Are you getting the most from your clients?

Heard of the lemon-squeezing exercise? Read on to hear how one entrepreneur created an extra £1.6m of business by pushing for more

When Debra Charles announced that Shrove Tuesday was to be set aside for ‘lemon squeezing’, her employees could have been forgiven for assuming she had decided to celebrate Pancake Day in traditional style.

But while the MD of database management company Novacroft did indeed hand out lemons to all and sundry, any expectation that the morning would be spent squeezing citrus juice onto freshly prepared crepes quickly evaporated. Instead, Novacroft’s team were asked to put on their thinking caps and come up with strategies that would enable the company to make more money.

“I split everyone in the company into groups and asked them to come up with ideas that would help the company make money and save money,” Charles recalls.

And the lemons? Well, they were intended as a graphic reminder of a simple truth. No matter how well a business is performing, there is always scope to squeeze a little more juice from the fruit, whether increasing customer demand, returning to supplier agreements or cutting unnecessary overheads.

Lemon squeezing day

Charles came up with her idea while attending the Business Growth and Development Programme (BGP) at Cranfield School of Management. The aim of the 11-week programme is to help owner-managers achieve their growth targets.

As programme director Gerard Burke explains, a key component of the course is an exercise in which managers are asked to take a long, hard look at how they can extract maximum value from the customers that they already have a commercial relationship with.

“You can grow sales in a number of ways,” he says. “You can sell new products to existing customers. Sell old products to new customers. Or sell new products to new customers. But a lot of very successful businesses achieve rapid growth simply by selling more of their existing products to customers they have already acquired.”

It’s a simple enough proposition. If a group of customers are buying goods or services from your company on a regular basis, it suggests that they like what you’re offering.

With that in mind, it makes sense to look at how you can sell even more or at least maximise the revenues from existing deals.

That’s why Cranfi eld asks all BGP participants to spend time thinking about extracting more value from their client relationships.

But you don’t have to sign up to a course to do it. Nearly all businesses can benefit from a spot of judicious lemon squeezing.

Where can you get more?

Of course, most of you probably know that already, but according to Burke it’s all too easy to neglect long-standing customers. He returns to the lemon analogy. “When you squeeze a lemon, the tendency is to get some of the juice out and then put it back in the fridge. You intend to return to it at a later date, but what usually happens is that it is forgotten about. It’s the same with customers – they get forgotten.”

So it can help to step back and think strategically:

■ Who are your major customers?

■ What are the opportunities to up-sell and cross-sell?

■ How can you best take advantage of opportunities?

There are various approaches this. Charles carried the lemon metaphor into the workplace, involved her whole team and identified revenue opportunities and savings valued at £800,000 in the process. Others limit the exercise to input from senior managers or department heads, but whatever your approach, the key is to look beyond what you’re doing with the customer today and identify tomorrow’s opportunities. However, you won’t be able to do that without fully understanding the customer.

Knowing the customer

“Once you’ve done that you’ll find the business will flow.” This is not something you can do as a one-off exercise. Just as your business evolves so will your customers. What they need from you tomorrow could be very different from today’s shopping list, so you have to keep up with events and that means staying in communication.

“It doesn’t really cost anything but it requires discipline,” says Lyndon Nicholson, managing director and founder of Article 10, a company that has grown by selling an ever broader range of services to high-value clients such as BP and BT. In Article 10’s case, customer communications are tightly controlled. “We store all customer contacts on a CRM (customer relationship management) database. Calls to customers are scheduled in,” Nicholson adds.

Talk to your customers

Gerard Burke stresses that lemon-squeezing is about enhancing revenue across the board rather than just selling more goods and services. You can also improve the bottom line by creating more cost-effective processes, raising margins and keeping cashflow under control.

Lyndon Nicholson agrees, adding that good communication with customers can be a big help when it comes to implementing measures to save money. He cites the example of cashflow. “When you’re talking to customers regularly, it becomes easier to negotiate on payment terms. For instance if you know your customer well, you could offer a discount in return for payment in 30 rather than 60 or 90 days.”

Regardless of whether or not you plan to diversify, it pays to look after the customers that are already in hand. Squeezing the lemon is really just good business sense.

Company: Article 10
Owner-manager: Lyndon Nicholson

“It’s easier and cheaper for us to retain existing customers than to acquire new ones,” says Lyndon Nicholson, managing director and co-founder of Article 10, a design agency providing presentation, web design, and corporate video and events services.

It works to develop wider and deeper relationships with existing clients such as BP, Vodafone and Unilever, rather than continually chasing new business. But it’s not always easy. “A company such as BP may have hundreds of buyers and just because you’re dealing with one doesn’t mean others will be easy to speak to,” he says.

Strategies include asking customer contacts to recommend others within the organisation. “After you’ve been recommended, a cold call becomes a warm call,” says Nicholson. In addition, staff ask customers if they are prepared to stage workshops to demonstrate the agency’s latest technology and services.

And the company offers its presentation service first, rather than more competitive areas, such as web design and corporate videos. “Not many businesses help firms with presentations and once we’ve got that business we find it easier to compete elsewhere.”

Company: Novacraft
Owner-manager: Debra Charles

Novacroft is a young, relatively small company in a market patrolled by big hitters. It has carved a lucrative niche managing the data required to run concessionary travel cards, but its competitors tend to be IT giants such as Logica rather than other small specialist companies.

Through innovation and hard work, Novacroft has built a customer base that includes the Association of Train Operators, Transport for London, and Oyster. Having attended the Cranfield Business Growth and Development Programme, Charles got her whole team involved. “People who do the job every day can see things I might not see,” she says.

The workforce was divided into teams and each was required to come up with revenue-enhancing ideas. “Some ideas saved hundreds of pounds, others thousands,” says Charles. For example, we found that one job wasn’t being priced properly. Putting that right added £200,000 in revenue. In total, we enhanced revenue to the tune of £800,000. No wonder she plans to lemon-squeeze every six months.