Customer Retention — The Easiest Way to Grow your Business
Over the past few weeks, we have discussed three ways to help grow your business: Gaining more customers, Get your customers to make larger average purchases, and getting your customers to make multiple sales; now, it’s time for a fourth idea to grow your business — customer retention.
Customer Retention — How To “Insulate” Your Customers From Your Competition
Now let’s talk about the fourth method you can use to grow a business… your business… in fact, any business. And that is, to extend your customer’s “buying lifetime.” We call that, “Customer Retention.”
Here’s what I mean: How long, on average, do the people who buy from you… your customers… remain your customers? What really is your customer retention rate?
In other words, how long do they continue doing business with you before they move on? Are they one-time buyers? Do they stay with you for a year? Five years, or ten years? Have you ever stopped to figure out your real customer retention?
And then, what are you doing in your business right now to make sure your customer retention is high and 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 question about it. Your competition… right now… right this very minute is making plans and taking steps to take your customers away from you.
Now, the question is not, “What are you going to do about it?”
The real question is, “What are you currently doing about it?” “What are you doing about it right now?” What systems do you have in place to keep your customers from defecting to the competition?
Let’s talk about your customers for a minute. Are they thrilled enough with the products you offer and the services they receive from you to continue doing business with you year after year?
What if you answered “yes” to that question? Well, my next questions would be, “Are you sure? How do you know? Have you asked them? Do you have a system in place for finding out?”
Notice that I said, “Are they thrilled enough?” Not “are they satisfied enough?” You see, there’s a big difference between being thrilled and being satisfied.
In fact, last year, more than 200 million Americans stopped doing business with companies that they were “satisfied” with. And sixty percent of so-called “satisfied” customers switch companies or brands on a regular basis.
You can’t afford not to thrill your customers, nor to build trust in you and your business. The cost is too high, and unfortunately, most business owners simply don’t understand it.
Failing To Provide Exceptional Value Can Cost You BIG Time in Customer Retention
Let’s take a look at what the potential cost could be to you if you fail to work on and improve customer retention:
Let’s say that your average customer spends $80 per year with you.
And let’s say that for any number of reasons, 100 customers stop doing business with you each year. They may die or move away. They may no longer have need for your products or services… they may switch companies, have a relative in the business, or have a bad experience with someone in your organization.
Or they may just simply disagree with some policy you might have. It could be a falling out with an employee, a personality conflict, miscommunication, a product they wanted that wasn’t in stock, or perhaps a feeling of neglect from you or someone in your company. It really doesn’t matter what the reason, they just stop doing business with you.
Well, those 100 customers no longer spending $80 with you this year just cost you $8,000.
But that’s not all.
What if those 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, for that matter).
And if each of them spent an average of $80, that’s $40,000 you won’t be receiving from them… PLUS the $8,000 you lost on your existing customers who left.
That brings the total in lost revenues to $48,000 in just one year!
We’ve worked with insurance companies whose agents write a hundred auto applications (or more) every month. That’s twelve hundred, plus, applications a year.
And they end up only gaining 150 or 200 at year-end.
Well, what happened to the other more than 1,000 policies? Where did they go? What happened to their customer retention rate?
Surely, they all didn’t die or move away. But you know, most agents… and most other business owners, for that matter, don’t concern themselves with what or whom they’ve lost. They just focus on their net gain.
They figure that if they finish the year with more policies or more customers or more sales than they started with they’re ahead.
Now, let’s suppose that you gave those 100 lost customers reasons good, compelling, life or business enhancing reasons to continue doing business with you this year.
And let’s suppose each of them told those same 5 people about their now-positive experience with you.
Well, there’s $8,000 you wouldn’t have lost in the first place, and another $40,000 you may possibly pick up from their referrals or by their word of mouth.
Your Customers… The Most Valuable Business Asset You Have
The point is, customers are important. In fact, they’re critical. There’s no question about it. You and I both know that.
