How to Double Your Business in the Next Twelve Months (Without Adding a Single Customer!)
Does your business rely on repeat business? Is your primary referral source past or existing customers? If your business relies on repeat and referral business and you aren’t marketing to past and existing clients, you’re committing the biggest marketing mistake of all.
The biggest marketing mistake of all is not marketing to your past customers, clients, guests, or patients! Statistics reveal that it costs 500 percent more to gain a new client than to keep an existing one. Did you also know that without consistent marketing, many of your clients will forget about you and eventually end up using someone else? It’s a hard fact to swallow, but it’s true. A few years ago I participated in a home show with some service industry associates. After surveying a good portion of the attending homeowners, we discovered that they could not remember the name of the service company they had recently used—even though they were thrilled with the work—even when the service had been just two weeks prior! The company did a good job, but will never be in that home again unless they correct this huge mistake.
A multi-industry study by the Wharton School of Business at the University of Pennsylvania revealed that companies who increased their customer retention rate by a mere 5 to 11 percent- age points actually increased their profits by an astounding 25 to 75 percent, depending on the industry!
It is my experience that you could potentially double your business in the next twelve months without actually adding a single customer. In 1999, I proved how powerful this concept can be. One of my companies was mailing quarterly. We increased the frequency to twelve mailers. Eight additional months of mailing to past clients over a one-year period cost about $16,000 in printing and postage, but the return was more than $200,000 in trackable additional business!
A Sad Story
When I started my first business, I worked in an upscale restaurant as a waiter. My wife and I 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 postcards. Real nice postcards. I remembered them from when I worked there. Gesturing toward the postcard, I asked, “How well do those postcards pull?”
“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 more than twenty- five 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, postcard, or greeting card has much more staying power than an e-mail, which can easily be overlooked or deleted. Just yesterday I had one of my coaching clients tell me that sometimes my e-mails 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 does get read!
And by the way, don’t forget about the old-fashioned telephone! Simply pick up the phone and call past clients. This is one of the 14 Fastest Ways to the Cash. Several scripts are provided later on.
To further irritate the problem, most small business owners don’t know how to track their repeat business, which 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 postcards with an offer, but no one was calling.
“No one?” I pressed. “No one” he confirmed.
“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.
In Client-Based Marketing, you continuously invest a set dollar amount or a percentage of income, and you track all of your repeat business and all of the referrals that come from past clients (because those referrals probably wouldn’t be there if you weren’t consistently marketing to past clients).
Client-Based Marketing is more like a drip rather than a one- shot deal. Sure, you can have strong offers, but be careful with those because you don’t want to train your clients to wait for a discount or special offer.
The goal is to stay in touch with them through engagement.
When marketing to your client base (mailing, calling, e-mailing), 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 losing. 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 one thousand 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 increased your business by only $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.
Five Steps to Double Your Business (Without Adding One Customer)
Get a higher price. One of the reasons to constantly be in front of your past and existing clients (other than the fact that your competitor is marketing to them), is to reinforce your brand message that positions you at a higher value. Translation: higher price. Constantly remind them of the reasons to always use you and build the unique experience around your company.
TOMA (Top of Mind Awareness). Just because you did a great job doesn’t mean your customers will remember you. I had $6,000 worth of plumbing done in my commercial building. I completely forgot about the plumber who had serviced my home on occasion. Why? Because he doesn’t have a system to stay in touch. Do you? How many of your customers are gone because of not having a system in place?
Sell more products and services. You probably have a variety of products and services in addition to your main product or service. Marketing to your past clients can dramatically increase your income and profit margin!
Increase frequency of use. Getting your clients to purchase more often is another powerful thing that can add lots of dollars to your business.
Referrals! If your clients have trouble remembering your name, much less all the wonderful things that set you apart, what are the chances they are going to be able to refer you? No chance! A strong Client-Based Marketing program can dramatically increase your referrals, especially if you have a Referral Reward Program, and by teaching your clients how to refer you, will help them refer you to the right kind of clients.
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