Generating revenue doesn’t always mean obtaining new customers. With the right strategies, you could earn more from your existing customers, too. Start with these simple ideas for generating more revenue with the help of your existing customers. Ask for Referrals Asking for referrals hasn’t gone out of style—the SBA even recommends it. During the startup phase of his business, my financial planner ended every conversation with: “The best compliment you can give me is a referral.” It took him only 10 seconds, and it prompted me to consider who I could send his way. How to Ask Are you a digital-first business? Start your quest for referrals by inserting a phrase like “Recommend us to a friend” into the footer of sales receipts and order confirmations. Next, identify when it feels most logical to ask for referrals verbally. You want it to feel natural, not forced. For example, during checkout, a bike shop manager said, “We rely on word-of-mouth referrals and would appreciate anyone you send our way.” I would have recommended that store without his prompting—but only if someone mentioned they were bike shopping. His verbal request now has me singing the shop's praises proactively because I want this shop to succeed, and part of his success includes referrals. If your company focuses on B2B sales, Salesman.org suggests asking for a specific introduction rather than a generic referral. An introduction to a buying manager jumpstarts the sales conversation, resulting in a quicker lead-to-customer conversion. As you navigate the referral request landscape, here are 2 important caveats. Ensure you’ve earned the right to more business. Did you fix a broken furnace on short notice or with parts that actually improved the performance of an aging appliance? Ask away! Did you fix the furnace and forget to order a key part so the job took 3 days and 2 trips longer than expected—and then you billed the customer for extra trips? Maybe not — a less-than-wowed customer won’t send business your way. Tread lightly and only occasionally. If you ask the same customer for referrals too many times, they might ask you for a sales commission, which could unexpectedly eat into your bottom line. Or your effort could be ignored entirely. Cost Referrals can be an affordable method of generating revenue from existing clients—asking is free. If you choose to implement referral program software, the current costs start at $200/mo or more. These apps are a great way to track and incentivize referrals (e.g., entry to win a gift card for each referral), although they do add an expense. Caution: Referrals Are Warm Leads Only Referrals are a great tool, but they aren’t automatic revenue. You’ll still need to convert these warm leads into paying customers. Re-engage Inactive Customers “I wonder why we haven’t seen Jimmy in a while…” Customers who’ve previously done business with you, but have since gone dormant, can also be a source of revenue. A simple nudge to remind them you exist may be all it takes. For example, a family-run beach-side hotel recently emailed me: “We miss you. Come visit us this off-season.” They included the perks of a pre-summer visit: fewer crowds and cheaper rates. That email reminded me that I’m way overdue to book my pre-Memorial Day weekend, and converted me into a customer. How to Re-engage Review and segment your list of inactive customers: this allows you to prioritize your focus and determine how to communicate. It might make sense to prompt high-dollar customers first, with a text or a phone call to your older clients. Want a new approach? You could reach out through social media, too, with a DM or a friendly, supportive, and even helpful comment on their post. Ultimately, the goal is to re-engage the customer, not scare them off. Take a sincere approach rather than a this-is-the-last-time message. Let the customer know you want them back. You may even want to ask for feedback to identify why they’ve gone dormant. Are they an unhappy customer, or was your product so good that they don’t need another one just yet? Cost Initially, the main cost for re-engaging will be the time it takes to identify and communicate with inactive customers. Adding a “reactivate” campaign into your existing digital processes (e.g., an e-newsletter) won’t cost much. Sending print mail or calling customers might cost you a few hundred dollars. Text or SMS services are also available for sales professionals and teams. Depending on the service you choose, the automated services can also track leads, keep a record of all conversations, and feel like a personal message from your rep. If you’re on the fence on whether to spend any money at all to re-engage clients, consider calculating the customer's lifetime value (CLV). That may help you narrow down which dormant clients have the best long-term value for your business. Will Customers Re-engage? The effectiveness of this strategy depends partially on why your clients are dormant. Dissatisfied customers have to be convinced that your product or service has improved. On the other hand, happy customers who haven’t needed your product again may only return if you have something new to offer them. Set Up a Loyalty Program Loyalty programs aren’t the cheapest method for increasing revenue—but they can be effective. I can attest to that. An independent hardware store occasionally sends me a $5 reward. Compared to my overall home goods budget, that's pocket change. Their offer persuades me to buy from them for 2 reasons. First, that reward shouts, “You’re important to us.” Second, I view that reward as “free” money to splurge on a fun item like a new plant, which requires buying companion products, like a pot and potting soil. That $5 “reward” translates to a $15 purchase. How to Develop a Loyalty Program Designing a loyalty program first requires identifying your goal. Do you want to encourage repeat business or generate new leads by combining it with your referral program? The success of your loyalty programs also depends on offering a reward that your customers want and that’s easy for the customers to use. Not everyone is motivated by a free Atomic Sub. Cost You can tiptoe into it by using punch cards. Costs would be minimal—the price of the punch cards and the expense of the reward plus any required training of your team regarding how to handle and process the redemption. Savvier digital programs (the kind that track rewards for your customers) do cost more but can simplify the process for everyone as well as provide key analytics so you know whether or not they’re working. If this seems like a better option for your business but the upfront cost is a barrier, you can work with Lendio to find the right financing option. Should You Create a Loyalty Program? Loyalty programs typically generate 12–18% more revenue, but that doesn’t always mean you should pursue one for your business. A program might generate $100 in revenue, but cost you $300. If so, the math doesn’t make sense. However, that expense-to-revenue ratio may be justifiable if the objectives include building brand awareness and loyal fans. Maybe your customer didn’t increase her direct spending with you by 12%, but the friends she sent your way did. Choosing Between New Customers and Existing Customers If limited resources mean you need to choose between acquiring new customers and retaining and engaging existing customers, you may be interested in this analysis from Profitwell, which sums up the answer like this: New customersLower ROI due to resources required to reach and competition vying for their attention, among other factors, although new customers are required to continually replenish your customer base.Existing customersHigher ROI and lifetime value. Since these customers already know you and trust you, it may be easier to get them to continue to spend money with your business or even spend a little more in each transaction. Also, if resources are limiting your ability to grow your business, you may want to consider financing. Check with Lendio, where our 15-minute application (with no credit impact) can quickly let you see what’s available to your small business. Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.