Jim Logan

Which revenue is more important for your business today? PDF Print E-mail
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Written by Jim Logan   
Monday, 07 April 2008 16:18
There are only three ways a business can make more money - get more new customers, increase the value of the average sale, and increase the rate and volume of repeat business.

Of the three, two have to do with making new sales - new customers and repeat business.

When I worked in a publicly traded company, new customers were valued more than everything else. Bonuses were paid on new accounts and sales reps who farmed were thought of as less than their hunting peers. I believe that attitude was a sign of the times and market we lived in - telecom equipment sales in the late 1990s - but it existed nonetheless.

I had the opposite experience when working for a late-stage venture backed company. The venture backed company valued repeat business more than new accounts. The reason was repeat business proved market acceptance and viability - you can fool someone once, but it's tough to get people to spend money on a loser a second and third time.

While there isn't a definitive right answer to which revenue is best - companies should chase all three ways to make more money - repeat business has the potential to produce greater margins and overall profitability.

But there's something exciting about the hunt :-)

Every business needs to continue to attract and win new customers. And every business needs to keep the customers they have and continue to maximize their relationship over time (there are exceptions, but this is a general rule).

So, with no scenario except the reality you live...Which is more important for your business today - more new customers or more repeat business? Why?
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