In tough economic times, it’s tempting to cut back or eliminate prospecting. Getting new customers is often very expensive in the short term. Prospecting campaigns often yield a short-term loss. The finance department will look at this loss and say, "stop doing that."
But they would be very wrong.
Getting new customers is the lifeblood of your business. They are the source of your future revenues and profits. Without new customers, your business will die.
Case in point, Red Envelope just announced their earnings for the quarter ended July 1, 2007. They reported a net loss of $3.6 million for the first quarter compared with a loss of $900,000 in the prior year and net revenue of $24.5 million versus $26.9 million is the same period last year. What happened? According to John Pound, their executive chairman:
"We expected to be in a revenue downdraft this quarter, with resulting bottom line losses. This was a result of reduced prospecting late last year and early this year, which resulted in a weakened customer file."
It sounds like he saw it coming. But it only proves the results of cutting back prospecting. Don’t fall into this trap if you can avoid it. If you are not growing, you are dying.