A Sad Story

My wife and I frequented one of the finest restaurants in the Houston area. I worked there when I started my first business. We were engaged there and celebrated many anniversaries there. The owners of the restaurant died and two sisters who worked there took over the restaurant. They weren’t very good marketers and business became very slow. Every time we saw them they complained about how bad business was. My wife and I made suggestions, but they didn’t seem very interested.

We knew they weren’t doing many of the basic things they should be doing to get business. One night as we were talking with one of the ladies, she was labeling post cards. Real nice post cards. I remembered them from when I worked there. Gesturing toward the post card, I asked, “How well do those post cards pull?” “No one?” I asked. “Nobody” he confirmed.

“Oh, phenomenal!” she said. “Every time we send them out we get tons of business. People come in and buy dinner and wine and sometimes they even bring friends with them.” This was the first positive thing I had heard her say in three years! Then I asked, “How often do you send them out?” “About once a year,” she replied.

I was shocked! Why do you think she didn’t send them out more often? “Because it costs so much,” she said. After being one of the top restaurants in Houston, Texas, for over 25 years, that restaurant closed its doors. Out of business. Why? Bad food? No. Poor service? No. Just a lack of marketing knowledge. Sad.

Most small business owners don’t understand the value of marketing to past clients. All they see is the cost. Then they want to go cheap and just mail to them or reach them by social media. Big mistake! A printed newsletter, post card, or greeting card has much more staying power than an email that can easily be overlooked or deleted. Just yesterday I had one of my coaching clients tell me that sometimes my emails I send to her don’t get read, but when I send a newsletter, she places it on the corner of her desk until it gets read!

To further irritate the problem, most small business owners don’t know how to track their repeat business. Tracking repeat business is completely different from tracking returns on paid advertising. With paid advertising, you invest a dollar and you track how many dollars you got back in new business. Many times when you market to your past clients, they may not respond to the offer, but they do remember you when they need you. Let me give you an example.

I was talking to a coaching client about this and he said, “My client-based marketing isn’t working.” “Okay, tell me what you are doing,” I probed. He told me that he was sending post cards with an offer, but no one was calling. “So, you’re telling me that you didn’t have one single repeat client over the past three months?” “Well of course I have,” he said. “Then why would you say your client mailers aren’t working?”

I went on to explain that the way you measure the effectiveness of your client-based marketing system is by tracking the total repeat customer dollars compared to the same period last year. Your goal is for that number to keep growing. It’s the difference between a savings account with interest and day- trading stocks. A savings account grows over time and collects interest. Your total balance continues to grow. Direct advertising is more like day trading. You make an investment and get an immediate return on it.

Client-based marketing is more like a drip rather than a one-shot deal. Sure you can have strong offers, but be careful to protect the permission you have so you can build a long-term relationship for long-term results as well.

When marketing to your client base (mailing, calling, emailing), another hidden question to consider is, “How much are you losing by not staying in touch?” This is a hidden cost factor that is often overlooked.

Before even asking what the returns will be, consider what you are los- ing. You are losing valuable clients every day by not at least staying in touch. But for the sake of argument, let’s say that you have 1,000 clients and it costs you $750 per month to mail to them. That would be $9,000 per year. If you could add $80,000 in revenue, don’t you think it would be worth the investment? Even if it only increased your business by $36,000, it would be worth it. Plus, repeat clients are easier to service, they already know your prices, and you don’t have to “sell” them. My experience has been that the long-term results will be more significant than that.