One of the most important things for any business owner, manager, entrepreneur or professional to realise is that there are four principal ways to grow any. If you learn to apply these simple concepts believe me, your competition won’t stand a chance.
- Get More Customers
That’s it. Build your customer base by converting more prospects into paying clients. When more people buy from you, you take in more gross dollars, and as a result (depending on your margins and overhead), you make more bottom-line profits. As a spin-off benefit, the more people you add to your customer base the more people you have to mine for additional sales and an increased opportunity for more referrals.
Each business, industry, or profession has their own methods and timing to contact those who are most likely to be interested in their products and services. For example:
Telephone Soliciting – You probably have received your fair share of calls from these telemarketers. They tend to call at the most inconvenient times such as just when you are sitting down for dinner. This is a cold calling scheme made from a list. Companies can buy lists, or use their own customer list.
Television Advertising – Chiropractors, car dealers, truck driving schools, and lawyers often take a different approach. Many of them advertise heavily on television, especially during the afternoon hours to attract new customers. They’ve found that a large part of their intended audience… the people who are most inclined to use their services, watch television during those hours, and it’s a cost-effective way to reach them.
Doing What Everyone Else is Doing – Most likely, the method you use is the same method that nearly every other business uses. It’s called the, “That’s how things are done in our industry or profession,” method. Typically, when a person first chooses to go into business they look around and see what everyone else is doing. They imitate their competition in most every detail. Who says it’s right, or that it’s the best system for you to use?
- Get Your Customers to Make Larger Average Purchases
Get your customers to spend more money when they buy something from you. This just happens to be the quickest and easiest way to increase your profits. Simply increase the size of the order, and get more money from each of your customers every time they buy from you.
Up-Selling and Cross-Selling
Nearly every fast-food restaurant incorporates up-selling and “cross-selling” principles in their order system. When you place your order at a restaurant, the waiter would typically ask if you’d like an apple pie, or fries with your order. That’s a classic example of cross-selling, or selling an additional product in addition to, or beyond the initial purchase.
They might also suggest that you “super-size” or “giant-size” your order. This is an example of an up-sell… increasing the size of the initial order. In any case, if you take them up on their suggestion, what they’ve done is just increase their profits substantially. They made an additional sale, with no acquisition or marketing costs.
By being aware of what their customers might want, but may not ask for on their own, and then by asking questions or making suggestions, they bring in a substantial number of dollars.
Another technique fast food restaurants frequently use is called “bundling,” or “packaging.”
They combine a sandwich, a drink and fries, and throw in a couple of “bonus” items, like maybe a cookie and a toy. They put it all together in one package, and give it a name like “Happy Meal” in the case of McDonald’s. They’ll charge you less for that package than what each of those items purchased separately would have cost, but the total dollar amount you spend will be higher. Since there were no marketing costs involved, just product cost, it’s pure profit and goes straight to their bottom line.
Developing Customer Loyalty
As a reputable business, you have an obligation to your customers. If you have additional products or services that can enhance their purchase, then you should do everything reasonable and ethical to see that they at least have the option of taking advantage of those items. Again, it’s playing the numbers game. Only a percentage of your customers will take advantage of your offer. But at least you will have given them the opportunity, and you will have fulfilled your obligation to them.
When applying this concept to your business, be sure you train your employees properly. You need to be sure you don’t make the decision for your customers. Give them a choice, and let them decide. If you come across as sincere, and not pushy, they’ll realise that you are really trying to do them a favour. They will see you as helping them get more value, more use, and more benefit from their decision and their purchase.
- Get Your Customers to Buy From You More Often
Give them reasons to want to come back and to continue doing business with you. The longer your customers go between purchases from you, the more chance they have of buying from your competition. Use educational information, notices of changes in the law, or updates regarding the products or services they’ve purchased from you that can affect them. Tell them about new products, new lines, special incentives and other offers that might benefit them.
This idea works two-fold.
- It “locks” your customers in, so they can’t afford to do business with anyone else.
- It makes it so attractive to do business with you, that they wouldn’t even consider going anywhere else.
What you really want to do, is lead your customers to the inescapable and undeniable conclusion, that they would have to be completely out of their minds to even consider doing business with anyone else but you. This transcends your selection of products or services, the prices you charge, your location, or any relationship they may have with another business.
- Extend Your Customers’ “Average Buying Lifetime”
Customer Retention refers to a measure of the average amount of time you keep a customer. Have you ever even stopped to figure this out? This is an important step, and one that we’ll be discussing in more detail in later pages.
Next, what are you doing in your business right now to make sure your customers continue doing business with you? If you don’t have a strategic plan, a working system in place, you are going to lose a certain percent of your current customers to the competition. There’s no doubt about it.
The question you need to ask yourself is not, “What are you going to do about it?” The real questions are:
“What are you currently doing about it?”
“What are you doing about it right now?”
Let’s factor in word of mouth referral. What if 100 customers tell 5 others about their experience with you? That’s an additional 500 potential customers who won’t be doing business with you this year (or maybe ever again, for that matter). What if each of them had been spending an average of $200 per year with your company? That’s $100,000 you won’t be receiving from them, PLUS the $20,000 you lost on your existing customers who left. That brings the total in lost income to $120,000 in just one year!
All customers are important. In fact, they’re critical. A business couldn’t remain in business unless it has someone to buy its products and services. Those “someone’s” are real people like you and me. If you sell your products to the business community, remember, businesses don’t buy from businesses. People in business buy from other people in business. Your market is always people, not businesses.
“Murray Priestley has 25 years of commercial and asset management experience having served in board, CEO and senior executive positions with a number of global public and private companies.”