Customer Relationship

Small businesses main problem? They need more customers.

Small businesses main problem? They need more customers.

In September of 2005 our company sponsored a survey of small businesses in the service areas. The purpose of the survey was to ask the business owners, many of them franchise owners, what their significant business hurdles were. The key areas of the survey were customers, growth, technology and research, and employees. You can see the complete results here.

There are many things to be learned by studying the results that you can see here, and I hope you'll find them interesting and helpful. It will probably come as no surprise that the common problems facing service businesses are:

  1. Finding new customers does not occur fast enough
  2. Growth of revenue is also not as fast as desired
  3. Cutting through the advertising chaos to reach customers is difficult
  4. The internet is providing little benefit to small businesses
  5. Issues regarding costs and working capital are also significant.

No real surprises but it does highlight the need that small business owners have to gain new customers and get the ones they have to purchase more often. Doesn't that solve most, if not all, of the issues they identified?

The question is how to do it. Our suggestion?

The internet provides a powerful tool for communication and advertising that small business and franchise owners aren't using enough or effectively for marketing. It's called "internet marketing" or "online marketing" and it can include "email marketing". It's likely that small business owners don't know how to use internet marketing as the internet is seen as a big nebulus thing with no tie to location and most small businesses are tied to one location.

The business principles we espouse, regardless of the vehicle used to enact them, are:

  1. Making our businesses remarkable by taking great care of customers
  2. Listening to and acting on what they have to tell us
  3. Giving them a megaphone to tell their friends and colleagues.

It's a simple formula for success and it works. The internet provides a very inexpensive and effective means of doing so when you use the right software tools.

Get customer feedback, generate referrals, and increase repeat sales for as little as $150 a month. Learn more

Guy Kawasaki - The Art of the Start

Guy Kawasaki - The Art of the Start

Guy Kawasaki has posted the table of contents, first chapter, and index for his latest book, "The Art of the Start". If you haven't read it yet and are in the start-up process, or preparing for it, you should give this a read.

Lots of great info here. Here's a quote from Clayton Christensen, author of The Innovator's Dilemma and The Innovator's Solution:

This is a delightful, complete, and consummately practical entrepreneur's handbook-quintessential Kawasaki. Every person who wants to start a business should read it. And read the footnote on page eight. There's more good stuff in here, but this alone is worth the price of the book.

Do you remember your customers on their birthday? On their anniversary? Do you give special notice to recently acquired customers? Promoterz does. Learn more

Justifying a Fishing Trip

Justifying a Fishing Trip

I like trout. I like being out where they live. I like to watch them and figure out how they work. I have discovered an interesting characteristic of trout. They are wary and careful as they investigate food, but once they see another fish feeding, their wariness takes a back seat to quick action.

It is as if two criteria must be met, first is it acceptable food, and second, can I get it first. Since another has obviously met the first condition then it is OK to move on to the second immediately, often resulting in a feeding frenzy. This characteristic serves the trout well as it quickly discovers available food and can eat it immediately.

Maybe I have spent too much time fishing lately, but it seems that trout rely on word of mouth, so to speak, to survive and prosper.

Our customers are also wary and looking for a good, safe solution. Once they have met that condition then they will buy. A referral or word of mouth recommendation provides them with the confidence to move directly to purchasing.

So the question is, are we making it easy for our customers to spread the good news? What are we doing to help potential customers see our happy customers? Spending some time and thought on empowering your customers to share could very well lead to a purchasing frenzy.

Finally, should we use worms or flies?

Find your happy customers and put a megaphone in their hand. Learn more

Grow your business by engaging your customers

Grow your business by engaging your customers

Do you feel like you have the “pedal to the metal,” spending all you can on advertising but still can’t get the growth of your business into the fast lane? The fact is, if your customers aren’t engaged, it may not matter how much you spend on advertising. Just like a car in neutral isn’t going anywhere (no matter how much gas you give it) until the transmission is engaged, your business isn’t going anywhere until your customers are engaged.

