they perceive their strategic future. 

For instance, a start up internet-based company may consider success as trial users, new users, purchasers of the service, or renewal memberships.  Notice that the words profit, revenue, sales, etc., are not important measures to them.  The efficacy of this model is the subject of great debate – led by the likes of Amazon which proudly claims that they still haven’t made any money – yet.  They are focusing on owning the world first, then making money from the world that they own later.  And Wall Street agrees with them given their valuation!

A mature company may not care much at all about trial users as a primary metric of success.  They may be focused instead on maximizing revenue per customer or overall sales. 

The point is that while every company will undoubtedly have varied and specific goals related to both their business cycle and management, the vast majority are focused on one big goal – making money.

Core Competencies to Earn a Seat at the Table

In my last blog, I suggested that you must EARN your seat.  You must become a valued contributor to the overall discussion – one that lends both knowledge and insight to the conversation in a way that helps the C-Suite make the hard decisions. 

To do this, you need to understand how senior management thinks about company performance; know which specific results drive their success and thus their motivation; and tailor reporting and communications to reflect marketing’s true contributions and earn a “seat at the table.”

My blog readers will acquire a foundational understanding of:

•       How business leaders think strategically

•       “Red flags” that guide decision making

•       The critical role of marketing/advertising in business success

•       How to create and prioritize Key Performance Indicators (KPIs) that are relevant to top executives

•       How to determine Return on Investment and Return on Objectives, and the difference between them

•       Marketing’s role in delivering Shareholder Value

We will accomplish this through a logical progression of the above core competencies. 

Earning a seat at the management table

Business acumen and a “big picture” perspective are essential to participate in the executive management decision process.   Without these skills the marketing person remains shrouded in the mystery of the unknowable return on investment activity that is classic marketing.

You need to know about executives’ profit/loss management perspective and how marketing can contribute to various business models.  With this knowledge you will be able to navigate the waters of the C-Suite and eventually….

Earn a Seat at the Table

What does this mean, to “earn a seat at the table?”  Senior management rarely has the patience and time to spend with people that do not have a contribution to the overall conversation and forward looking perspective needed to run a company.  Sitting at the “table” does not mean you are valued.  You may have been given that seat by a predecessor or by convention (we need SOMEONE from marketing at the meeting). 

You must EARN your seat.  You must become a valued contributor to the overall discussion – one that lends both knowledge and insight to the conversation in a way that helps the C-Suite make the hard decisions.