Is it better to keep a customer or replace them?

“$29 per month… NEW CUSTOMERS ONLY!” Most of us have seen something like this and thought less than pleasant things about a vendor who hangs these new customer offers out in public where existing customers can see them. That bargain basement deal that’s not available to existing customers doesn’t make you feel good about your decade-long relationship with that business. The loyal customers who have stuck through good times and bad with that vendor – including their mistakes (which we all make).

The thought?

“Where’s my screaming deal?”

It isn’t that these deals are inherently bad. The mistake is putting them out there in front of everyone – including your current customers. If you can find a way to avoid showing the “loss leader for new customers only” offer to existing customers – avoid it. In some media, you can’t avoid it – so don’t use that kind of offer there. It ticks off your loyal customers. Every. Single. Time. Your customer service team gets to take flak about this each time you run these promotions.

Meanwhile, a lack of communication to existing customers plants the thought in customers’ minds that their vendors take them for granted. We know you’re thinking of us when you outsource customer service to Jupiter to save $1.29 per hour, or when you discuss how to shrink receivables. What sort of effort do you invest to retain existing customers?

If you have convinced your customers that you aren’t thinking about them & that you’re more concerned about getting new customers – why should they feel differently about you? You’re advertising for new clients everywhere. While those ads are out there chasing down more new customers to fill the leaky customer bucket, are your long-time loyal customers (and the rest of your customers) being ignored?

All the single ladies

Look at it this way: If you’re someone’s steady “significant other” and they are constantly out chasing down new “others”, most of you wouldn’t take that so well.

Why should your customers feel any different when they aren’t being wooed, cared for, thanked, communicated with, or given any special attention? They only seem to get attention when they call to report (or complain) about a service, delivery, or product failure. Once the initial sale is concluded, is the only time you connect with your clients when they contact you, or something has broken or otherwise gone wrong?

“That’s what everyone else does.”

You might be thinking “That’s what everyone else does. Why should I behave differently?

You are, or have been, a customer of car dealers, cable companies, dry cleaners, restaurants, various repair shops, handyman services, plumbers, sewage tank pumpers, electricians, hair salons, clothing stores, hardware stores, quick lube shops, etc. Almost all of them are advertising for new customers this week. How many of them are ALSO communicating with you to keep you, to bring you back, to make you feel good about being a customer, and/or encourage you to refer them to someone you respect and/or care about?

Very few.

They’ll likely continue appearing to take you for granted for weeks, months, or years – all while chasing new customers, all while grumbling about churn as they slowly lose customers to someone else’s $29 new customer offer. Don’t be that business.

Doing only one of these (looking for new, caring for existing) is not sustainable. Yes, I know it’s more work to do both. Most places need to get new customers, but most of those same places spend a lot more money & effort to get a new customer than they do to keep and care for an existing customer. Doing both means making an effort to protect the asset you paid for – yes, customers are an asset. Perhaps not in accounting terms, but in the real world where customers don’t grow on trees, we’d all rather have more long-time customers and others begging to do business with us.

Don’t spend $12 to get a customer this month, only to ignore them hereafter and hope they stick around, and then go spend $12 to get another one. That assumes you know how much it costs to get a customer (and it’s always more than you think).

Recycling customers is expensive.

Take better care of your existing clientele. Well cared for clients tend to buy more, buy more often, & for a longer period of time. They refer their friends & colleagues because they finally found someone who gets it. Be that someone.

Photo by martin.mutch

Do your sales efforts have a smell or an aroma?

Sales is tough work. One of the things that makes it challenging is starting a conversation with someone you don’t know. This can be particularly difficult when they know you are primarily interested in selling them something. As Gitomer says, “People don’t like to be sold, but they love to buy.” Nowhere is that more evident than at a trade show, where people will avoid eye contact with anyone wearing a “sales hat”.

Even so, trade shows offer ideal opportunities to talk to (usually) vetted prospects, assuming you’re at the right show. These face to face opportunities provide an often-unparalleled chance to learn about your prospect. Body language & facial expressions help you determine if the questions you ask and the responses you provide are resonating with your prospect’s needs and wants. These physical cues are not evident during a phone call or email exchange.

Avoid the hat

In order to benefit from these valuable face to face conversations, you have to start them. Getting these conversations started requires you to engage with someone. This requires that the attendee accepts the engagement rather than ignoring you, looking away, staring at their feet or simply saying “Nope”. Trade show exhibitors try all sorts of tactics to provoke an interaction, including attractive women, giveaways (tchotchkes), and refreshments.

Giveaways are most common. Some lame, some extravagant, some in context with their business. There’s an opportunity here for much thought than you typically see. Common rubber footballs, pens, pads of paper, and so on – much of it never makes it home, much less back to the hotel or office. These giveaways are rarely thought through well enough that they are designed to make a connection to the product or service being sold. We’ll come back to that.

