Repeat business equals profit.

No, that’s not a typo and I didn’t stammer. I wanted to use a bit of repetition to drive home one of the biggest keys I’ve found to consistent business growth.

The least expensive way to get more customers is to increase the value of the customers you’ve already got. Look at them in terms of “Lifetime Value” – or the dollar amount they will generate over the long-term, rather than just a one-off transaction.

Part of this mindset starts with looking at your business as a total marketing entity, rather than just a production, service or retail entity. The big reason for this it allows you to see all marketing expenses as investments – investments that generate a return, or ROI.

It will also help you accept the reality than when you buy your customers – that purchase will always be your biggest expense.

It will also be your most profitable.

So what do I mean by “buying” your customers?

Exactly that. Instead of “selling” to your customers, “buying” your customers opens up a world of possibilities. Instead of guessing how much to spend on sales and marketing, “buying” your customers means you know exactly how much to spend on your marketing in order to generate revenue.

First off, you need to determine the “Acquisition Cost” of your current customer. If you’ve put $1000 into advertising and had 100 phone calls, you’re paying $10 for each lead. If only 5 of those leads makes a purchase, you’re paying $50 to capture each sale.

Say you could create a marketing plan that could buy a customer for $50. On average, each customer would spend $500 with you, and $100 of that would be profit. How often would you invest $50 into marketing?

Time and time again.

Once you know how much it costs to buy a customer, you can start thinking about the consequences of a customer’s “Lifetime Value.”

Knowing this value – which is simply the amount of money your average customer will spend with you over a buying lifetime – will help you make better decisions about the overall direction of your business.

Years ago, I owned a dog food business. My average customer would spend $800 a year on their dogs, and the average dog lived about 10 years. I presumed a customer would stay with me half that time, meaning the “Lifetime Value” of my dog food customer would be $4000.

Imagine if I created a program that both produced and rewarded referrals. Say that single customer now had incentive to refer two new customers to me. Suddenly, that customer is worth $12,000. What if those new referrals sent more referrals? How much value is that initial contact worth now?

More importantly, what would I be willing to do to keep that customer?

This long-term view of customer value is essential. Only when you realize a customer’s “Lifetime Value” do you see the importance of developing great relationships with your customers.

That way, you’ll do whatever it takes to keep them for a very long time.

The ultimate goal of all that effort, of course, is to build a loyal base of “Raving Fans.” To paraphrase my friend Jeffrey Gitomer, customer satisfaction is worthless, but customer loyalty is priceless.

How do you get your customers to be loyal to your business? You start with your existing base of customers. Start tapping into your database. Begin to develop a rapport with your customers. Start sending them letters, brochures, catalogues, or newsletters. Develop a loyalty club. Or just pick up the phone and thank your customers for their past business.

Whatever you do, make sure it’s consistent. Also, make sure you make it easy for people to buy from you. Finally, develop and introduce a “WOW” factor – where your customer’s expectations are surpassed each and every time.

Creating a “WOW” is easier said than done. However, when you find your “WOW,” you must create a system to make sure your customer’s expectations are surpassed – every time. Every day you need to get better. And you need a plan that goes further than just providing great customer service.

What should that plan look like? Let’s outline 7 key action points:

1. Identify your ideal customers. Find out who they are. More importantly, find out what they would regard as “excellent” customer service.
2. Create your customers’ “Customer Service Vision” – based on the feedback you received directly from your customers.
3. Decide what you can promise your customers. Make sure it is something you can deliver consistently each and every time. The basic rule is to “under promise and over deliver.”
4. Make sure your entire team is involved. Share the “Customer Service Vision” with everyone in your company and ask for input on how to consistently deliver it. Then work with your team to make sure you actually deliver.
5. Checkup constantly to make certain you are delivering what you promise.
6. Keep improving. As your level of service gets better, move the goalposts. Challenge your business and your team to go the extra mile.
7. Finally, always smile. People (and after all, that’s what your customers are!) love to feel special.

Remember that good service is just the first step in securing customer loyalty. You’ll also need to focus on the kinds of products you stock, your overall sales process and the way you manage your business.

Combined, each of these areas will work together to give you an advantage in your market that outshines your competition no matter what the economy does.

Also remember people are always willing to pay for service – when it’s the service they desire. If service continues to exceed expectations, customers will continue to stay with you. You’ll develop a great competitive advantage, and they’ll continue to say great things about you and your company to their friends and associates.

And that kind of repeat business really is priceless.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

I have a theory, and it’s a theory I have seen proven again and again in business.  And, it’s a theory that has made so many companies so much money, that it literally blows me away how few ever use it.

Think about this … who is the number 1 prospect to buy from you tomorrow …?

That’s right, the people who bought from you yesterday …

And that’s where my theory kicks in.

You see over the years, several reports have shown that most companies ignore my theory and spend 6 or 7 times more on chasing new customers than they do on getting past customers back.

And yet, the majority of profit in any company comes from repeat business.  Without repeat business a company will always struggle to grow and make profits.

So, back to my theory …

A company that doesn’t send thank-you cards to its customers leaves a lot of profit on the table …

It’s not just the thank-you card, it’s what sending the card shows me about how you do business.

