How to Grow Your Startup’s Sales Revenue without Seeking New Clients
Because searching for new clients can be a pain in the ass. Why not work with existing clients for a longer time horizon and maximizing their lifetime commercial value?
Right off the bat, this is the answer to my article headline.
The formula is known as Customer Lifetime Value.
“Customer lifetime value (CLV, or CLTV) is the metric that indicates the total revenue a business can reasonably expect from a single customer account throughout the business relationship.”
- How to Calculate Customer Lifetime Value
Pay special attention to the keywords. They are:
- Total revenue.
- Single customer.
- Throughout the business relationship.
None of the keywords suggests continuous penetration of new client accounts. If you are a solopreneur or running a young startup, you are better off without having too many clients.
You want to manage a small number of accounts and grow an amicable plus win-win business relationship.
Let me explain why and how below.
New Client Account Penetration is a Pain in the Ass
This is a necessary evil when we have no clients.
Yes, at this stage, we need to pitch like crazy. We go all out to search for our clients. We disregard their fit and budget depth. We focus on survival first.
We may have to do work for free.
At the beginning, we learn to understand customer personas. We can identify the following:
- Their needs and how we can meet them.
- Their budget.
- How they work.
After a while, we build a library of customer types we want to pursue.
At the beginning of our startup, seeking out and securing big client accounts with an unlimited budget is close to impossible.
To maximize our sales revenue, we need to stretch our revenue stream over a longer time horizon.
From New Account Penetration to Customer Lifetime Value
You need to focus on Customer Lifetime Value if the customers you are working with have such attributes:
- They are your new customers.
- They are retail customers.
- They are fellow startups.
- They do not know what they want, what they are doing, and they want to get something done.
I have worked with each of these categories hundreds of times. I can smell one from standing streets away from my working desk.
In brief — These are difficult clients, each annoying in their own way.
Tip: Everyone has their own way of managing annoying clients, and the meaning of ‘annoying’ differs for you and me. I find the best way to handle such clients is to reduce their population in our order book.We have to strike a balance between growing sales revenue and the number of headaches we get.
How to Grow Customer Lifetime Value?
It depends on the work that you do as a startup owner or solopreneur.
Let me use the example of a website copywriter as I work with many of them. I understand their pain. I am one myself when opportunities come along.
5 Ways to Increase Customer Lifetime Value as a Copywriter:
- Start with one service proposition — Just one. Start with website copywriting or managing their social media accounts. Build trust first before going for the big pitch. Customers with low budget flexibility do not want to deal with sharks with a big appetite.
- Negotiate and include service add-ons in the contract — Do this right from the start. Include foreseeable add-ons such as copy rewrites, call-to-action add-ons, new landing pages web-copy, product whitepapers into the contract.
- Explain the value proposition of a package — Explain to the client that add-ons before contract expiry are at a discount to your usual, one-time ala carte rates.
- Use education to pre-sell add-ons — Secure your main service delivery contract before educating your client. Otherwise, they learn from you for free and seek out your fellow competitors. When you work with your client on the website copywriting, teach them the new features of tools used in the industry. Show them how it works. They will be impressed by your knowledge and not by a higher workload. Seek out areas where they see a business need and do not want to work on.
- Think how you can offer add-ons with Natural Economies of Scale — If you work on website copywriting, you can extend your offer add-ons to newsletters, social media funnels, blogging, live streams, and whatnot. It is a natural extension of your client’s needs.
Note: Think about growing Customer Lifetime Value like drilling an oil well. Constantly searching and validating oil wells is a tedious process. Once you have one, work to continuously harness oil reserves.Summary
Seeking new clients is one way of growing sales revenue.
We cannot just seek out new clients. We have to learn to keep them for a longer time horizon. The way to do that is to embrace Client Lifetime Value as our NorthStar metric instead of client account penetration.
There are 5 ways to do so.
- Start with one service proposition.
- Negotiate and include service add-ons in the contract.
- Explain the value proposition of a package instead of one service.
- Use education to pre-sell add-ons.
- Think about how you can offer add-ons with Natural Economies of Scale.
Working with a small number of diamond clients trump making millions of one-sale, petty sales.
If you want your startup to survive in the long run, embrace a long-term mindset.
Think Customer Lifetime Value.
“The best advertising you can have is a loyal customer spreading the word about how incredible your business is.”
As a content contributor, I write my observations from daily life and my business exposure. Because our life experience is the bedrock of our unique perspectives.