4 Ways to Grow Your Business Series

When your business’ value proposition is strong, you can afford to be more selective in the new customers you take on, and so concentrate your investment on the most profitable and potentially loyal prospects.

It may sound a little simplistic, but there are really only four fundamental ways to successfully grow your business: in other words, make it more valuable.

1. Increase the number of customers of the type you want to have.
2. Increase the frequency with which customers come back to buy from you.
3. Increase the average value of each sale you make.
4. Increase the effectiveness of each process in your business.

It’s interesting to contemplate the fact that all of the business development strategies you might implement will fall into one of these four categories. Any other strategy that doesn’t appear to sit in one of these - for example, cutting costs - may help you temporarily, but it won’t grow your business. Cutting costs will not make your business more valuable unless you turn around and re-invest the money you save into one of the four ways.

In the next few months, we will devote a story to each of the four ways stated above. This month we will deal with strategies for increasing the number of customers you have.

Be sure to check out the newsletter in May for the next part of this series - how to increase the frequency with which customers come back to buy from you.

How To Increase The Number of Customers

1. Develop a unique core differentiator (UCD)

A UCD is the reason why customers buy from YOU, something you have that is of real value to them and swings their buying decision in your favor. You may in fact have several UCDs – different ones targeted towards different segments of your customer base.

Good UCDs can come out of simply reviewing the way you do business and deciding to emphasize some aspect of what you already do, or of thinking up a different way of doing it. For instance, if you ran an automobile parts business, you could offer free same-day delivery of parts ordered from repair shops within your area – only you offer this service to customers who need fast delivery.

Think about how you’d finish this sentence: ‘People buy from me because I’m the only business that...’ If you can put in something there that only you are doing, then that’s a UCD. If you can’t, then its time to start creating some UCDs for your business.

2. Tap the power of the phone

Many marketing people consider the phone to be the single most underutilized selling resource in business today. An effective phone technique is really important in keeping prospects interested; there’s no reason to spend money on generating leads only to turn them off the first time they call you because of the manner in which you talk on the phone; or by handling the call carelessly and leaving people hanging for long periods; or setting up one of those telephone tag situations. We all know how frustrating these things are.

With the right training, your team will have the focus to handle any call, and make it work to your business’ best advantage.

3. Develop a sales system

Just about everyone in business knows of someone they’d call a ‘natural’ salesperson. If you observe these people you’ll begin to notice a pattern to the way they do things – how they get the prospect interested, how they keep them interested, how they handle objections, how they deal with questions about price and how they finally ask for the sale. All in a way that builds trust and understanding with the prospect as they go along.

They have systemized their routine – they have a ‘sales system’. Now it is actually possible to learn an effective sales system. A systemized approach to selling based on an effective sales method is a must-have for increasing your customer base.

4. Research your market

To improve your return on investment in marketing communication pieces such as letters, advertising, emails, and direct mail, a targeted rather than shotgun approach is very important. Your marketing should focus on a specific group of people who are the right type to purchase your product or services and give them a message they will relate to.

So it’s extremely important to understand what makes your customers tick; if you are selling computers then you need to realize that the expert user with knowledge of software and hardware and all the technicalities is going to want different information than a person who just wants something easy to use for their email contact with family and friends.

To arrive at this knowledge of your actual and potential customers you need to do some homework identifying your main market segments and profiling them according to their interests – some market research. Then you can market accordingly in a much more focused and cost effective way.

5/25/07

How To Increase the Number of Times Customers Come Back

It's a simple fact of business – most companies are obsessed with getting new customers. They advertise, plead, bribe, bend over backwards and sometimes beg to get a new customer.
And after all that, once they get them, they ignore them.

Think about this. It can cost up to 6 times more to win a new customer than it does to have an existing customer purchase again. Why? Because you invested time and money to acquire that customer for the first sale, but every additional sale after that doesn’t involve any extra acquisition cost. So for every sale you make to an existing customer you actually keep more as profit.

In other words, it ‘s a well recognized fact that retaining and having customers come back for more – and more – is the most profitable way to sell.

So how can you encourage repeat business?