What does engage mean? Here are three definitions you might find in a dictionary:

  1. To attract someone’s attention
  2. To establish a meaningful contact
  3. To move into position so as to come into operation

Combine the three of them and it provides a pretty good working definition for engaging your customers:

Attract your customers’ attention with the intent to establish a meaningful relationship and move them into position to help your business grow.

Without worrying too much right now about how to engage your customers (we’ll get to that) let me propose multiple levels of possible customer engagement as represented by the pyramid model above.

At the base of the pyramid is your total available market. That is, all of the potential customers in the world. They have potential, but at least at this point no level of engagement with you or your company.

The next level derives its name from a term we have all used when asked by a sales man if we need help, “No, just looking.” The fact that we are looking means we are more engaged than the masses, but we’ve yet to make any great commitment.

Just beyond Just Looking is Just Buying. For most companies this is the height of their ambition. Get a sale, book the profit and move on to the next customer.

Above just buying is buying again. This is a level that in general assumes that the customer was pleased enough with their first purchase to be willing to come back and purchase again. I say in general, because it is possible that they have no other options and therefore they have no choice. For you as the business owner, this is a very good level. Serving a repeat customer costs less because you don’t have to pay to acquire them and they are less expensive to serve in most cases because they are already familiar with you and your operation. The more customers you can get to Buying Again , the more profitable you will be.

But there are customer engagement levels even higher than Buying Again. The first is Giving Feedback. This refers to customers that are willing to invest more of themselves in your company than just their money. They do this by making the effort to tell you how you can improve your offerings. In effect, they go beyond the typical definition of customers and become co-producers, helping to ensure that your offering is exactly what the market wants and needs. Two great things happen in the process: 1) As your offering improves so will your sales and, 2) As the customer invests their ideas in your company they will become even more loyal and move to the next level.

At the top of the pyramid is Telling Others. At this level your customers are so pleased with your offerings they can’t be stopped from telling others. They become co-promoters, a very powerful sales force willing to tell perfect strangers and best friends how wonderful your company is. As consumers in general become ever more jaded and less trusting of traditional advertising, the growth of your company will be largely dependent on how many of your customers become promoters.

Having described the model, let me hasten to add that I know it is oversimplified. Not all customers will move through each level. Some will become promoters without ever providing feedback. Some will provide feedback and then go away and never return. Despite its simplicity, I believe the model can be helpful in understanding the concept that customers can become much more valuable to a business than just the value of the purchases that they make. Consider the following:

This chart attempts to show in relative terms how much a business benefits financially from a customer at each level of possible engagement. At the far left, Just Looking, expenses associated with a customer typically exceed income from that customer. For example, you spend money on advertising and attract the attention of a customer willing to take a look. At that point you have paid out (for advertising) more money than you have brought in ($0 purchased by the customer).

For those customers that take the step and buy your offering, chances are you will cross over into positive returns. If the customer returns to buy again and again your profit from that customer will increase. Note that the slope of the line becomes steeper in the buying again phase. That is due to the fact that it is less expensive to sell to returning customers than it is acquire new customers. In fact for most businesses it costs five to ten times more to acquire a new customer than it does to sell more to current customers. The obvious difference is the acquisition cost associated with attracting new customers. The less obvious reason is that a regular customer already knows how your product or service works and doesn’t require as much “hand holding” throughout the process.

As the curve continues into the higher levels of engagement, Giving Feedback and Telling others, its slope becomes even steeper indicating that significantly higher returns are possible. Two reasons for this: 1) The additional costs required to move customers into these levels is relatively small and 2) The potential returns have a built in multiplier effect—that is, one customer’s actions can influence many other customers.

For example, feedback from one customer that helps you improve your offering not only benefits that one customer and brings them back again but benefits all your customers and increases the likelihood that they will return more often. Even more obvious, a customer who begins telling others about your business brings not only her purchases but the purchases of several new customers to your business.

