If there’s one difficult experience that every sales or marketing professional has been through at least once, it’s that sinking sensation that comes when a campaign you really poured your heart and soul into just doesn’t hit the mark, for reasons you don’t completely understand. Naturally, you wonder if it was something obvious that you missed – like a spelling error or a grammatical snafu? Maybe you didn’t include enough information? Or your call to action just wasn’t compelling enough?
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?
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.
I have read quite a few articles and blogs lately from business coaches who advocate that you should spend money to get “likes” on your business page in Facebook and followers on other forms of social media. With all due respect, this is by far the most foolish and financially irresponsible strategy I’ve ever heard of. If your coach or advisor is telling you to do this, you need to need to understand that there are at least 3 good reasons why you should NEVER do this:
- While it is nice to have people like your page, you need to think about what the end game is. Likes don’t put money in your bank account and food on the table for your family. What you really need in your business is a good steady stream of qualified leads who are ready to pay you for your solution. Likes are not leads. They may like your page one day and never return or pay very little attention to the posts on your Facebook page.
- Facebook has recently changed the way their ads work (yet again) for posts on your business page. Even if you have thousands of followers, you must now pay to talk to them. In the old days, you could send messages and your posts were given priority in the newsfeed of your followers. Not anymore. Now, you must pay to promote each post you make or virtually no one will ever see it (no matter how many likes you have). With Facebook, you must pay to acquire the likes AND also pay to speak with them.
- When you send traffic to your own website and they give you permission to contact them, you are building the most important asset in your business: your list. Your list allows you to build a relationship with prospects and customers and it also buys you time to present your claim, solve their pain and prove that you can do it. Once you own your list, speaking to them is virtually free. No matter what, you have this list and it is always the most cost effective way of building your business. If someone else, like Facebook or any other social media site, owns your list, then they control how, what and when you can communicate – and how much you must pay to do it. If Facebook went off line or out of business, what would happen to the so-called list of followers you paid dearly to acquire?
As a small business can you really afford to buy likes on social media or should you spend your time and limited marketing budget on generating qualified leads who will pay you for your solution?
The most successful brands in the world don’t waste their money on likes. Instead they focus their time and money on influencing and persuading you to buy their solution. They know exactly how to push the “buy button” in your brain and they do it successfully over and over again.
They have ALL mastered 1 simple technique and they secretly hope that YOU will never discover what it is. As a small business owner, they currently have an unfair advantage over you but that is about to change… In my free online event on December 6th, 2012, I will reveal why this 1 technique is so damn effective and how you can use it to instantly influence and persuade your customers.
Click on video above to see and hear Rhondalynn in action.
You may be surprised to hear that 95% of your prospects don’t really understand you message. You have to understand that your potential customer is simply in pain (in some aspect of his life) and he is looking for the solution. So he has come to you… and what do you do?
Let’s take a look at your last ad, press release, email or even the home page of your website. If you are being honest, I would bet that more than 60% of the prime real estate here is focused on YOU – your brand, your product/service, what you are doing and why you are doing it. And if you are using visuals they are probably of your products, your machinery, your location or even YOU.
And if you are like most business owners, the last 40% of your time and space is spent trying to cram as many words as you can into this bottom section to let your prospects know just how much you can do. In my experience, most of you are spending way too much time trying to impress your audience with fancy words and descriptions.
Here’s the bad news – you’ve already lost your potential customer. In fact, you put him to sleep about 2 minutes ago.
Your brain accounts for 2-3% of your body’s mass but uses 25% of your body’s energy. This is a very important fact to know if you are trying to influence or persuade others. Your brain is the 2nd most energy consumptive organ in your body – if you don’t give it what it needs, it will control your thinking. For those of you who are hungry right now, you know exactly what I am talking about.
From a survival perspective, the brain doesn’t like to use more energy than it has to. If you can make it easier for your customer’s brain to grasp your message, process it quickly and decide, you are more likely to get a YES.
Just for fun, I would like to introduce you to one of your customers… well, at least the decision making brain of one of your customers.
The part of your customer’s brain that decides is the same brain that you and I share with this crocodile. This part of the brain is solely focused on what? Survival, that’s right. Does Mr. Crocodile care about your brand, your products, your photo or your features and benefits? No. Does it care about win/win? No. It is solely focused on itself and physical survival. This part of your customer’s brain gets triggered within 30 seconds and is permanently tuned into the WIFM (what’s in it for me) radio station – constantly scanning to protect itself from pain or death.
So what does this mean for you? To the extent you understand the pain of your customer and are here to help him solve it, he will listen to you or read what you have to say.
Let’s come back to your marketing message for a moment. How can you use this insight for your next ad, press release, email or your website?
First, you are going to stop wasting your most valuable real estate talking about your products, your background, your brand, your philosophy or who you have been certified by. Your clients do not care. If this box represents 100% of the time and space that you have to get your message across right now, you need to spend 80% of it:
– Showing your customer you understand his pain
– Recreating his pain
– And offering THE solution with proof you can deliver
This means that you should never waste it with a lame opening statement like “Introducing our new spring line”, “welcome to our newsletter” or “here are our latest clearance items”. While important to you, they mean nothing to the part of your customer’s brain that decides. They are like a bedtime story for your customer.
If you are using photos or video, and I highly suggest you do for reasons that we will cover in a session together very soon, you want to select visuals that support what? That’s right – recreating or demonstrating you understand your customers pain. This is not the time or place (if you are an electrician for example) to show a picture of you and your van. That photo is about you and not your customer’s pain. Remember your customer is tuned into WIFM radio station.
Also, if you are going to feature your brand or logo, it does not belong up here in this important 80% area.
That leaves only 20% for your call to action and contact details, which is plenty of space if you have captured your prospects attention up top in the 80% zone.
Do you remember when I made the bold claim that 95% of your prospects don’t really understand your message? As you can see, the reason for that is really very simple – your customer has come to you in pain (in some aspect of his life) and his crocodile brain is solely fixated on finding THE solution. This part of his brain, which is responsible for decision making does not have the time or patience to sit around reading or listening to information that is all about you. If you don’t capture his attention in the first 30 seconds with something that is relevant to his pain, you’ve lost him. He can’t possibly understand your message no matter how clever or funny it is because he’s not even paying attention – his reptilian brain has already moved on to look for the solution that will keep him alive or cure the pain .
I want you to assume for a moment that you are dying of thirst. Would you be willing to sit for an hour while I substantiate my credentials, talk to you about why I started my company and educate you on the value and qualities of my pure spring water? Or would you simply get up, walk across the street and find the water that you need to survive?
What if you were dirty and itchy? Would you be any more willing to listen to me focus on my brand or my product for an hour? How long would it take before you just got up and found something to wash yourself with?
And what if your house were on fire? Would you kick back and read 3 pages of stuff on my website about how great my water is or would you rather find someone right now who can help you put out the flames?
The bottom line is this – the quickest way to connect with your customer and get the attention of the decision making part of his brain is to let him know immediately that you understand his pain and can cure it. If you do this well upfront, he will listen to whatever it is that you have to say.
This insight will help you go from boring your prospects to convincing them and that’s good for your business.