How crucial new sales are to your business

How crucial new sales are to your business

Every start-up wants to grow their business, but have you thought about why you NEED to grow your business or at least keep your sales funnel full? Let’s discuss how a healthy flow of sales is crucial to your business and practical steps you can take today to ensure that it’s a priority for your organization.

Start with Retaining Existing Customers

Every income statement starts with the total amount of sales generated at the top. This is where it all begins. Just as not paying attention to your roof can cause damage to everything underneath, not focusing on sales can hurt the rest of your business. Managing a healthy top-line starts with keeping your current customers happy and loyal. You will never be able to keep all your customers as certain circumstances are out of your control. Let’s call this, “uncontrollable lost business.” However, controlling everything you can to reduce lost business as much as possible will go a long way for your organization’s financial health.

Signing up new customers to replace lost ones does not move the needle that truly matters to you, profit. In actuality, you will see a drop in profit as new customers are traditionally more expensive, in most industries, to service than existing customers. While your top-line may remain the same on paper, your bottom line, or profit, will take a beating.

So, you have a solid product or service with a strong, loyal customer base. Now it is time to think forward. You can initiate some effortless, organic growth, which will lead to even more new customers, by remaining close with your current customer base. Schedule regular check-ins and provide opportunities for your clients to be vocal about your products or services. Ensure that what you are offering is still benefiting them. If they are changing, how can your product or service flex with them so your value proposition does not diminish over time?

Regular check-ins are also great opportunities to add additional products or services to your existing customers (organic growth) and gain word of mouth referrals and recommendations to strengthen and grow your brand! The easiest new business to gain is hiding within your current customer base. The second easiest new business you will ever sell has been tee’d up for you by a mutual connection you both trust.

Grow your Client Buffer

New sales provide you with a cozy safety blanket to help you sleep better at night. There is nothing riskier than surviving solely on the business of a few loyal customers. No matter how loyal they are now, many things can change that relationship at any moment. To name a few:

  • A drop in your customer’s revenue, forcing reduced spending
  • Going out of business
  • Replace, or overhaul their procurement strategy
  • Restructure or further develop their business so they don’t need your product or service anymore
  • New leadership with loyalty to a competitor of yours

It’s also important to track new customers signing up to know how fast you are growing and how effective your existing growth strategies are. This tracking needs to be executed on a variety of levels to properly identify your business development’s strengths and weaknesses. The final result should always illustrate how much more revenue was added to your top line, which should be compared to the prior month, quarter, and year performance, as well as projected performance. However, a more detailed tracking system should be developed for all KPI’s (Key Performance Indicators) to thoroughly understand how revenue growth is impacting the rest of your business. Some basic KPI’s include:

  • Lost business
  • Net promoter scores
  • +/- industry/organizational bias
  • Number and type of touches required to generate an opportunity
  • Number of new opportunities
  • Closing ratio
  • Average account size
  • Gross margin and selling costs as a percent of sales

It will not be possible to truly improve unless you possess, and understand all the information.

Use NEW demand to BOOST your EXISTING margins

With an increase in new customers signing up to do business with you comes an increase in demand for your organization. This increase in demand can easily bring about justified price increases which, in turn, increase profit margins. Who doesn’t like and benefit from that!?

But wait, new business isn’t done boosting your profit margins just yet. Every organization has necessary overhead such as salaries, benefits, rent, utilities, permits, licensing, etc. While some of these are variable costs that can fluctuate with growth, many of them are constant whether you have 100 or 1,000 customers. 

So, the more customers you have, the more sales you have, the smaller your percentage of sales for each of these fixed expense categories. Fixed expenses do not change, at least not frequently. They remain constant, even as your business grows. The percentage of sales is a great way to look at expenses. Some expense categories may seem excessive at first glance, but a simple comparison (percentage of sales) to top-line sales will help you better understand its true impact on your profitability. This is done by dividing the expense total by the total amount of sales to see how much of the pie each respective expense category is occupying.

Here is a very basic visualization of standard rent expense as follows:

100 Customers% to sales125 Customers% to sales
Gross Margin$820,000.0082%$1,070,000.0085.6%

*assumes every customer spends exactly $10,000 with you


New business is an absolute necessity for a healthy top line (gross sales), a stable future, and a healthy bottom line (net income) and it all starts with understanding, listening to, and retaining your current customer base. 

New business can provide justification for price increases from greater demand for your strengthened brand and a bigger blanket to cover all your fixed overhead expenses.

Plus, the more often and bigger your team wins, the easier it becomes to win on a consistent basis. Winning ingrains itself into the DNA of your culture and everybody wants to work for and with WINNERS!

If you could use some assistance creating and/or implementing a highly developed and practicable sales process for more efficient, effective, sustainable sales growth, then give Kassner Keen a shout to see if a Keen Collaboration is right for you and your team!