One in three customers do not buy your complete range of products and services. Why? Well the answer is very simple! It’s because they don’t know you offer them!
So is your business unknowingly falling victim of this profit-crushing statistic?
A thought-provoking question, isn’t it?
Some say the problem is even worse, that it’s closer to two out of three. Of course it may be different if you have only one product or service, but just to put this in context, one well-known media company I coached in this area had just four products and services, yet their penetration rate of all four products into their customer base was just 1.27%
There was a caveat; when we profiled the customer base we discovered only 10% were prime for all four products and services, but even so there were still phenomenal growth opportunities lying dormant in their existing customer base.
Let’s bring this idea to life…
If I were coaching you and your team, one of the first exercises I’d ask you to complete would be to write down on a piece of paper, in five seconds, a number that equates to the total number of products and services your customers can buy from you.
In nearly 20 years of doing this exercise, the response – 99.9% of the time – is the same: I have yet to find an organization with more than 20 people and more than 10 products and services where there is instant and unanimous agreement on the total numbers of products and services they offer.
If your team cannot quantify the precise number, who else can’t? Your customers!
The No.1 problem
The number one reason customers do not buy ALL of your products and services is that they simply don’t know you sell them. Now, whilst being a challenge it also offers one of your greatest opportunities for creating accelerated growth.
Could this be the case in your business?
A few questions to bring this idea to life;
- Have you ever come away from a customer meeting and thought, ‘I should have asked about . . .’?
- Have you ever had a customer tell you they’ve bought a product or service from someone else, which they could have bought from you? How frustrating is this?
- Are you missing sales (and cross-selling opportunities) of products and services, to current customers?
- Do you have a process to educate and up-sell to customers your full value proposition of products and services?
If you answered yes to any of the first three questions and a resounding no to the fourth, then you’ll find enormous benefit in the Proposition Matrix…
The Proposition Matrix
Is your success formula that guarantees you and your people will consistently educate your customers on your full range of products and services, and it’s simple to put into practice.
This is how it works;
Imagine a grid, a chessboard, like the one below. On the vertical axis are all your customers and on the horizontal axis your products & services. All you do is colour in the meeting square where the customer currently buys your product or service.
The squares that remain uncoloured are your ‘acres of diamonds’, and through an ongoing process of educating and engaging with your customers on those open spaces, you can start to maximize and unlock the potential in your existing customer base.
Education and engagement can be achieved through face-to-face contact, email marketing, direct mail and telesales, or any number of other media.
There are differing surveys, articles, and expert opinions on the frequency with which customers need to see or hear about your business in varying forms. However, the underlying message is the same: the process of education and engagement never stops.
Measures that matter: Penetration rates
It is fascinating when you start to measure the penetration rates of your products and services. There are three critical measures to focus on.
First, the overall penetration of your products and services into your entire customer base; second, your penetration by product; and third, your penetration by customer (see below).
The benefits of the Proposition Matrix
What if I told you one business I coached grew from £3 million to over £12 million in just two years by understanding its business better through the Proposition Matrix.
Or that a major media company with over 500,000 customers and just four products and services increased sales to existing customers by 227% on one product line and 183% on another in just six months.
What impact could the implementation of this strategy have on your business?
Personalizing the Proposition Matrix for your business
- Identify your list of customers and prioritize them on your matrix by classification band. Depending on the number of customers you have, you could have separate matrices for Platinum, Gold, Silver, and Bronze customers. This process will give you in-depth data to inform your market potential strategy for each customer profile.
- Have a separate matrix for new business, dormant, and prospective customers. Yes, the Proposition Matrix will work just as well for acquisition activity.
- Create your Matrix either in Excel or linked into your software/CRM system.
- Identify which customers have bought which products and services and design your education and engagement strategy to target the gaps (your acres of diamonds).
- Track the Measures that Matter in terms of overall penetration, by customer, and by individual product and service proposition.
- Keep great records of the increase in penetration rates, revenue and profits as you apply this idea in your business for accelerated, sustained and profitable business growth.
About the author
This guide has been written exclusively for ByteStart by Royston Guest. Royston is author of Built to Grow, a blue print to help entrepreneurs, business owners and professionals understand the guiding principles of accelerated, sustained and profitable business. Join Royston’s Built to Grow Facebook or LinkedIn Group and access exclusive content, articles and insights on how you can deliver accelerated, sustained and profitable business growth.
More from ByteStart
ByteStart is packed with help and tips on all aspects of starting and running a small business. Check out some of our most popular guides;
- Wisdom of Crowds: 4 ways customers can improve your company
- How to turn your customers into your best sales force
- How to develop a strong USP and how to use it to attract more, high-value customers
- How to get your customers talking online
- The power of referrals – How tradesmen can win new customers online
- 10 advantages running your business as a limited company has over being a sole trader
- How to set up a limited company
- 10 Do’s and Don’ts of writing a business plan
- How to choose the best online accounting software for your business
- 15 Questions you need to ask an accountant before you hire them
Promoting your business
- Making your small business a BIG hit online – A Digital marketing guide for small business owners
- How to create business cards that make a big impression
- The “Magic 10” Tips on networking – how the experts build great networks
- A Practical guide to Content Marketing for small business owners and start-ups
- 10 Top tips for small businesses starting out with social media
Going for growth
- Developing your startup’s greatest asset – YOU
- The Founder’s dilemma – Managing the transformation from start-up to growth business
- How finding a great mentor could help you to grow, and your business to flourish
- Barriers to growth – how to identify them and how to overcome them
- 5 Steps to kick-starting growth in your business
- Which types of insurance must your business have?
- Becoming an employer – Your responsibilities when you hire staff
- Health & Safety compliance for small businesses – where do you start?
- A Guide to the National Living Wage for small business owners
- Why it’s vital you have clear ‘Terms & Conditions’ for your business
Funding your business
- How to maximise your chances of securing a small business loan
- A Guide to ‘Alternative Finance’ – the new funding options for startups and small businesses
- Finding finance for your new business – funding advice for start-ups
- How peer-to-peer lending offers businesses a new funding option
- What to do when the bank says “NO”!