Why does a 5-10% annual sales growth target end-up being so daunting? After all, it’s not a huge bump. In fact, when you plot it out as a linear forecast, the uptick over the current trend is so slight that it’s barely even noticeable.
And there’s the rub.
A 5-10% growth target can often seem like sandbagging when you assume that everything you’ve already got is just going to keep on coming like clockwork.
But it doesn’t…not by long shot.
In an interview for the Playbook entitled, Lowering the Cost of Customer Churn in B2B, I spent an hour with Javier Aldrete, a B2B sales optimization expert from Zilliant, discussing how to minimize customer churn and defection.
It’s not uncommon for B2B companies to be losing 20-30% of their existing business each year because of churn and defection. And this is what ultimately makes even meager growth targets so difficult to achieve. As Javier says:
If a company wants to grow 10% from one year to the next, they actually have to grow somewhere between 30 and 40% because they’re starting 20% in the hole.
So, while your sales team is out trying to acquire new business, they have old business that’s eroding away. Essentially, they’re starting the race from 20 yards behind and scrambling just to keep up, let alone get ahead.
Of course, it doesn’t have to be this way. Churn isn’t a “cost of doing business” that you just have to learn to live with. You can take proactive steps to minimize churn and retain more of your hard-won revenues and profits—that’s what the rest of the interview was about.
But the first step is recognizing the reality: Winning the business is not the same as keeping the business.
Lowering the Cost of Customer Churn in B2B
It's not uncommon for 30-50% of a company's customer base to be in some stage of defection. We spoke with Javier Aldrete and learned the new approaches companies are using to recover the revenue they're losing to customer defection and churn.