Look at it this way, when was the last time you were sent a thank you note from a company you did business with … ?

If I’m right, it was a long time ago, if ever …

Big companies, small companies, they’re all as bad as each other.  They spend a small fortune getting you to come in and buy and when they have you right where they want you, they let you get away …

Most don’t even do the basics right.  But even if you get the basics right, let’s see how well you’re doing over all …

Here are my 6 steps to getting your customers buying from you again and again …

1. Collect their details – and I don’t just mean their name and number.  You need to learn as much as you can about them.  Preferences, birthdays and anything else that will help you turn them into a regular customer.  One thing to make sure of, you need to have a great database system, but no use keeping names if you don’t use the next 5 steps …
2. Send a thank you card and invite them back – and do it in hand writing, even on something as simple as a postcard.  It’s crazy how simple and inexpensive this is, yet so few ever do it.  You can even include business cards they can give to their friends …
3. Plan future buying – this is so simple yet very rarely done.  What if you sat down and thought through, or even called or met every customer and discussed their future needs.  Just think of how easy I would be for a printer to remind you or even call you about the fact that you are running out of letterhead.
4. Inform your customers of your entire range – ever had customers say, ‘oh, I didn’t know you sold that’?  You want every customer to know everything they can buy from you.  Just think of how people have insurance with several different companies, when was the last time your insurer called and asked if they could offer you a quote on all the policies you don’t have with them.  You need to be more pro-active with customers.
5. Write a monthly or at worst quarterly newsletter – with everyone going to email newsletters I am of a firm belief that it’s back to the old way of written and printed newsletters that will get the results.  With so much technology, some times it’s the back to basics that works best.
6. Special Offers – if they’re not receiving offers, carrying a VIP card, or in some way made to feel important, then you aren’t getting as much from your customers as you should be.  Think of your favourite restaurant, could they send you a text every Monday with the menu specials for the week.

I’m sure you can think of dozens more ways to get your customers coming back.  It’s not about ideas though, it’s about action.

It’s about putting any or all of these ideas into action in your business now … and if you do nothing else … at least send someone, or everyone a thank-you note …

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

Mention marketing to the average business owner and they think mainly of advertising, however there are far more cost effective, far more profitable and much easier ways to get yourself new customers …

But first, we need to understand a simple idea about what business really should be focused on, and that’s profitable customers …

Let me explain.

When you “buy” a new customer with any form of advertising or marketing it costs money.  Simple example, if you ran an advertisement for say $2,000 and got 100 calls and 20 sales then you spent $100 per new customer.

That number is your “acquisition cost” or “cost per sale.”  Essentially it’s how much it costs you to buy a new customer.  Take that one step further and you got 100 people who called or 100 leads so your “cost per lead” was ($2,000/100) $20.

So, if you don’t already know these numbers you need to go and work them out.  If you get a lot of business by word of mouth or passing traffic you still have to count them as well.

If we follow this example and pretend it was a restaurant, we can presume each person coming in spent only $100 on dinner.  How much money did you make from each customer?  That’s right, you lost money, It cost you $100 to get them there, $30 for food and drinks to serve them, $30 for staff and $10 for overheads, so all up $170 out for $100 in …

In other words, all 20 of these new customers were on average a loss.

So, there are four ways we can turn them into a profitable customer right up front.

1. We can work on writing better advertisements. Create a better headline, a better offer and make sure we only advertise in media that makes sure we are getting to our target audience. From there we should be able to get a much better response, many of my clients we’ve doubled and tripled advertising responses with just a few simple changes. So, let’s look at the numbers if we doubled the responses, and you can fairly easily do this. Now we get 200 callers and your cost per lead goes down to just $10 each …  That’s a great start and assuming the other numbers stays the same, we are down to just $50 cost per sale and thus $120 out for $100 in.  Still more work to do, but we are on track …
2. Next we work on getting more of the callers to come in and buy.  Boosting your conversion rate is often as simple as measuring it and as complex as creating scripts for your salespeople or receptionists to follow.  So, what if instead of 1 in every 5 (20 out of 100) coming in we could get 2 from 5 and really make sure the marketing and advertising dollar goes further. So, we are now getting 200 callers and instead of just 1 in 5 we get 2 people to come in and buy. That means we are up to 80 people booking in and buying from you. Your acquisition cost or, cost per sale is now down massively. Your $2,000 advert now gets you 80 buyers at just $25 each.  So when we do the math, our marketing is starting to make a profit on ever new customer, just $95 out for $100 in. Great work …
3. Next we need to get them spending more every time they buy from us. Instead of $100 each time, how can we work on raising sales, suggesting other items, a better wine list etc.  all these ideas you can sit down now and work on. What else can people buy,  Think of it like one of my clients, a pharmacist who offered ever single person who bought from him a bag of those wonderful chemist only jelly Beans. He ended up selling hundreds of packs a week, just by asking.
4. Finally, we need to get people back.  Collect their details, send them a monthly newsletter, special offers, even a simple thank-you card and invite them back as often as you can …

No matter what you do, remember you are buying customers and it’s getting more expensive every day. Once you’ve got them, keep them for as long as you can. Good service goes only so far, from there it’s up to you and your marketing to invite them back and give them reasons to buy from you again and again.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

So, when is great service really great?

