Although you may like to think you are creatively captivating your consumer with your communications, allow me to drop a mind-blowing bomb… Did you know that your current marketing messages are falling on the deaf ears of approximately 98% of your prospects?
04 Sep 2013
Cold calling is one of the most costly and difficult ways to find customers. Not only is it time consuming, but it can actually turn customers off to your business. And why would you do it when there are numerous, more effective, online options available to find customers and drive thousands of qualified leads to your business today?
29 Aug 2013
With a hotly contested election just around the corner, The Prime Minister Kevin Rudd has come up with a proposal to allow small businesses to defer lodgement of their Business Activity Statement (BAS) from quarterly to annually. He suggests GST could easily be estimated and paid in instalments throughout the year based on the previous year’s performance.
Imagine you’re the CEO of an established private healthcare business when the economy plunges into the worst downturn since the Great Depression. Up to then, your team has delivered extraordinary results; your bottom line is growing steadily each year and your services are recognized as world class by the hospitals, city councils and large public health facilities that refer work to you.
Imagine choosing that time to tell your Board and senior management team that, in essence, you want to walk away from about half of that business and pursue a very narrow niche market.
No doubt, you may at this point be imagining yourself out of a job. But hear me out…
As you may have guessed, this story is not a fictional one and the “you” in the story is actually a business coaching client of mine. I’m happy to report that the discussion with the Board went quite well, the business has nearly doubled since that day, and my client is still the CEO.
And along the way we both learned some valuable lessons about how to increase sales and become the dominant player in the marketplace. In fact, there is a big difference between being just a good company and being one that your customers can’t live without.
Solve Your Customer’s #1 Source of Pain
Consumer sentiment and spending have decreased dramatically in the past few years and those changes are being felt across every industry. Everything you thought you knew about your customer and why he/she was buying from you has probably changed. And if you do not take the time now to re-discover your prospect’s main source of pain and the reason why she needs your product or service now, you will never increase sales. In fact, you risk losing more sales and more ground to your competition.
Now some of you may think – but my industry is different
All of the leading experts recommend that you spend 75% of your budget to retaining existing customers (and re-engage them). Yet surprisingly, most companies do the exact opposite. Even large corporations like Coles, Woolworths, Max Factor and Target (not just the little SMEs) make the mistake of spending too much chasing new customers (or ones that have left) and often ignore their existing ones.
Several years ago I held a senior commercial role at one of the largest retail businesses in the country and I can confirm that they spent <20% to retain existing customers. They, like 95% of businesses out there, spend the bulk of their budget on chasing new customers or attempting to re-engage those that have left and gone to the competition.
And therein lies the biggest mistake you can make as a business owner…
Every dollar spent on direct marketing to retain existing customers is actually worth 50x the equivalent amount spent chasing new customers. With above the line advertising, it is very hard to capture the attention of new customers, embed your message in their mind and compel them to act. It is much easier (and cheaper) to reinforce your message with an existing customer and encourage repeat visits.
So, if everyone knows it is easier and cheaper, why are most businesses NOT focusing the majority of their attention and budget on their existing customer base? The answer to that question is unclear. But what is clear is that there are 4 Simple Strategies that you can use today to boost sales and retain existing customers.
1. Spend 75% of Your Budget on Existing Customers – The bulk of sales and marketing efforts should be focused on direct communications and NOT on social media, newspapers, PR, magazines or pay-per-click advertising. For those of you who are established and have been in business for a few years, this is going to free up a lot of time that has been wasted on chasing new customers.
2. Do Your Homework to Maximize Return on Investment (ROI) – I recommend that you take the time today to analyse your existing customer data:
– What are they buying?
– What could you introduce them to which would increase gross profit margin?
– How can you drive frequency (visits)?
3. Frequency Lifts Sales by 75% More Than Upselling – It is much more effective and profitable, to focus on getting customers to return to your website or business, as opposed to trying to sell them one more thing while they are there.
4. Focus on Customers Within a 10km radius – Customers who have moved outside a 10km radius of your business can be particularly tricky to re-engage. In research conducted at one of the largest retailers in the country, we discovered that 82% of the revenues were attributable to customers that lived within a 10km radius. And in my experience working with hundreds of small-midsized businesses, this statistic still holds true. If your customer has moved outside of this radius, it does not make sense to waste any of your budget trying to reactivate them.
Even though it’s important to appeal to and attract new customers, it’s absolutely crucial to your business’s survival that you retain and nurture the customers that have supported and shopped with you to date. Everyone knows that is cheaper and easier to garner incremental business from existing customers but what separates the truly successful entrepreneur from the pack is the ability to put this knowledge into practice by allocating a large portion of your budget and focus to existing customers.