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Marketing Your Business – Most Ignored Marketing Rule #7 – More Customers Doesn’t Mean More Profit
Usually, if more customers buy your product or service, you will earn more money.
The problem is what you need to do to get new customers. If you have to spend a fortune on advertising and promotion or lower your price to make your product or service more attractive, more customers can easily cost your business a fortune!
And, it’s not good.
There are only three methods to increase sales in ANY business. I call them the Three Moss: #1. Mo’People #2. Mo’Money #3. Mo’ often
#1. Mo’People – Get more customers (more people who will buy from you).
Most businesses spend all their time and money on this – getting more customers. They’ll send out thousands of colorful brochures, pretty postcards, and nifty sales letters. They will spend a lot of money advertising in newspapers, magazines, flyers and directories. They will have huge sales where they hope a new customer will be lured in with disgusting prices.
All the “Mo’ People” stuff companies do to attract new customers consumes A LOT of money and time. More…
It’s hard to make it work.
Businesses that send mailers are thrilled when they get a 1% conversion rate. This means that out of 100 emails sent, 1 person ends up buying something. You don’t need a PhD in math to figure out that this also means 99 out of 100 mail:
- never got to the prospect
- were ignored (and rejected) by the prospect
- didn’t excite the prospect at all
- didn’t excite the prospect enough to get them to buy
Not only that, but if it costs $1 to send each mail, then whatever you sell to that miserable customer would have to net at least $100 in profit or your campaign will end up in the red.
New customer acquisition campaigns can (and do) – but only when the campaign’s cost per new person is well below the lifetime value of each new customer you get.
For example, if you sell yachts or private jets, you can send expensive mailings to your prospects because a single conversion will put you on the easy path.
A few years ago, there was a pretty famous story of successful new customer acquisition. You might remember a time when you couldn’t open a box of bath soap without finding a free AOL CD inside. But, here’s the deal… the lifetime value of each new AOL customer was somewhere in the hundreds of dollars – I’m guessing $400 at least. Each of these CDs probably costs about 20¢ to produce and distribute. So if we do the math, AOL only needed one customer for every 2,000 CDs (0.05% conversion) to break even. 2, 3 or 4 new AOL customers for 2000 CDs (0.1%, 0.15% and 0.2% conversion) would mean a profit of $400, $800 or $1200 for 2000 CDs. Now maybe you can see why those CDs were EVERYWHERE.
But even a successful campaign like this takes a lot of time and money.
Getting new customers is difficult and expensive. If your business is brand new, you have no choice. Customer acquisition campaigns are a necessary evil.
The good news is that if you’ve been around for a while and already have clients, there’s a lot more money to be made with a lot less effort and expense if you focus on #2 and #3 – Mo’ Money and Mo’ Often.
#2. Mo’ Money- Get more money from your customers every time they buy from you.
#3. Mo’ Often – Get your customers to buy from you more often.
How do you get your customers to spend more money and spend it more often with you? By ensuring they get what they expect from your business. And what do they want? This part is easy. Every good customer wants only one thing… COMFORT.
- Value-conscious customers want to feel comfortable getting value for their money (CostCo Wholesale Club)
- Affluent customers want to feel that the quality, service and exclusivity of your product matches their “resort” (American Express Platinum Card)
- Early adopters want to feel comfortable that your product or service puts them ahead of the pack (Apple iPhone)
- Business customers want to know that the tools and service you provide will keep their business running smoothly. (Nikon Professional Services)
Giving your customers what they want is a snap once you know what they want and once you decide that you and your business are ready to meet that need.
So here’s what you need to do:
STEP 1: Assess – You will need to take an honest look at your business and its processes. If your business is not ready (operations, call center, shipping, etc.) to put your customers at ease, your first task is to work on your business until it is.
STEP 2: Educate – Once you’re sure your business or service can put your customers at ease, you need to make sure your customers fully understand how comfortable you can put them. You will first let them know how your product or service will make their life more comfortable. Then you’ll explain to them how your business is designed to make them much more comfortable than your competition.
You can do this relatively easily and inexpensively with an email newsletter sent monthly to customers’ email inboxes.
Why only “relatively” easily? Because the newsletter won’t work if your customers see it as that thing that comes in the mail you want them to read. You will need to ensure that your newsletter is a “delivery comfort” device. Every article, promotion, or testimonial MUST be written to provide that sense of comfort to every recipient.
STEP 3: Demonstration – Finally, you’ll want to show people how comfortable you can make them. A good way to do this is to perform FREE trials. Another is to use testimonials where you introduce your entire customer base to a select few customers who have already had great, profitable, and heartwarming experiences with you and your business. Testimonials are a great way to communicate the benefits of your business – and the proof will come from people your customers can easily relate to.
Yes, more customers CAN mean more profits, but the time and expense involved in attracting new customers is HUGE.
Smart business owners have learned that focusing on their current customers is much less expensive and just as profitable…
… if not, more.
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