A♦️ Be a big fish in small pond : A simple formula for growth

  Have you as a business leader ever thought about how many new customers you need each year? It's a pretty simple and obvious question, but most of us don't ask it because we focus on the revenues and budget. In today's market, businesses are constantly vying for customers. To stand out and secure long-term contracts, it's imperative to develop a robust sales strategy that goes beyond traditional tactics.

Personal Context

Having spent years navigating the competitive landscape of the technology industry, I've witnessed firsthand the power of strategic sales techniques. Too often I’ve seen fast growing formerly successful startups stumble as the very entrepreneurial approach (it’s a deal and it’s revenue so it’s cash) that caused them to thrive as a startup causes them problems as the business gets a little larger and they find they are one of many players competing on price in a big market.

Problem or Challenge

As they get a little larget many businesses struggle to differentiate themselves from competitors and build lasting relationships with clients. This can lead to lost sales, decreased market share, and hindered growth.

Complexities

Overcoming this challenge can be difficult due to various factors. You may prioritise short-term gains over long-term relationships, potentially neglecting relationship-building efforts. Additionally, your sales teams might lack the interpersonal skills necessary to cultivate strong connections with potential clients. Furthermore, the fear of competition can hinder your business from highlighting your competitors' weaknesses, as you may worry about the negative repercussions.

Solution

To effectively convert revenue into new customers, you need to understand two key metrics: average order value and customer churn. These numbers help determine the number of new customers required annually. And in turn helps you accept the need to focus.

For example, a £5 million business with 50% recurring revenue needs £2.5 million in new business. With an average order value of £25,000, this translates to 100 new customers. This calculation influences marketing strategies.

If your conversion rate is 1 in 10, you only need 1,000 prospects annually. A focused target market is enough to grow. Targeting a smaller market makes marketing more efficient, builds your brand and your competence.  All increasing your return on investment.

So avoid the common mistake of aiming for a massive market with a tiny conversion rate. This demonstrates a lack of understanding of your target market and can lead to expensive marketing efforts. By identifying a more manageable market, you can optimise your marketing strategy and achieve better results.

For sales success, consider the following strategies:

1. Cultivate high-level relationships: Invest time and resources in building relationships with key decision-makers within your target organisations. Engage in networking, attend industry events, and seek opportunities for face-to-face interactions.

2. Understand your competitors: Thoroughly research your competitors' strengths and weaknesses. Identify areas where you can differentiate yourself and highlight their potential shortcomings.

3. Sowing seeds of doubt: While avoiding direct attacks, subtly question your competitors' offerings. Emphasise potential risks, uncertainties, or limitations that may be associated with their products or services.

Benefits

By implementing this strategy, you can:

• Build stronger customer relationships: Deep, long-lasting relationships can lead to increased customer loyalty and repeat business.

• Gain a competitive edge: Differentiating yourself from competitors can help you secure more deals and increase market share.

• Reduce customer churn: Satisfied customers are less likely to switch to competitors.

Why it Works

This strategy works because it leverages the power of relationships and psychological tactics. By building strong connections with decision-makers, you can influence their purchasing decisions. Additionally, sowing doubt about competitors can create uncertainty and make your own offerings more attractive.

Measurement

To measure the effectiveness of this approach, track metrics such as:

• Customer acquisition rate: Monitor the number of new customers acquired.

• Customer retention rate: Track the percentage of customers who remain loyal to your business.

• Average deal size: Analyze the average value of closed deals.

• Sales cycle length: Measure the time it takes to close sales.

Conclusion

By adopting this proven strategy, you can elevate your business's performance and achieve long-term success. Remember, building relationships and sowing doubt are powerful tools that can help you outshine your competitors and secure valuable contracts.