Let’s say you and I go to a restaurant and sit down. The waitress is polite, greets us perfectly and serves us so well we feel obliged to order a little more expensive wine.

It’s poured and served with a great skill …

We order our meal and are having a great time …

The meal arrives and it’s bad, I mean real bad.  Now, no matter how good the service, a lack of delivery reminds us that customer service is about the whole experience, not just the interaction.

I had an accountant once who took me to great football games and wonderful dinners, but he kept messing up my returns and was almost always running late.

I don’t care how good the WOW factor is, if you can’t deliver the basics …

So, here’s my 3 steps …

#1 … Deliver with consistency – by far the most important of the three steps.  Every time I call your company, the phone should be answered the same way, the orders processed systematically, the services delivered with regularity so I can trust that you know what you are doing and I can feel good about coming back and referring my friends.  Remember, you can’t WOW a customer until you have at least satisfied them.

#2 … Make it easy for me to buy – consistency is a start, but if you make it hard to do business with you, I can never be WOW’ed.  Everything from ability to contact people, websites, emails to payment methods, delivery choices and so on.  All of these things you need to make sure you are easier or at least as simple and easy as any of your competitors.  Ring them, go to their websites, do as much ‘market research’ as you need to, to make sure buying from you is both simple and easy.

#3 … WOW me – satisfaction is boring, you have to do something I don’t expect.  I remember when only a year or so back, having WiFi in your room was a bonus, now I expect it and am greatly disappointed when a hotel doesn’t do it.  Check your industry and then check 3 or 4 others to find out what is now expected as standard so you can dream up a strategy to WOW me.

Let me give you a couple of examples …

I met with an accountant recently who has a $15,000 golf computer swing analyzer in his office, so while you are chatting about your accounts (and he is billing you) you get a few practice swings in.

Or, the Emirates First Class seats, where when I flew from Sydney to Dubai they actually have doors to your seat and you can close yourself off from the rest of the cabin.  The lights in the roof of the plane gradually change from day to night with a beautiful orange glow, and then the mini-bar in my seat.  All examples of WOW …

But remember, if they hadn’t of had the flight get to Dubai, would I have cared about all the other stuff.  Or, what if I could only pay with cash, how hard would that be…

Great service is one thing, satisfaction with what I am buying, backed up with great WOW type service is what counts …

Reprinted from http://www.mybusiness.com.au/

In fact, imagine that with only a few words you could stumble across the one area of your business that is literally overlooked every single day in most companies, to the point where people dismiss it as, "yeah, we're OK in that area".

Well, here it is ... with one caveat ...

If you dismiss this it's at your own peril ...

The Question ...

Do you know your conversion rateS?  and yes the 'S' is meant to be in ALL CAPS ...

Why ... ?

Well, first of all do you even know the overall conversion?  If not, you have some serious room for growth, in fact, whatever you think it is, your gut feeling, halve it and, you're MUCH closer to what it really is.

So, why RATES plural ... ?

Simple, do you know it for every step of the sales process, contact 1, contact 2, and so on through however many contacts there are.  Or, each stage, like in a retail fashion store, getting you in the store is one thing, starting a conversation is another, getting clothes tried on and so on ...

Then stage 3 ... do you know it for each and every sales person at every stage of the process ?  Bob might beat Mary, but Helen beats Bob, and all at different stages of the sales process, so maybe they can learn each stage from each other.

Then Stage 4 of knowing your conversion rate, do you know it for each marketing medium.  As in, do you know what the rates are for Yellow Pages V Referrals, not just think you know, but actually know.

Finally for the more thorough amongst us, the 5th and 6th stages, how much they spend on the initial transaction andthen stage 6, how much are they worth over their lifetime of buying from you?

Finally Stage 7, how many referrals do you get from each marketing medium and from each salesperson and so on?

Is this a lot of work?   YES ...

Imagine though you knew that every $1,000 advertisement bought you 100 leads and 20 sales of $500 each.  How often would you INVEST $1,000 to make $10,000 and what if they came back for 3 years on average and spent another $2,000 on average ... ?

Yes it's work, but it's much better work than struggling to pay the bills because you don't know your numbers.

All the Best ... Brad Sugars

P.S.  Meet with one of my coaches if you are struggling with knowing your numbers like this www.actioncoach.com ...

Let me give you mine.  The usual restaurant my wife and kids go for lunch on a Sunday had an item on their menu changed by their "corporate head office" and it's my favorite sushi ... it arrived and I was unhappy.

So, when the manager came over, he made a really quick decision and took action.  He said, sir, let me make you the old one on the house right away ... happy customer, will return and buy again.

Simply put he took action to turn an unhappy customer into a happy one.   I'd love your story to help with a new training program on turning unhappy customers into happy ones ...

Thanks ... Brad ...

PS.   If you want help turning your unhappy customers into raving fans, speak with one of my ActionCOACH Business Coaches, as franchisees they know what it takes to run a business of your own ... www.actioncoach.com ...