A business can’t remain in business, unless it has someone to buy its products and services. And those “someones” are people. Real people. People like you; people like me.
And businesses don’t buy from businesses. People in business buy from other people in business. It’s people that you market to. Not businesses.
Some businesses or professions refer to the people who trade with them as customers, clients or guests. Others call them patients, passengers or patrons. Insurance companies use the term “policyholders.”
It really doesn’t matter what name we give them, what’s important, is that without people who are willing to trade their dollars for the products and/or services that you have to offer, you won’t be in business very long.
Now, here’s an interesting point: Most business owners know exactly how much they have tied up in furniture, fixtures, equipment and inventory.
They can tell you nearly to the penny how much each item costs, how old it is, how much it’s depreciated and what the remaining life expectancy is.
That’s important information for any business to have; there’s no question about it. But what’s amazing is that very few business owners have any idea of what the value of their most important asset is…their customers. They have no idea about their customer retention.
Now, think about how this whole concept of customer retention relates to your business for a minute. What is it that you can do… specifically, to extend your customer’s buying lifetime with you? How do you improve customer retention? Why not take a few minutes and answer these questions.
First of all, who are your customers… those who are buying from you now? Do you have a method of capturing their name, address and phone number? Do you have a way of determining how often they purchase from you? What their favorite colors, sizes or styles are?
And what about your staff or employees? Do you know how they treat or feel about your customers? Do they, or do you, for that matter, have favorite customers? What makes them a “favorite?” Is it how much they spend? How often they come in or buy from you? Is it their personality? And how do you treat those customers? Any differently than the others? Are your employees invested in your customer retention?
Do you have regular employee meetings and talk about how to think like a customer? What you would want if you were a prospect considering doing business with you for the first time? Or, maybe an existing customer considering giving repeat business to your establishment or organization? Or maybe considering referring a friend, a family member or an acquaintance?
Do you have a training system in place to teach your staff how to handle or deal with difficult customers? Short-tempered customers? Analytical customers?
Do you have a plan for moving people up the “Loyalty Ladder?” From Suspect, to Prospect, to Shopper. Then on to Customer, Client, and Advocate. And finally to convert them into Raving Fans?
When a customer stops doing business with you, do you know why? Do you have a system in place to find out? What would you have to do differently to get your customers to buy from you for… say, 5 ½ years, instead of just 5 years? Bottom line is this — what do you have to do in your business to increase customer retention, year after year?
Believe me, if you will actually take the time to go through these questions and formulate answers for them… and then incorporate that information into your business practices, you can work wonders towards extending the buying lifetime of your customers. Your customer retention will soar! And as a result, you’ll add significant profits to your bottom line.
If you would like to explore ways to grow your business through customer retention or a variety of other ideas to help you, contact us today!
Grow Your Business — Four Ways to Make it Happen (con’t)
Last week, we discussed the second way to grow your business by getting your customers to make bigger purchases. This is a great way to increase your bottom line. You must have these kind of systems to help grow your business. Now let’s look at the third way to grow you business — multiple sales.
The One-Time Sale Should Only Be Considered When You’re Not Trying to Grow Your Business
Now, let’s move on to the third way to grow your business… get your customers to buy from you more often. In other words, increase the frequency of their purchases. Get them to come back. Give them reasons to want to come back and to continue doing business with you. You see, the longer your customers go between purchases from you, the more chance they have of buying from your competition.
It’s like, “Out of sight, out of mind.” You need to constantly stay in front of your customers with educational information, and notices of sales or special promotions. And you need to tell them about new items, special incentives and other offers that might benefit them.
The idea is two-fold: One… to “lock” your customer in, so they can’t afford to do business with anyone else; and second, to make it so attractive to do business with you that they wouldn’t even consider going anywhere else. That way, “grow your business” becomes a way of life.
You see, what you really want to do is lead your customers to the inescapable and undeniable conclusion that they would have to be absolute fools to even consider doing business with anyone else but you, regardless of the selection you have, the prices you charge, your location, or the relationship they may have with their current supplier.
