Not that long ago, I received a 15-page sales letter from a self-proclaimed small business marketing expert trying to convince me to attend his latest seminar. I was actually blown away at how bad the letter was… and how mind numbing.
Part of what struck me as both humorous and shocking was that he claimed to be an expert in neuromarketing (and small business marketing). Ironically, there is a vast amount of neuroscientific research that proves the average human attention span is incredibly short and that all decisions are dominated by the oldest and most primitive part of the brain – the old or reptilian brain.
So if the decision-making part of your brain is incredibly hasty and primarily driven by survival instincts, what are the chances that either you or I would wade through 15 pages of self-indulgent copy to decide whether or not we want to attend a seminar? Odds are slim, aren’t they?
What Do Successful Small Business Marketing Professionals Do to Compel Prospects to Say “Yes”?
If you are interested in more articles to help you boost the effectiveness of your small business marketing today, then you will definitely want to read the following blog posts:
Is There a Better Way to Find More Customers?
Snagging more customers with a good small business marketing message doesn’t have to be tedious, expensive and stressful. Amen, right? So, let’s break it down. When you’re hungry, which would you prefer: (1) to run to the fridge and grab a tasty snack; or (2) grab your fishing pole, and head out back to catch your next meal?
How to Know Which Half of Your Advertising Budget is Wasted
John Wannamaker may not be a household name but he opened the first department store in Philadelphia in the late 1800’s and is believed to be the inventor of the price tag and the seasonal sale. He was the first retailer to place a half-page newspaper ad, and also the first full-page ad five years later. He is widely considered to be one of the fore-fathers of advertising and credited with the famous phrase: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”
Why with all we’ve accomplished in the last one hundred and twenty years, is this quote still relevant and significant to you (and to all small business marketing professinals) today?
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.
To prove my point, I’m going to share with you two examples of what NOT to do.
I saw a billboard recently on a major freeway. It read “Texting While Driving KILLS”. Then down below in fine print were the words “For more driving tips, text ‘SAFETY’ to 79191.” Now I’m sure you are probably laughing or at least smiling right now because this is an obvious case of sending a mixed message. And you’re right, I’m sure it is very clear to you why this message is ineffective. But the sad part is – this type of miscommunication or presentation of conflicting ideas is seeping in and polluting your sales and marketing materials every day. To get more customers to your business, you have to stop making this costly mistake.
Take for example your website, your eNewsletter or your brochure/catalog. What exactly are you asking your prospect or customer to do? Did you make the mistake of trying to cram 3 or 4 competing requests onto one page? Did you ask them to buy your product, join your database, visit your blog and watch your latest video? Chances are, you got really excited about what you do and you wanted to share everything you could on just that one tiny page. And I can understand why you got excited but you confused your audience and most of them walked away because what you wanted them to do wasn’t clear.
Now what you did may not have been as blatant as “For more driving tips, text ‘SAFETY’ to 79191.” However, the end result was the same.
If you want to get more customers and prospects to your business, you need to focus on communicating one clear message. If your message is clear and there is only one action that they could take, you will find that the number of people who step forward and take that desired action will go up dramatically.
Now that brings me to my second point.
The second mistake I don’t want you make is to use words or sentences that are confusing. Take for example this sign I saw outside a motel – “Free Wifi Starting at $59.99”. I think the motel owner who put up this sign was either in a rush or ran out of space because he forgot a few important words. What he probably meant to say was “Free Wifi. Rooms starting from $59.99”. He only forgot two small words but those simple words made the difference between a message that was clear and one that made absolutely no sense at all.
Now you may not be offering free wifi but I bet you may have used or at least seen terms like “scalable architecture”, “a customer-centric model”, “ holistic approach” or “results-based focus”. These words mean nothing to the reptilian brain (the part of your customer’s brain that decides and takes action). That part of the brain is 45million years old and it struggles to process and understand complex words, numbers, unfamiliar symbols and graphs that contain too much information. If you want to speed up the decoding process and make it easier to get more customers to your business, you need to make your message simple. Choose words that are clear and easy to understand. Complete your thoughts and sentences – don’t make it difficult and give your customer the excuse – “I need to think about it”. If your customer has too think too hard to decode your message, he simply won’t make a decision
Now I want you to be honest with yourself – is there a chance you might be sending mixed messages to your potential customers? Are your sales/marketing messages clear and succinct? If not, now is the best time to go back and re-write your materials. If you want to get more customers to your business, you need to simplify what you are asking them to do and use language that is easy to interpret.
02 Oct 2012
Do Your Prospects Often Ask You For a Cheaper Price?
What would it be worth to you if you could STOP competing based on price?
Knowing this valuable information before you craft your next sales or marketing message, can help you to influence your customer to decide quickly and make price a non-issue.
If your sales process is currently taking too long, this information will help you close sales faster.