1. Know your best customers and treat them well

One of the first ways to ensure repeat business is to classify your customer base into tiers according to how profitable they are. This can be as simple as categorizing them as A, B, C and D customers. This classification process means that your ongoing communication and marketing approach will be more appropriate for each group.

For example, your A customers are the ones you most want to keep working with, so you might invite just them to join a preferred customer club, or As and Bs would get special mailings and offers, etc. You could even go so far as to ask your D customers to go elsewhere, freeing up more time and energy for your preferred customers.

2. Provide awesome service

Creating a team commitment to service can impress your customers enough to keep them returning and referring others. The commitment could make certain promises of performance standards and could explain your business ethics and mission. These can make great unique core differentiators as well.

Awesome service, like good telephone technique and selling technique, can actually be systemized so all the team knows what they are expected to do for a customer and just how far their authority extends in bending the rules. You can’t stop at saying you want your customers to be given awesome service – you need to train the team so they can deliver it consistently and effectively.

3. Nurture your customers

It’s important to nurture your relationships with your customer in the same way you would any other important relationship. Nurturing is the most cost effective way to make customers feel valued and motivated to keep purchasing from you. The more you stay in touch with them the more likely they are to remember you. Some effective nurturing strategies are:

• Regular mailings to build on the relationship such as newsletters, offers, calendars, service reminders, thank you notes, special articles of interest, holiday cards

• Establish a loyalty program that rewards frequent purchasers

4. Use customer comment

Asking for feedback lets customers know that you are truly interested in them and their opinion – something other businesses just may not bother with. And the feedback you get can be extremely valuable for your strategic planning.

Follow-up calls just to make sure they are happy with their purchase or to get in with some damage control if they are not; satisfaction surveys; customer advisory boards – all can be very useful in encouraging repeat business.

When you do make the effort to gather feedback, and the customer has made the effort to give it to you, don’t waste it. Use the information to continually improve the way you do business, and let customers know that their suggestions are being used.

6/19/07

Grow Your Business By Increasing The Average Sale Value

Customers come to you for help and guidance. So it’s important to let them know about all the options, including additional products or services that are available to add on to the original purchase. You’ve put a lot of time and money into getting that customer in to your business in the first place, so why not leverage the return on that investment where you can?

There are a number of common selling strategies you can use to increase the average sale transaction value.

1. Cross selling

Cross selling is when you sell other products or services from your range in addition to the customer’s original choice - “Would you like fries with that?” Look at your major product or service offerings and ask: What else could we offer to go with this item that would add value and help the customer get the most out of the purchase? Then develop cross selling checklists for each item that will guide team members in making suggestions to customers. Read more about cross selling on Page 1.

2. Up-selling

A great way to up-sell from a lower to a higher priced item is to offer your products or services in three or more tiers, along the line of good, better and best; or bronze, silver and gold. Your first tier might be your budget items, the ones for price conscious buyers. Your second tier is the one you actually want the majority of customers to buy, and your third tier items will appeal to those who are happy to spend a little more for more value. Train your team members to offer three options from your range of items, explaining the tiers. Statistics show that most people will select the second tier item.

3. Bundling

Bundling should make your products and services appear more attractive and create a higher perceived value in the mind of the customer. For example, a health professional might bundle together a free assessment when a customer signs up for a certain minimum number of sessions. Take a look at your full range of products and services and see if there’s any opportunity to package things in this way in your business.

4. Smart merchandising

Signage, ticketing, presentation and packaging, traffic flow, and point-of-sale displays are all types of merchandising that can increase your average sale if done well. Having educational information about your products or services, and sales tools like testimonials or brochures, can help build customers’ confidence in your business and increase the average sale value.

5. Work your margins and pricing

To increase your average sale value you must have a firm understanding of your margins and how they affect your bottom line. Avoiding discounting and price wars is important to maintain and increase your average sale value. If your present margin is 35% and you reduce your prices by 10%, then just to produce the same profit as before the discount your sales volume must increase by 40%! On the other hand, if your present margin is 35% and you increase your prices by 10%, your sales can reduce by up to 22% while still maintaining the same profit. Do some what-if scenarios around increasing and decreasing your margins to see just what the effect on profit might be.

Copyright 2007, ROC Sytems Pty Ltd. All Rights reserved. Reprinted with permission from http://www.ranone.com.

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