Make It Easy And Advantageous To Do Business With You So You Can Grow Your Business
Let me give you a real-life example of how this works. One of the clients I consult with owns a restaurant who wanted to grow like you want to grow your business. And for his business customers who like to take their clients to lunch, he offers a certain number of lunches for a pre-paid, discounted price. So what happens, is, he locks in his customer, gets his money up-front, and makes it convenient for everyone.
The customer simply signs the check, which includes the tip… no money changes hands during or after the lunch, and new customers are constantly being introduced to his restaurant. And many of those new customers take advantage of the same arrangement for their clients.
Here’s another example. The car wash where I take my cars, offers a special pre-paid, discounted card, that’s good for a certain number of car washes. It’s a great deal for me because I save money, and I can take my car to be washed even if my teenagers have gotten into my wallet and taken the last couple of dollars I had. And when my card is filled, then I’ve got a free wax job coming. And it’s a good deal for the car wash too, because they’ve gotten their money up front and have locked me out of the competition.
Here’s one more. The store my wife buys shoes from offers a “points” program. Every so often, she receives a notice in the mail informing her of how many points she’s accumulated. She may not have been to that store for quite a while, but when she gets that notice and sees the credit she has coming she nearly always makes it back to that store within just a couple of days. And she hardly ever leaves empty handed.
Now, let’s apply this concept to you and how you can grow your business.
You see, you’ve to let your customers know that you value them… that you want them to come back… and you want to make doing business with you fun, risk-free and easy.
Well, I’m sure you can see that the ideas are unlimited. And I’m sure you can probably think of a number of things you can apply in your business right away that will help you develop trust and loyalty with your customers.
There are more than two dozen different strategies you can use to create an almost magnetic effect that keeps your customers returning time and time again. That keeps them saying, “I’ll be back.” And that keeps them “insulated” from and locked out of your competition. When you lock them out of your competition, now you will grow your business!
Contact us if you would like to get specific ideas on you can grow your business like these examples!
Grow Your Business — Four Ways to Make it Happen (Part 2 of a 4 part series)
Last week, we talked about the first way to grow your business — bring in new customers. New customers are important to your business. There’s no question. In fact, they’re vital… not only to the growth of your business, but to the very survival of the business.
And it’s critical that you have multiple systems in place to ensure that your business continues running… and growing… uninterrupted if anything unexpected happens.
Now, as important as getting more new customers is there are still three more methods you can use to grow your business. And each of these methods are more profitable, more effective, and can give you greater potential for leverage than the first method.
The Fastest And Most Cost-Effective Way To Grow Your Business
So, let’s talk about number two – the fastest way to grow your business… get your customers to make larger average purchases.
In other words, increase the average transactional value of their purchases. Or more simply, get them to spend more money when they buy something from you.
Now, this just happens to be the quickest and the easiest way there is to increase your profits and grow your business.
One of the things that continually amazes me, is the number of businesses that have extensive and expensive plans in place to grow their business by acquiring more customers. Yet, very few have paid much attention to this highly profitable and highly leverageable step of increasing the size of the order… getting more money from each of your customers every time they buy from you, helping you to grow your business exponentially.
If you think about how easy it is to grow your business this way and how profitable it can be, you’ll see why it’s such a powerful concept. And, you’ll also see why nearly every fast-food restaurant has embraced… has mastered… and requires that every person who takes orders, understands, and is proficient in the use of the “up-sell” and “cross-selling.”
Think back about your own experience. You drive through and place your order… a sandwich and a drink. And then what happens? A voice comes back over the speaker and asks if you’d like an apple pie, or fries with your order.
That’s an example of cross-selling. Selling an additional product in addition to, or beyond the initial purchase.
Or, they might suggest that you “super-size” or “giant-size” your order. That’s 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, since they made an additional sale, but had no acquisition or marketing costs.
