How do you sell to a current customer as opposed to a new prospect?
It’s an often-repeated maxim in solution sales, that a salesperson’s chances of closing a deal with a prospect are rated at about 1:3 or even 1:4. However, if you are selling to a current customer rather than a prospect, those odds improve dramatically to 2:3.
Why is it that the chances of closing a deal are so dramatically improved when dealing with an existing customer?
Reason #1: You’ve gained their trust
Undoubtedly, the critical difference between a new business deal and client deal is trust. If you have already completed one transaction and, most critically, the customer is satisfied with the outcome, you will have begun to earn their trust.
Reason #2: You represent a lower risk
Because there is trust, the decision-maker(s) will feel instinctively that it is less risky to go with you again; because of this previous interaction.
Reason #3: You have an established process
If you have already sold something, delivered it and got paid, chances are that commercial terms have already been agreed. Because you have gone through this previously and are already set up with the customer as an existing (or even approved or preferred) supplier, they will be less inclined to go through their process again with someone new.
Reason #4: You wield greater influence
The hardest part of a salesman’s role is getting a first meeting from cold. This is a totally different scenario for an account manager who has an established relationship with his customer.
Assuming that these factors (amongst others) hold true, the existing supplier should be in an unassailable position, shouldn’t they? Yes, but it is often the case, however, that incumbents do not properly leverage the advantages they have, due to a number of different reasons. Two of these reasons are the culture of Service Delivery & Relationship Management, and the flawed concept of Hunters & Farmers.
The attached toolkit explores these two concepts in more detail, as well as outlines Frog’s recommended method for mastering account development planning.