By Imogen Lloyd on Thu 13 April 2023 in Blog
Sustained business growth is the ultimate goal in the B2B world, and is crucial for long-term survival and success. In this Growth Series, we’ll be diving into the importance of profitable growth, what factors contribute towards it, and how to achieve it.
The Growth Formula
Customer acquisition and customer retention are the most widely recognised methods of expanding and sustaining a durable customer base. However, we often see product businesses focusing more on one while the other exists on the margins of their daily operations, leaving a yawning gap in their business growth potential. Finding a balance between your principal income channels, and distributing your resources evenly, is pivotal to maintaining an effective growth strategy.
While growing your customer base and maximising customer lifetime value are great individual starting points, they become an unstoppable duo when focused on as a whole. ProspectSoft’s Growth Formula divides the key to profitable growth into its two chief components; more customers and higher CLTV. In union, these simple principles of growth allow product businesses to take control of their success and increase profit margins without limitation.
The funnel guides you through the stages of customer acquisition in its most basic form. Of course, while there are more intricate components that bridge the gap between each stage, the funnel model provides a foundational set of steps that lead you to closing that first sale and beginning your customer retention strategy.
Attract: Attracting new customers usually relies on marketing efforts such as email campaigns or telemarketing, and is often referred to as Top of Funnel (ToFu) Marketing. While the aim is primarily to generate as many leads as possible, it’s also crucial to target the right businesses and generate high quality leads.
Sell: After lead generation and qualification, you can now progress to middle-of-the-funnel (MoFu) content. This might consist of sending out samples, providing targeted advice, and guiding your prospects through the consideration stage.
Close: At the bottom of the funnel (BoFu), you’ll be focusing on securing the first sale and converting your prospects to customers. This is referred to as the decision stage.
Onboard: Although you’ve now reached the very end of the growth funnel, the first sale for a B2B product business is rarely profitable. It’s now important to focus on successfully onboarding your customer and encouraging repeat sales.
While the growth funnel alone is a great model for securing large, one-off purchases, most wholesalers, distributors, and manufacturers must incorporate a retention method into their growth strategy to maximise profitable business growth and avoid suffering from a leaky bucket!
Order Frequency: The timeline along which customers repeatedly place purchases should be closely and regularly monitored to avoid the risk of customer churn.
Order Value: This refers to the revenue that an individual customer brings in to your business, and can be enhanced by cross-selling and upselling products.
Retention: Maintaining engagement with your customers and continuing to develop your relationship is key in keeping customers for as long as possible.
Focusing on maintaining and improving order frequency, order value, and retention all contribute to a higher customer lifetime value (CLTV).
The Funnel & Flywheel
Combining the funnel and flywheel means product businesses focus on both customer acquisition and customer retention, ensuring that you’re generating a constant inflow of new customers as well as sustaining your existing customer base.
While the funnel is an ideal method for predicting and increasing conversion rates, the flywheel focuses on building trust with these converted customers and nourishing relationships. So, by using the funnel and flywheel model as a united entity, you’ll be certifying optimal and profitable business growth that prioritises both attracting new customers as well as increasing CLTV, equally.
To learn more about how to achieve continued, profitable growth, keep your eyes peeled for Part 2 in our Growth Series: The Growth Playbook & How to Implement It.