If you consider the teachings of many universities, learning centers regarding customers, there is a common mantra that is put out into the market, but at what cost.

The mantra’s say: Acquiring new customers is costly; holding on to existing customers and getting them to buy more of your products and services is far less expensive. That is why it is important to do everything to keep your customers.

If you consider the teachings of many universities, learning centers regarding customers, there is a common mantra that is put out into the market, but at what cost.

The mantra’s say: Acquiring new customers is costly; holding on to existing customers and getting them to buy more of your products and services is far less expensive. That is why it is important to do everything to keep your customers.

During this month I have conducted several business reviews where sales organizations are not achieving their planned results and interestingly these mantras were alive and well in them. The focus was all about existing customers but the profits were rapidly diminishing. Is this really the right mantra to put through your organization?

I am not saying there is not any truth in what is being conveyed in the business, but there also needs to be some balance to that commentary. You can focus all you want on existing customers but you need equal focus on profitability and replacement of the natural attrition that occurs, particularly in today’s marketplace.

Firstly, managers need to understand that sales people live in fear of losing customers, but they do not live in fear of losing profit. Their theory being if you lose profit over here, you can pick it up over there; we kept the customer. If you don’t have the right measures in place you can experience unnecessary losses when sales people are under pressure to perform. Those measures are not just the gross margin report as that is the affect. You need to be equally monitoring the causes.

Secondly, the sales people that are losing the most profit are those that are not managed with an equal message through performance management for their customer accounts. They are often going to the customers under skilled, lacking tools and business practices that will assist them in maintaining profits, even with the toughest of customers or market places. Managers need to adequately prepare sales people.
Thirdly, attrition rises and falls according to the marketplace and economies. In some years the attrition is quite low and in others you can lose customers, through no fault of your own, in rapid succession. A sales person that is not continually developing new customers will become a high risk member of any sales force.

Sales managers need to place more attention on balancing the existing customer mantra with sound business practices and performance management that support customer retention, customer acquisition and profit simultaneously.

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