You see, they realize that a certain percentage of their customers will say “yes.” And the only reason they say “yes” is because a suggestion was made to them. So they play the numbers game. And so must you in order to grow your business.
And the result? Well, by being aware of what their customers might want… but not ask for on their own… and then by asking questions or making suggestions, they bring in a substantial number of dollars. And other than the actual cost of the product those dollars are pure profit.
Grow Your Business by Making It More Advantageous For Your Customers And Prospects To Give You Their Money Than It Is To Keep It For Themselves
Now, here’s another technique they frequently use. It’s called “bundling,” or “packaging.”
It’s where they combine a sandwich, a drink and fries, then 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.”
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.
And, since there were no marketing costs involved other than the cost of the items, themselves… it’s pure profit and it goes straight to their bottom line.
Now, what does that have to do with you, and how to grow your business?
Well, you may not be in the fast food business, but the principles can still apply.
To start to grow your business, ask yourself this question: “What additional products or services do Ihave that would be natural complements to what my customers initially buy from me?”
Could you grow your business by suggesting that your customers upgrade to a better model, a larger quantity, maybe a more comprehensive or perhaps a more frequent application?
Could you grow your business by finding ways to bundle or package certain items that would give your customers more value, more use, more enjoyment, and at the same time increase the unit of sale?
Do these things seem like common sense to you?
Well, they probably do. But as I mentioned before it’s surprising how few businesses use these three simple principles.
Your Moral And Professional Obligation To Your Clients
Now think about it. In reality, you have an obligation to your customers, your clients, your patients, your policyholders… whatever you call those who do business with you… the people who give you their hard-earned money… to make sure they get the very best value, the best use and the most enjoyment from their original purchase.
And, if you have additional items… either products or services… that can enhance their value, their use or their enjoyment, then your obligation is to do everything that’s reasonable and ethical to see that at least they have the option of taking advantage of those items.
Again, it’s playing the numbers game. Some will take advantage of your offer and some won’t. But at least, you will have given them the opportunity. You will have fulfilled your obligation to them. And, if played right, they will then help you grow your business.
You haven’t made the decision for them. You’ve given them a choice. And you’ve let them decide. And if you come across as honest, caring, and sincere, they’ll not see you as being pushy, but they’ll realize that you are really trying to do them a favor… to help them get more value from their decision and their purchase. And they’ll come back to do business with you again, and again… and they’ll refer others to you, as well.
Up-selling, cross-selling and bundling… these are only three of more than a dozen immediate, profit-producing methods you can use to quickly and nearly effortlessly add immediate profits to your bottom line and grow your business the fastest way possible.
If you do nothing more than find a way to incorporate these three techniques in your business (which you should be able to do within the next twenty-four hours), you’ll blast your profits completely through the roof and grow your business starting today.
Think about it… increasing your sales… increasing your profits… without increasing your expenses… it’s an exciting concept. And it can add an immediate twenty, thirty, even forty percent or more, in pure profits to your bottom line. Here at Coffee News, we can show you how to use this way to help grow your business, so call us today!
Grow Your Business — Four Ways to Make it Happen (Part 1 of a 4 part series)
Over the next four weeks, we are going to explore how to grow your business. These ideas are from my free report “Three Of The Most Powerful Things You Can Do To Grow Your Business.” You can request a copy here.
New Customers Are The Lifeblood to Grow Your Business
Now, here’s the first one of the four ways to grow your business. Simply this…
Get more customers. Build your customer base. Just get more prospects to buy from you and become your customers.
You see, when more people buy from you, you take in more dollars, and so you make more money. You grow your business. And the more people you add to your customer base the larger it becomes, and the more people you have to go back to for additional and repeat sales.
Now, it’s in this one single area where most business owners (including your competition, and probably, you, too, if you’re honest), spend most of their time, effort and money.
If you’ve been in business for any length of time, you probably realize that getting new customers is not always the easiest or most profitable thing you can do to grow your business.
The reality is, most businesses only employ one or two main methods of attracting new prospects.