If your customers need to “think about” doing business with you, this information will help you to stop boring and confusing them.
If your customers keep asking you for a better price, I am going to show you how to get the price that you deserve.
We now know there are 3 distinct parts of the brain and each one of them has a different function. However, only 1 of them is responsible for decision making and it fires up around 8 seconds before you are consciously aware that you have even made a decision. The research and information I am about to share with you hasn’t come from psychology, the personal development industry or even a marketing agency – these findings were made by neuro scientists, medical doctors studying brain wave activity with FMRI machines. They were looking to find out which part of your brain lights up when it is presented with different stimuli and the findings have been documented and published in respected publications like the Wall Street Journal and the Harvard Medical Journal.
The biggest part of brain is the neo cortex. We are the only species on the planet that has developed this part of the brain. It is the last thing that forms in the womb and it lights up when we listen to music, look at colours, speak, read and process numbers. If you ever hear people talking about right vs. left brain thinking, they are talking about the neo cortex. In a nutshell – IT THINKS.
Similarly, when your customer says “I need to think about it” or “is this the best price I can get?” this part of the brain is firing up and looking for data. This uses up tons of your brain energy and prolongs the decision making process. So, if you want to drag out the process of getting your customer to decide or compete on price, you want to make sure that your customer has to us this part of his brain. Make sure you give your customer lots of BIG words, numbers, graphs, lists of features and benefits, talk about your competitors and how you stack up next to them – and your customer will NOT decide <that is guaranteed> but he will do a whole lot of thinking and take up more of your valuable time and energy in the process.
Let’s move on to the middle or mammalian brain – this right here is the part of the brain that we share will every warm blooded creature on the planet. This is where you process emotions and feel. But this is not where you make decisions.
At the top of your spinal cord, there is a collection of neurons – which are commonly referred to as the old or reptilian brain. This is the first part of your brain that is formed in the womb and it is the part that keeps you alive – all bodily functions that take place below the level of consciousness, are controlled by this part of your brain.
It is your fight or flight brain – and its sole responsibility is to ensure your survival. It houses the amgydala – which is the chemical factory in your brain that regulates all bodily functions. And it is the part of the brain that lights up when you DECIDE.
It lights up even before you have conscious awareness that you have made a decision. Now, while it is very true that this is the most primitive part of your brain, the good news is that it is very predictable. By understanding how this part of your brain works, you will never again bore and overwhelm your customers AND you will never again be lured into the trap of competing based on price.
How will you do this? By understanding how this part of your customer’s brain works, you can help him to use the least amount of mental energy in processing your message which means that he will make quicker decisions. It is important to remember that unlike the neo-cortex up here (the thinking part of your brain), this part right of your brain is automatic – it does not think, it only DECIDES and ACTS. It is always at work scanning your environment looking for information of value to your survival.
So you might be wondering how does this apply to the price that you charge for your product or service? Just for a moment, I want you to imagine that you are in the business of selling pizzas. Now, it doesn’t matter whether your business is called Pizza Hut, Dominos, Eagleboys, Boston Pizza or Pizza World… you are basically selling an undifferentiated product and the market that you find yourself in looks price conscious, doesn’t it? The reason for that is simple – the consumer finds it hard to distinguish between your pizza and the next guy.
Now if you happen to BE the owners of a Chicago Deep dish pizza shop you might argue that your pizza is better because your crust is thicker and you provide more toppings and value. But in the eyes of the consumer, your pizza is still not really worth much more than the next guy’s pizza. You might be charging $20 and your competitor is charging $18.50. Why is that?
It’s because even though you think there is a difference, in the eyes of your customer, there isn’t. 95% of what you and the next guy offer are essentially the exact same thing. And as long as you keep operating in that zone with a marketing message that doesn’t stand out and stake a claim, you will continue to compete on prize because your customer is up in his neo-cortex trying to figure out which pizza is the best one to order.
So knowing this, what could you do differently? Well one company in 1973 identified a way to stand out and grab market share. It didn’t claim to have the best, the thickest or even the cheapest pizza, it just made you a promise that if you ordered from them, you would get it in 30 minutes or your pizza was free. It was the most successful campaign in the history of the industry – for good reason.
Think about it, when you order a pizza, what is the one question that you have in the back of your mind? I wonder when the pizza will get here?
Dominos answered that question for you. They stopped making you need to think about it and they triggered the part of your brain that decides and dials.
This is the power of Sales Seduction – understanding why your customer says YES and helping him to say YES to your product/service. Can you see now how knowing this information can help you accelerate your sales process, close more business, trigger decisions and allow you to charge a fair price for your product/service?
Great – so your homework today is to go back through one of your sales or marketing messages and identify all the ways that you are boring or overwhelming your prospects. The key to NOT competing on price ever again, is in making it easier for your customers to say ‘YES’.