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First some clarification to make sure we are all on the same page here. When we say “grow your business” we are referring to generating more revenue and essentially increasing your profits. What we are not referring to is mergers & acquisitions or anything like that.  Just simply selling more products or services to more people more often. Period!

  • Method 1: Gain new customers or clients

  • Method 2: Increase the profit level of the average sale

  • Method 3: Increase repeat business

Pretty simple, right?  Yet, in our experience in consulting and advising many businesses here in New Jersey and from across the country in their marketing we often find that about 99% of them have this belief in common:

“To generate more money for our business, we must market or advertise to gain new customers first and foremost.”

I am not saying most businesses neglect repeat business. However, it never seems to be emphasized enough, and certainly not nearly as much as marketing to gain new customers.

Now, if you are a completely new or start up business, you do need to focus all of your efforts in gaining new customers. However, if you are more established and at least have a customer base, whether large or small, you could very easily be sitting on profits that are going ignored.

Here’s a quick example of a project we worked on last year. One of our marketing consulting clients here in NJ wanted to increase their sales.  After analyzing their records for the past 2 years I determined that over 70% of their 3,000 customers used them once and then never came back again!

We quickly developed a “back-end sales strategy,” or better known as a repeat business strategy.  I assured them that follow this program for 6 months to a year and do not be surprised if your business doubles or triples in sales growth easily!  To date, I hear things are going quite well for them.

So if you have been in business long enough to have a customer base, whether they are still actively buying from you or not, figure out how many come back often. Find out how long its been since many have come back again.

Do you even have a reason for them to come back? What can you offer them as an incentive? 

Here’s why marketing for new customers is usually NOT the most cost effective way to generate new revenue both short term and long term.

Marketing requires resources (time, effort, energy, and money.)  When aimed at gaining new customers, it requires much more in resources to accomplish significant results.

Think of it like this: How much do you currently spend on marketing to attract new customers?

If your marketing budget was $2,000 a month and on average it brought in 20 customers who spent on average $200 each, you are essentially spending $2000 to bring in $4000 resulting in a net of $2,000.  Of course, for retail business and product sellers, their profits margins may make this even less attractive.

However, what would it take for you to bring in 20 new orders a month to an already existing customer base?  Maybe if you sent out a mailing costing about 50 cents each to 300 old customers, 20 would respond.  In that case, it cost you only $150 to bring in the same $4,000 in revenue.

This couldn’t possibly be more relevant now than ever before. With a down economy right now and a war going on as I write this during April 2003, more and more businesses are facing the “pinch” of having to spend less, yet produce more.

So my advice to you is to focus more on your existing customers.

Now, what else can we do to quickly generate higher levels of revenue for you?

When a customer or prospect is about to do business with you, can you offer anything else to the order or sale?  Can you include an “add-on” product or service?  If you can, you can increase the average profit level of each sale!

Now, for that equation I promised you. Take out a piece of paper and write this down: 

  1. Number of prospects (potential customers)


  1. Conversion Ratio (Out of every 10, how many buy?)

(This would give you the number of actual customers)


  1. Average Sale Price


  1. Average number of repeat purchases


Your Total Revenue

 Then fill in your historical figures.  Which area can you improve upon the best  in?

Are you lacking in enough leads or walk-in traffic or hits to your website or phone call inquiries?  If so, ask yourself how can you improve the response to your marketing. If you are not doing enough or any marketing, get started!

Are you getting calls and leads from potential customers, but for some reason you are not converting enough of them into paying customers?  If so, ask what is keeping people from doing business with you?  Better yet, ask them why they went elsewhere. If that’s not possible, or applicable, look internally. How do you compare to the competition?  Are your employees or yourself well trained and capable of handling customers’ questions and concerns?

What’s the average price or profit level per sale or business deal for your company?

This figure can be calculated by dividing the total number of orders or sales into the total revenue for any given time period.

If this figure is smaller than desired ask yourself how you can increase it. Honestly, some businesses can legitimately get away with charging more for their services or products. They may have been charging less than the competition since they were a new business and wanted to be competitive. But now since they are more established they can charge more along the lines of the “going rate.”  Other businesses can differentiate their products, services, or company on quality. In that case, communicating this to your customers can warrant a higher price.

 Or as I mentioned earlier, can you include anything else to the sale for a higher profit level?

Finally, how many times does your average customer use your services or buy your products?  If you don’t have this information, start getting it. It’s easier to get than you think and is very important to have.

If you do have it, just divide the total number of orders or sales by the total number of customers for a given time period to get this number.

If this is lower than desired, there are many questions to ask yourselves.  Is the quality of our customer service lacking and sending people away? On the other hand, is there anything else we can offer our customers? If so, do they know about all we have to offer? If not, how we can let them know?

So there’s a lot of information and a lot of questions to ask yourself about your business. Whether you are just starting out or you are already an established business just looking to continue to grow, these are some important considerations.

That formula of the 4 Parts leading to your total revenue can provide a very useful guide to determining just where you “drop the ball” or what can be improved upon.

This Business article was written by Chris Philippi on 3/21/2005

Chris Philippi is president of Philippi Marketing & Associates, a retail consulting firm specializing in helping independent retailers and small retail chains increase sales quickly, easily, and without expensive advertising. Chris is co-author of The Worlds Greatest Business Mentors and is available for speaking engagements and consulting around the world. Contact him at
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