For example, prior to enactment of the “Do Not Call” law many insurance agents were heavy into the use telephone soliciting. And many of those calls seemed to come when unsuspecting prospects were just sitting down for dinner.
Chiropractors, car dealers and lawyers are known to advertise heavily on television… especially during the afternoon and late night hours to attract new customers.
Now, what about you? Think about your business for a minute. Do you use 1 (or maybe 2) main advertising outlet to grow your business?
Chances are, that you and your business, like every other business, also utilizes one main method of attracting new prospects. And, most likely, the method you use,is the same method that nearly every other business in your industry or profession uses.
The Way You’ve Always Used to Grow Your Business Isn’t Always The Way It Should Always Be Done
It’s called the, “That’s how things are done in our industry,” method, or, “That’s how things are done in our profession,” method.
When a person (at least the majority of people) first chooses to go into business… and let’s use an insurance agent as an example… they typically look around and see what everyone else is doing.
Then they arrange their office just like every other insurance office they’ve seen, they look at what everyone else is doing to market or promote their agencies, and then they adopt those same marketing plans and methods to market or promote their agencies.
And, it’s not only insurance agents who do this… it’s nearly every business in nearly every industry or profession.
But, wait a minute. Who set up that system in the first place? And who says it’s right, or that it’s the best system to use? Is this the way you grow your business?
The fact is there are an unlimited number of methods of attracting new customers to your business, and your imagination is the only limiting factor.
Grow Your Business by Looking Outside Your Industry Or Profession For Ideas You Can Adapt And Adopt
Some of the best, most productive and most cost-effective methods to grow your business can be adapted from what others are doing in totally unrelated businesses.
Now, this brings up a couple of questions.
First, how observant are you? What are others who are in the same business that you’re in doing? And, how effectively are the things they’re doing working for them?
Next, look around at what other businesses… unrelated businesses in other unrelated fields, industries or professions are doing? Have you seen what’s working for them? Is there one business that just stands out, by doing something different or unusual? Or do they all pretty much use the same marketing methods?
Next question: How creative are you? Can you look at what some of the other businesses are doing, and adapt (with a few minor changes), their methods to help grow your business?
In other words, if you were brand new… just starting in business, and had no idea of what anyone before you had done to attract new customers, what would you do? How would you go about getting new customers to grow your business? Would you use the same methods you use now, or would you do something completely different?
Grow Your Business by Knowing And Catering To The Specific Needs And Wants Of Your Clientele
A colleague of mine consults with a dentist who specializes in working with children and their teeth. He loves children. And he also recognizes that as they get older they may need braces, they’ll probably get married, and they will have a spouse and children that will all need dental care.
And so, he set up his reception room with a special, “kid-height” counter, so when the children come in, they can talk directly to the receptionist, transact their business just as an adult would, and schedule their next appointment. He’s even decorated his reception area with artwork and pictures that some of his young patients have created.
How do you think those young people feel? Well, they absolutely love it there. And they tell their friends about it, too.
And their parents? They’re thrilled. Imagine, having your kids want to go to the dentist! And then be treated… not like a second-class citizen, but as an equal, transacting business (with the parent’s help, of course), and having a hand in scheduling their future appointments.
What a learning and growing experience for them. And who do you think the parents use for their own dentist? That’s right. The spin-off business of catering to, and working with children, is their parents. And as the kids grow up and have families of their own, which dentist do you think they’ll use… that they’ll insist that their spouse switches to… that they’ll bring their own children to?
The relationship he’s building with those young people, of friendship, of trust and of caring, will provide him all the financial security he’ll ever need, and will allow him to do whatever he wants, and go wherever he pleases for the rest of his life.
So, what about you? What are you doing? Specifically, what marketing methods are you using right now to attract new customers and grow your business?
And second, how many different marketing methods do you presently, and concurrently have working for you?
Coffee News has a variety of ways to help you market and grow your business. Contact us today to find out more!
Watch next week for our second installment on how to grow your business!
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