Flip the Funnel: How to Use Existing Customers to Gain New Ones

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Charity Begins at Home

Indulge me for a moment and break out your sales into four categories:

1. Business that comes from marketing-led acquisition or conquering (i.e., first-time customers)

2. Business that comes from repeat customers (as defined by two or more times)

3. Business that comes from successful upgrading or migrating of customers to increased or higher tiers of spending (often defined in loyalty terms based on levels of spending)

4. Referrals from existing customers (new business from old customers)

Then again—that is if you even know how to break out your sales into these categories in the first place. It’s always surprising to me how few companies are truly on top of their customer data—or are able to classify their revenues into just four high-level buckets.

For this reason, let’s make it even simpler and instead break out your sales into just two groups: acquisition-related business (category 1) and retention-based business (categories 2 through 4). Once you have these priceless percentages, I’d like you to overlay these against the total amount of money invested against each of these respective groupings. My gut tells me that there’s probably a huge imbalance between the two analyses.

Why is this the case? Why do we continue to allocate our financial resources inefficiently relative to what really matters?