Cisco to partners: Look for growth from existing customers, not new ones

It costs 15 per cent more to land a new customer than to work with an existing one, Cisco claims

Cisco has urged its partners to focus on earning more revenue with fewer, existing customers, rather than spending time and money trying to new over new ones.

The vendor claims that new consumption-based deals mean that partners have more opportunity to up-sell and cross-sell products and services than they did in the past.

On a blog post, Cisco's senior director for global customer success, digital experience and analytics, Steve Cox, said: "Traditionally in our industry, business growth has been built around gaining market share: adding new logos, making more deals and fuelling the sales pipeline."

But this has changed, he added, citing "experts" who claim it costs 15 per cent more to land a new customer compared with selling to an existing one.

"As the subscription economy continues to transform the world around us, ‘customer share' is emerging as the growth strategy that makes the most business sense today," he said.

"Customer share is a growth plan geared toward earning more revenue from fewer customers - as opposed to looking for growth from more new clients. Instead of focusing your sales team on new logos, the emphasis is on expand selling and growing customer lifetime value.

"As trust is built with existing customers, new and more valuable opportunities often arise with them during post-sale engagement. In fact, [tech firm] Totango says up to 90 per cent of a company's revenue can be generated in the post-sale phase. That's because the ability to upsell, cross-sell and expand a client relationship becomes much easier when a trusted partnership is already in place."

According to customer platform site SignalMind, it costs on average between six and seven times more money to acquire a customer than to sell to an existing one.

But Cox said it is not always simple, and offered advice to partners on how to cash in on their current customer base.

He said focusing on product adoption and usage is the "key to selling more" with existing customers, adding that conducting regular business reviews is also essential.

"Although the traditional quarterly business review has its place, customer relationships grow faster when they are less about formalities and more about trust," he said.

"In a value exchange model, decisions are made using information that is current and timely, which means having more frequent and more meaningful, outcome-based conversations with your customers is essential."

Chris Gabriel (pictured), Cisco partner Logicalis' chief digital officer, agreed that changing business models means analysing customer types is important.

"The metrics around new-customer acquisition costs versus selling to existing customers are well-known," he said. "But there are [new] aspects to it: one is that the dynamic of working with customers is changing. Things like the cloud change that. In the old days of working with a customer, you did a project and then that was a three-to-five year investment and that refresh is not going to happen for three to five years.

"I imagine Cisco's angle on this is now they're moving to a move software-driven model, if you take the customer order for a big chunk of Cisco software on day one, you have to work with them differently because you have to make sure they're getting the value from it."