Companies should concentrate on targeting repeat business from existing customers when trying to increase sales, a leading financial consultant has warned agents.
The cost of acquiring new customers can often be prohibitive or inefficient when managing a business, Simon Pratten, managing director of consultancy service Transitions, suggested.
Pratten suggested agencies and similar to other business sectors do not make good use of their current client base, focusing often on looking for the “exciting new win” rather than securing another sale from an existing customer.
“Attracting new customers is more costly”, Pratten argued in the well-attended session this weekend.
Highlighting the classic 80-20 rule, where 80% of a company’s revenue comes from just a fifth of its client base, he added: “People do often not see that there good use of their time could come from their existing business customers.”
Meanwhile, the key question for travel firms, argued Pratten, is whether the cost of introducing new products can be met at the same time as acquiring new customers.
Too much emphasis on new products could lead to the creation of a disconnection between it and the time and resources needed to maintain the current sales model.
Pratten also advised travel agencies to ensure that if they create a “cash cow” business, where quick cashflow is created on the back of a strong launch, profits are pumped back into new areas of the company. He said the temptation by many companies is “to say ‘it’s great’ [the profits] and ease off” but reinvestment will help when the original cashflow begins to tail off.