I don’t see too many so-called “booth babes” these days, but they do exist, particularly in the automotive industry. In 30+ years of trade show time, I have seen one coherent use of them – when costumed in a way that connected their presence perfectly into context with the product being sold. Interestingly, this involved costuming intended to appear as if it came from the movie “Edward Scissorhands”.

Refreshments are the other area (besides giveaways) where you see a broad latitude of items. Whether it’s numerous forms of candy, airline-esque bags of peanuts/pretzels, to more imaginative setups like serving locally-brewed root beer in boot-shaped shot glasses from a cowboy-themed booth at a trade show in Texas.

And then there are the booths that recognize Maslow’s hierarchy of needs – specifically giving away things that are all but irresistible. These are things, per Maslow, that tie back to the lower tiers of the hierarchy, delivering a feeling of safety / comfort and home. These are the booths with freshly cooked bacon (not kidding) or fresh from the oven chocolate chip cookies. The latter is what I’ve seen perform the best.

The aroma of warm chocolate chip cookies is incredibly disarming to most people. Even the folks who don’t want a cookie seem obligated to explain why – which starts the conversation. Stop long enough to have someone hand you a warm cookie and most will pause to take a bite or two, and feel enough obligation to answer a qualifying question or two. Before long, the conversation is started.

Remember the point of your “gimmick”

Lots of money gets spent on these things. Much of it is spent without much thought or planning, at least from my perspective. Never forget the primary reason why you’re exhibiting at a trade show and spending that money: To start the process of making a sale, or at least, to gather leads. A gimmick to get people to stop at your booth is solely to make it easier to start a conversation. Your booth and pre-show marketing ties into all of this and should contribute to the process of creating / provoking these conversations.

Years ago, I had a fishbowl in the booth. The fishbowl contained a number of our competitor’s hardware dongles. Providing the dongle to us was a requirement for new clients to get a cross-product discount by abandoning the competitor’s product for ours. A bowl full of dongles sent a powerful message and it prompts people to stop. It’s a curiosity. It creates a conversation.

What are you doing to create these conversations?

One sentence can make or break a campaign

As we’ve discussed before, I still believe that well written direct mail works when it is done properly because I see the results. While much of it is “junk”, there are folks out there producing high-producing mail pieces. What do I mean by “high-producing”? I mean mail that survives a trip from the PO Box or the mail box to the kitchen table, then gets opened, then gets read, then prompts the recipient to take action.

If it works, keep doing it. If it doesn’t work, fix it, or stop doing it unless you’re willing to fix it. Many have taken the second option, believing that it no longer works.

Each of those steps must be successful for a piece to be high-producing. Otherwise, the piece gets tossed at the post office, or on the way home, or on the way from the street-side mailbox to the house, and so on. Even if it does make it to the kitchen table, it has to meet the smell test to get opened, and then again to get read and so on.

About that one sentence

That one sentence occurs in your mail piece multiple times. Anything that appears on the face of a mail piece can be the one sentence that either provokes someone to keep the mail or toss it. This same cycle occurs for the face of the mail piece, the back of the envelope, the headline and salutation on the letter inside, and every sentence thereafter.

Too many mail pieces (and emails) ignore this simple progression. It’s a conversation. If you’re standing in front of someone talking with them to both understand what their needs are and help them understand how you can help them, you’re doing the same thing. If you say something that breaks the trust you’re building with the prospect / client you’re speaking with, the conversation is effectively over – which is the equivalent of your mail piece going into the trash.

Remember, your email or your mail piece is no more than a proxy for you standing there. It needs to be in your voice, while reflecting your perspective and expertise. I find that reading these things aloud before sending helps me write them in my voice. When I read something written in a way that doesn’t sound like my voice, it feels terribly obvious as soon as I say it out loud.

Do your emails sound like your voice? Do the things you put in the mail sound like your voice? Sounding like you, i.e.: using the words and sentence structure you use is the easy part. It’s crucial to convey your message with your personal credibility and desire to help the client. Perfect it one sentence at a time.

What about the one sentence that can break it?

There’s always a risk that a mail piece will go down in flames at any point between the PO Box / mailbox and the kitchen table. The aforementioned smell test isn’t a one time thing – it has to be passed at every step of the way.

The one sentence that can break it and make all the effort and expense of sending that piece is the one that destroys your credibility.

I received a letter like this last week. Someone tried to be clever on the face of the envelope and trick the reader into opening the envelope. While it probably worked on some people, it will destroy the credibility of the sender with many other readers. At best, that piece will go straight to the trash, which is how I handled it. With others, it could create some blowback to the organization who mailed it. With some, it could make that organization all but dead to the reader.

