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Call us for a chat on +44 (0)20 7836 3678 or Email Jim Piper or David Newman

The subtle difference between new business and business development

Those of you who have seen Glengarry Glen Ross may remember the scene where Ed Harris is telling Alan Arkin about what he learned when he first got into the sales racket:

“You don’t sell one car to a guy, you sell him five cars over fifteen years. But those guys who come in and burn everyone for as much money as they can get and then go to Argentina ruined a good thing.”

I can think of several household name companies off the top of my head that fall into the “burn everyone” category in order to boost sales, particularly within telecoms, utilities and banking. One of the reasons that Nationwide’s “brand new customers only” parodies a few years back were so successful was because so many people have had first hand experience of this type of practice.

It could be argued that we were all brand new customers once. We all had our slice of ‘enticement cake’ when we signed up, so we should just stop moaning and eat the gruel for the remainder of our 24-month contracts. But for every month of gruel I dream about the day when my contract finishes and I can stick two fingers up to the offending corporation and say “You just lost yourself a customer, mister!”

Now I’m sure that my actions won’t be causing sleepless nights to the top brass at the likes of Vodafone or Natwest. But I do have a long memory for perceived injustices against me by big faceless corporations and I’m pretty good about sticking to my guns of never using certain brands again once they’ve made it onto my blacklist. I’m also pretty good at moaning to anyone who will listen about what poor service I had from said brands – and brand reputation can be raised or lowered quicker than ever before in these days of internet review sites, online consumer forums and social networking sites.

So now to my point: according to research from insight group SMG, retailers are expected to spend 64% of their marketing budget on new customer acquisition by 2015 – this is despite the fact that long-term loyal customers are more profitable in the long-run.

New business is vital to any organisation. Whatever industry you are in, there will inevitably be some natural wastage of your client base, sometimes for reasons beyond your control and sometimes not. So for that reason it is crucial to have a pipeline of prospects in order that your business can grow.

At the same time, customer retention is apparently more profitable (although there will be a significant variance of this between different market sectors) and that’s where the business development side comes in. Build lasting relationships with the clients you have in order to sell them more in the long run.

It’s a fine balancing act, but there’s no point in having one without the other.

One thought on “The subtle difference between new business and business development

  1. What’s interesting about the Retailer stat you quote, is that a client of mine did a “buy early for Xmas” promo to their mailing list of several thousand with a free shipping redeem code.

    Net take-up of the offer was ONE CUSTOMER. And over the redeem period they got about 3 times the normal level of orders from new customers.
    Now you could argue that the offer wasn’t attractive, their product set wasn’t attractive to previous customers or the email didn’t get delivered.
    But it seems to the client (and me) that it’s easier to get new customers than to persuade existing customers to re-purchase.

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