In conclusion, engaged customers will help you improve your offering, they’ll actively promote your product, they will improve your bottom line, and, to a large extent, they will determine how fast your business will grow. As you consider the growth of your business, look not only at how many “Just Looking” customers you can bring in and move to “Just Buying,” but also consider how you can get your “Just Buying” customers fully engaged in your business.

Find your happy customers and put a megaphone in their hand. Learn more

Five Ways to Stay in Touch with Your Customers

Five Ways to Stay in Touch with Your Customers

About thirty-five years ago my father bought insurance from an agent named Roy Rohatinsky. How do I remember that? Because every year until I moved out of my parents home, I received a phone call on my birthday from Roy. “Hi Dave, this Roy Rohatinsky. Just calling to wish you a happy birthday!”

“Uh, thanks.”

“Sure. Good bye.”

“Bye.”

When my parents asked who was on the phone, I replied “Some guy named Roy wishing me a happy birthday.”

“Oh, that is the insurance man!” My mom would say and we’d go back to whatever we were doing before the call came. Thirty-five years later Roy is still my parents insurance agent and I still remember his name. If you need insurance Roy can be reached at 3549 N University Ave. Ste 200 Provo, UT 84604. Roy knew how important it was to stay in touch with his clients.

Another example. My brother bought a house in Mesa, Arizona nearly fifteen years ago from a realtor named Becky. His experience with Becky as his realtor was good. Every year since then he has received a pumpkin on Halloween from Becky along with an invitation to attend a Christmas party. The first eleven years Becky received no payback on those pumpkins. But in the twelfth year I decided to move to Mesa and asked my bother if he knew of any good realtors. “Oh, I just got my pumpkin from Becky. Let me get you her number.”

Becky helped us find a great house for our family. When my wife’s brother got a job transfer to Mesa, we recommended Becky. They used her and had a great experience. I also recommended Becky to a co-worker that bought a home through her and, in turn, recommended her to another co-worker that also bought a home using her services.

Some might say Becky was wasting her pumpkins on my brother—especially after eleven years. Becky knew differently: eleven pumpkins for the commissions on four houses is a very sweet return. By the way, if you are moving to Arizona, look up Becky Coen, the best real estate agent in the state.

Staying in touch is powerful because it focuses on what really matters: the relationship. With modern technology it doesn’t have to be expensive or time consuming to stay in touch. Here are five simple ways you can stay in touch with your clients or customers:

  1. Never forget a Birthday. This is a simple one, but it is amazing how few businesses make the effort. Ray made a phone call, but a card or an email can be just as effective. You might consider including a gift such as a coupon or discount. If you do, make sure it has real value. If your customers perceive you are just using it as an excuse to send them advertising you will lose any value you might have created. Use a tool like PromoterZ.com to automate the process.
  2. Pick a holiday and make it yours. Becky delivers pumpkins on Halloween, but depending on your business you could pick any holiday and make it yours. Give pies on the 4th of July or chocolates on Valentines. A card on Christmas is an old standby that still works, but it is easy to get lost in the flood of cards that are sent that time of year. Try something different.
  3. Be grateful. Send each of your clients or customers a thank you card or email after each purchase or just from time to time to thank them for being your customers. Gratitude is always appreciated.
  4. Get involved in a community event. Sponsor a golf tournament or a local road race or a cultural event of some kind in your city or industry. Let your clients know about the event and encourage their participation. They will appreciate the fact that you are giving back to the community.
  5. Publish a newsletter and/or a blog. Take a few minutes each week, month or quarter to tell your customers about your business and/or industry. Don’t be afraid to tell them about your self. Remember, the goal is to build the relationship and just like any other relationship, building a relationship with your customer requires your willingness to share. Tell them your story. No one can compete with that.
When you pass out a Promoterz bounce back card you automatically build an accurate customer list, increase repeat sales, increase referrals and prevent lost business. Pretty powerful little card. Learn more
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