You obviously don’t want any of these things to happen. It may seem like a waste to spend a couple of paragraphs to remind you of this possibility, and I simply do so to make it clear that every step in the process of reviewing, opening and reading the mail is an opportunity to both provoke interest and lose it.

These same challenges affect your email pieces, blog posts and any other materials you place in front of clients. In fact, the same can be said for a face to face conversation you have with a client or prospect.

Get one new client a day, week, month

It’s not unusual to talk to business owners who want to double their business, even if the discussion is a bit unfocused at first.

It’s far more unusual to find someone who wants grow their business by 1000%, IE: 10 times its current size. Some have said that growing a business by 10 times is easier than doubling it because of the changes it forces upon all aspects of the business. Easy probably isn’t the word, but it makes sense logically because you know you’d have to rethink every process from one end of the business to the other.

Doubling the sales of a business tends to result in doing things the same way, but doing them twice as often, or somehow doing twice as many of them. You may also want to consider hiring someone to do SEO (search engine optimization) With that in mind, the idea of doubling your business might leave you wondering where will the time come from or who will do the work. Reasonable questions, according to someone at kottongrammer.com/miami-seo. Even if that sort of growth seems possible, it might not seem reasonable, no matter how attractive it sounds or how confident you are that you could handle it.

While I’m not trying to talk you out of that kind of growth, and I’m confident that almost every business could use more clients, I know that not everyone is sure how they could make that happen, or how they’d handle the load if they did manage to double the business.

Instead of reaching for 10x or 2x, let’s keep things as simple as possible for now by starting with getting one new client in whatever timeframe makes sense for you.

Start with one

Keeping it simple… How would gaining one new client per day, week or month do for your business?

Perhaps your business isn’t structured in a way that one new client per day could happen, or perhaps you couldn’t deal with 30 new clients a month. What about one new client per week? If your clients require lots of time and effort, perhaps you could only handle gaining one new client a month or even per quarter. What impact would result from gaining one new client per day, week, month or quarter? Do the math on whichever timeframe makes sense for you.

How often do your clients return? If you have 365 new clients a year from now, and you keep adding one every day, how does that change your business? Even if your typical client spends only $10 per purchase, one more per day is a step in the right direction, particularly as these new clients return.

Bring some context to “get one new client”

For a little daily context, maybe you get one more dinner reservation, one more kayak rental, one more room filled, one more table turn, one more styling appointment, or one more portrait setting per day. If you maintain this month-in, month-out, what’s that mean to your business? What are 30 more table turns, 30 more rentals or 30 more room-nights worth to your business per month?

For some weekly context, perhaps you get one more home to clean, one more weekly cabin rental (or one more rental week in the shoulder season, if you have such a thing), one more legal consultation, one more pack trip or one more bookkeeping session.

Naturally, you may wonder how you would get that one more client. One easy way: Think hard about how you’re getting them now. If your lead flow numbers vs your sales numbers tell you that there are leads you’re losing, not closing, or simply not ideal for – dig deeper. Examine each lead source, each media, each referral source. Where can you find one more? Repeat the process.

Why only one?

You might be asking why only one new client per day, week, month or quarter? Simple. If you can figure out what you have to do to gain only one in the timeframe that works for you, then the path should be clear to your long term sales goals. By consistently getting one more, you’ll know you can do it as well as how to handle the growth. Whether you do what it takes to do that one, five or ten times – the choice is yours.

One critical piece – it helps to know what’s working. Do more of what works and less of what doesn’t.

18 questions to increase sales

This week, I’ve been working on metrics because I can’t have my fingers in every pie at once – at least not once the number of pies grows beyond my ability to manage them all in my head at the same time. Even if you can do that, it’s very difficult to sense where changes are happening much less where trend directions are changing.

Some of this can be done by gut feel because you’re right in the middle of it, but sometimes gut feel will burn you because you filter what you’re experiencing through existing expectations. Thus the need for metrics – so that you don’t have to spin too many plates at once, assume too many things or make decisions based on too much gut feel.

Metrics are questions, too

Metrics are a form of question.

For example, a common metric for businesses with a web site is “page views”. A page view metric asks the question “How many people saw a specific page this month?”. When all of those page view metrics are combined, it becomes the question “How many people saw our website?”

Website metrics are pretty common and easier to collect than metrics from other media – which are often on you and your team to collect. The work to do that might seem painful, but you can learn a lot from it.

How many people called about the radio special you advertised on KXXX? How many people visited the store and mentioned the radio special you ran on KXXX?

These things are important so that you know whether to invest in marketing that item on KXXX vs. marketing something else on KXXX, vs. marketing anything at all on KXXX.

You would do the same for anything else marketing on any media, otherwise you’ll have nothing other than gut feel to help you make these decisions. Traditional media doesn’t often provide these metrics, because they can’t. Radio, TV and print newspapers can’t do that because they usually aren’t contacted by prospects seeking whatever you advertised. It’s tough to know if you aren’t part of the transaction process.

