The ACRE Principle focuses on the critical components necessary for revenue stabilization while encouraging intelligent investment in the resources that most profitably enable a business to establish profitable, long-term business relationships. In today’s business environment there is a tremendous emphasis on and investment in revenue acquisition activities through sales and marketing. When revenues drop, this is understandable. However, most businesses unknowingly taking the short-term view, at the expense of long-term opportunity, by focusing on replacing lost sales without understanding the causes for or solutions to these drops. The ACRE principle brings focus and reality to the components that enable a business to profitably and systematically grow — eliminating churn and bringing an end to sales acquisition chaos.
Their are four components to the revenue model. These four components are:
- Attraction: Drawing businesses and individuals to the firm.
- Conversion: Transitioning these prospects into stakeholders.
- Retention: Maintaining long-term, valued relationships.
- Expansion: Continued growth of the relationship.
The two components of the ACRE Principle are where traditional sales and marketing functions exist. Businesses readily budget for expansion, compensate for growth, and invest in tools and resources that result in bringing new relationships to the firm. The cost of these activities are nearly five times higher than the cost of the other half of the principle, yet businesses readily commit sufficient resources for acquisition related growth.
On the other side of the ACRE Principle is the benefit and value associated with effective retention and expansion of existing business relationships. Many businesses seem to accept that churn is an unavoidable cost of doing business. As a result, they rarely invest in understanding or preventing client churn. It seems contradictory that while most businesses agree to the addage that “it is cheaper to keep and existing customer than to find a new one,” few understand the key behaviors and processes necessary to demonstrate a commitment to it.
In today’s environment, businesses need to do a better job of protecting and valuing the relationships they already have. Accepting churn as unavoidable is a costly error in judgement. Investing heavily in new relationships without stabilizing and expanding existing ones brings in lower dividends.
When looking at the total growth initiatives in your organization, remember the ACRE Principle, and invest wisely and appropriately across all segments.
