New Customers Grow a Business. So Do the Ones You Already Have.
David Lertola and his partner Tom are Midwest CPA clients who bought REK Marketing and Design, a small business digital marketing agency. We asked David to share what he learned in his first year of ownership, especially about growing a business through the customers it already has.
Chris Barrett, Midwest CPA
When my business partner Tom and I first took over a small business digital marketing agency, we were only offering two services: building a website and search engine optimization (SEO). The business had strong local SEO rankings, so it was surviving on new customer leads, but churn was a problem, and you can’t outrun a leaky bucket. Closing new customers mattered from day one, and it always will, because a company that stops winning them quietly starts dying. The part we had to learn was how much growth was already sitting in the customers we had, and it took us a few tries to work out how to unlock it. The answer was less glamorous than any sales campaign. It came down to actually talking to people.
So where does growth come from after you buy a business?
Both ends, and you do not get to skip either one. You have to keep closing new business, because that engine never gets to idle. The side we underrated at first was the money already parked in our current accounts. When I took over, almost everyone on the list paid us for one of those two services and nothing more. So while we kept chasing new clients, we also sold more to the ones already paying us, which grew revenue without spending a dime to acquire anybody. Here is the part worth sitting with as a buyer. You already paid for the hardest thing to get, a customer who trusts the business enough to keep paying it. Selling that person a second service is faster and cheaper than winning a stranger. New customers and current customers are not an either-or. They are two engines, and most owners only ever fly one.
How do you figure out which services to add?
Ask, then believe what they tell you. Tom and I landed on that the hard way, and it took us more than one try. Our first idea was to build the services we were sure clients would want and then sell them. We mapped them out, felt pretty clever, and watched almost nobody buy. Dead quiet. So we flipped it around and started holding monthly meetings with customers: no pitch on the agenda, just checking in on how their business was doing. Somewhere in most of those talks a client would mention a problem they were stuck on, and usually it was something we could fix with a new service. That was the easy sell, because it was their idea before it was ours, and it helped both sides. Some of those problems pulled us past our core offering, and since a small business rarely gets to wave off revenue, we stretched to cover them. That stretch taught us parts of this industry we would not have learned otherwise. Sometimes it was a one-and-done because the juice wasn’t worth the squeeze, but that is an important lesson in itself.
What is the first thing to fix in a business you just bought?
For me, it was the silence, and it was loud (no pun intended). The previous owner wanted nothing to do with proactive communication, so a big piece of the client list had not heard from the business in months. Some had not heard a word in years. They were paying every month into a void. The first calls we made were pure cleanup, reaching out to people who had no reason to think anyone was still watching their account. A surprising number of those conversations turned into upsells, because the moment someone feels heard, they tell you what they actually need. The bigger win was quieter than that. Trust that had worn away on autopilot started to come back, and clients stopped feeling like a line item on autopay. If you buy a company from a hands-off seller, assume the relationships got neglected right along with everything else, and make repairing them the first thing you do.
How do you keep competitors from stealing the customers you just paid for?
Be the first call when something smells off. We have had clients bring us a problem a competitor pointed out, usually one working an angle to pry the account loose. A year earlier, with nobody on our side ever reaching out, that is the exact script that ends a relationship. A stranger says something alarming, the current vendor is nowhere to be found, and the client walks. This was the root cause of our churn problem. Now, because we were already meeting with them every month, it went the other way. The client brought the competitor’s claim straight to us instead of acting on it, we worked through it together, and the account came out stronger than it started. A moment that should have been a cancellation turned into trust. None of that happens if you are invisible to the people paying you. You cannot defend a relationship you are not in, and keeping one takes far less than winning back what you lost.
What actually grows a small service business?
More ways to get found. I make this case on half of my sales calls, because a lot of owners treat a website like a finish line when it is really a starting line. If word of mouth is your only source of leads, you have almost no control over how many show up or when, and referrals are great right up until the month they dry up and leave you refreshing your inbox. A real digital presence hands you a lever you can actually pull. A site that ranks. Ads that run the second you switch them on. Each channel you add is one more way to get found on purpose instead of by luck. If you are sizing up a service business to buy, look hard at where its leads come from. One channel is a risk wearing a business costume. Several channels are the real thing.
A year in, what surprised me most is how little of this came down to marketing wizardry and how much came down to paying attention. We bought a customer list. What Tom and I inherited was a stack of relationships nobody had maintained, and most of the growth came from the slow work of maintaining them while we kept new business coming too.
About the author
David Lertola owns REK Marketing and Design, where the team helps small businesses grow by bringing in more quality leads. He is still, cheerfully, a small business owner figuring it out right alongside the clients he serves.
Disclaimer
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting, or investment advice. You should consult a qualified legal or tax professional regarding your specific situation.