That doesn’t mean you shouldn’t track them.

The right questions help increase sales

Coming up with the right question can be a lot harder than not having the answers.  You have to be careful to ask open-ended questions designed to tell you what you don’t know, rather than asking questions designed to confirm your assumptions.

Where is the profit in your business that you haven’t yet found?

For most people, the answer probably lies in your existing customer base. The next question I’d ask you is how many of your customers are buying 100% of what they should be/can be buying from you?

How can your current customers help you find that profit?

The natural follow to the previous question.

To rephrase it, what percent of your customers are giving you all the business they could? Who are those customers? What actions will be necessary to either sell to the ones who aren’t buying everything you make, or determine the ones who won’t buy?

Once you’ve identified the ones who won’t buy, it’d be good to identify why they won’t and correlate that (if possible) with where they came from as a lead. Are the leads who buy some buy not all (or who buy once but not ongoing) leads who came from a certain type of media or a certain type of marketing campaign?

Are the ones whose initial purchase is different than the ones who do keep buying – and buy it all? Can that be solved by pursuing slightly different leads, or by changing marketing or the product / service?

Finally, can / should that gap be fixed? Does it matter if this group of clients aren’t recurring buyers, or that they don’t buy everything you offer?

Are you communicating with customers optimally at all touch points?

Are there touch points you aren’t thinking of?

I was chatting on Facebook with a reader earlier this week who owns a locksmith business. After our conversation, I wondered if there was an opportunity to get involved in home and/or commercial property sales – ie: lock / key / lockset changes that might be warranted when a property changes hands.  It’s an opportunity to get a new client if there are enough buyers who want locks changed at purchase time.

Does your business have secondary transaction opportunities like that?

Win on low price, lose on low price

Do you depend on having the best price to win business? If so, are you sure that’s really how you want people to choose your company?

I ask that because if you cut your price 10%, that 10% comes out of your profit margin. Perhaps obvious, but not always something folks pay attention to – particularly when price is used as an end-all, be-all to close a sale.

You can tell that’s going on when you intentionally keep silent when someone names the price of a product or service. Stay silent long enough after they react to your “What’s the price?” question and the “we’ll win on price at all costs” salesperson (particularly the novice) will often get nervous and say something like “Of course, we can go lower…”

Use low price as a component

As Amazon Web Services SVP Andy Jassy is fond of saying, “I’ve never met a customer who asked if they could pay more.”

So how do you balance between being too expensive and being the one with the paper-thin margins?

Don’t get me wrong. Using price as a component of the things you use attract customers is fine. Where you run into trouble is when it’s used as the primary decision point. In those cases, you’re more than likely going to get burned and less likely to attract long-term customers.

One common example is using products and services as loss leaders. It’s OK to leverage price in this way as long as you know your numbers very, very well *and* you know that once you get that customer, there are plenty of opportunities to provide more value to them – value that they’ll be happy to pay for.

Fail to do this and you’re headed for trouble. This isn’t just about milk at the back of the store. You see it frequently with internet-based services. How do they offer “free” to so many people, yet still make a profit?

They know how much it costs to offer that free service.

They know how many of those freebie users will convert to paying customers because they want services, features and benefits not offered to freebie clients.

They know their margin on the paying customers is enough to fund the freebies, plus profit margin, so that more paying customers raise their hand and say “Yes, I need that.”

Bottom line, they know their numbers and they never stop recalculating them, just in case something changes.

Low price isn’t owned by the internet crowd

You can use free or cheap as a lead generation carrot as long as you too know your numbers, and make sure that you’re using that offer with the right prospect.

That’s where most businesses get started down the wrong road – they make the offer to the wrong group of people, ie: people who would never have been their customer in the first place.

If you make your offer to the right people, that’s a different story altogether – and that’s the magic formula no matter what your pricing is like.

The timeshare business has done this for years by giving away a free night or two, dinner, etc – all in order to get you to see and enjoy what their facility offers. They know historically what percentage of people will buy if they take the time and make the effort to attract the right prospects to their offers.

Using low price requires well-crafted offers

Timeshares don’t make their numbers by giving away all those free nights, golf rounds, lift tickets and meals to anyone and everyone. They’re careful to pre-qualify prospects using financial, behavioral, demographic and psychographic measures to make sure they closely match historical buyers.

When you attract people with a low price offer, the goal isn’t simply to make it free or available for a low price, but to provide enough of a taste with as little risk as possible to the prospect so that the right person can make a decision to become your newest client.

If you can do this without killing your margins during the period between the time they taste and the time they get serious about buying the real value you can deliver, then low price can work.

Do you know your numbers that well?