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The Often Overlooked Fourth Way to Grow Your Business

In a previous article I wrote about the three ways to grow a business. Whilst these apply to all business types, in the early days of a start-up business they are more difficult to apply.  For reference, the three ways are:

1)      Acquiring customers
2)      Increasing the average order value
3)      Increase the frequency of sales.

Many established business owners make the grave mistake of only marketing to attract new customers. As a result, they neglect existing customers, and yet, it’s often the case that previous/existing customers will purchase from you again, if you only contacted them and showed them that you valued their custom.

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Here lies the big issue. So much energy and expense is invested in attracting new customers as a means of growing the business, when equal investment in serving and marketing to existing customers could actually garner significantly better returns. Let’s investigate.

Consider this. As a prospect, when you decide to purchase from a new supplier for the first time, do you, in general, spend all that you can with them? In most cases the answer is no. What happens is that you test the new supplier to ascertain whether they can deliver on their promises. When they have proved to you that they are a trusted supplier, only then do you allow your guard to be slightly lowered and interact more with them. And, that’s if they are also interacting with you.

When you find a new supplier you can trust, the tendency is to give them a lot of your business. Doing business between the two parties becomes easier as you get to know one another. Eventually you may become extremely good friends with the owners and be treated accordingly.

So, what’s this got to do with marketing? Surely this is all about customer service? Of course, the customer service element is important and without a decent service the chances of re-ordering significantly reduces.

But here’s what most business owners forget…

If you market to your existing customer base there are a number of things that are likely to happen.

1)      Chances are you will find your customer uses your products/services more often which most likely will lead to increases in volumes. This immediately meets business growth strategy number 2, increasing the average order value.

2)      It is also likely that your customer will order more often, depending on what you sell. This meets growth strategy number 3, increasing the frequency of sales. It’s unlikely you will achieve either of these from a first sale.

3)      Finally, and here’s the BIG one, this customer is more likely to refer other customers to you through recommendation. It’s the way we are as people. If a supplier provides such an excellent service then you tell others (recommendation) or you provide referrals for the company to follow up on.

These referrals can also turn into endorsements in so many different forms. They could be written as a quote, a picture and quote or a video. This is extremely powerful and is used to attract other prospects to the business.

This can also be taken a stage further by creating a case study. Again, a superb marketing opportunity to show others how you helped people/business like theirs.

Finally, this could even be taken further into a joint venture. This will depend on what you sell, but I encourage you to explore ways to make this happen. A joint venture could be worked in so many ways from either marketing through your customer’s database, running a joint promotion sharing the costs in a magazine, TV commercial, banner ads etc.

As you can see, the stronger the bond between the two businesses, the more opportunities there are to explore different marketing initiatives.

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Let’s consider an alternative scenario

Imagine that you retain the excellent service you have, but once an order is fulfilled your business has no further contact with your customer. Without follow up, what do you feel will your customer will be thinking. Granted you provided a good service. But, that’s where it stopped. Maybe you provided the products/service at the cheapest price? If so, without follow up your business is at risk from competitors who are paying this customer more attention than you.

These days customers demand more than simply providing goods and services. They require care. They want to feel valued. Therefore the way to achieve this is by communication…marketing and/or after sales service. Failing to do this could easily lead to the customer seeking an alternative supplier – one that does value them. Then your customer is lost and it’s incredibly difficult to get them back.

By failing to look after a customer and remain in touch with them the chances are your business’ ability to grow through using strategies 2 and 3 are severely restricted.

The fourth growth strategy is reducing attrition. Attrition is the loss of a customer. Very few businesses actually measure how many customers they gain and lose in a year. Whilst sales may be good, this could be through excellent new customer attraction and high attrition. Imagine what you could do with a business that had excellent new customer attraction and minute attrition levels – they would be soaring.

Let me tell you a true, quick story…

Many years I used to go to the gym every morning at 6.30 am. There was a good regular crowd that were inconvenienced after January 1st with the usual bunch of well-wishers wanting to lose weight and get fit. Queuing for machines became a regular occurrence at this time and personal trainers were in demand.

These new customers to the gym had joined through a marketing campaign, which cost a lot of money. By mid-February the gym had more or less returned to the pre-Christmas levels and the regulars were again enjoying the space and luxury of working together to use the machines without queuing.

Easter arrived and another influx of new members arrived through marketing campaign. The same pattern repeated and would do again every few months.

I’m sure you already understand the truth behind this story. If the gym had found ways to look after their new members, then a good proportion of them would have stayed and joined the regulars. This in turn would have meant the business would have grown rather than see-sawing throughout the year. A significant reduction in attrition would have generated excellent profit results for the gym, but they couldn’t see it. What a shame. As a result, they missed out on the opportunity to sell more club services to these members.

You have more than one type of customer to market to…

By looking after your existing customers and segmenting your marketing to ensure they are valued and receive excellent information from you, you will build a sustainable business. You cannot achieve this if you lose customers at a similar rate to the ones you attract.

Marketing and customer service should receive your highest attention if you are serious about building a superb business with year on year growth. The right approach will yield significantly higher testimonials, case studies, referrals and joint ventures etc all of which are considered powerful marketing tools.

Take you time to understand what your customers want side from what you sell. Sometimes they haven’t bothered to look at your website and have no idea what else you can do for them. You must be pro-active in your approach. There are so many marketing tools you can use to achieve good attrition rates. Your task now is to grasp the importance customer attrition plays in your business and take the appropriate steps to work out ways to measure and reduce it.

Let me know how you get on.

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