The fastest and most cost-effective way to grow your business is through Customer Maximization.
There are in fact five important elements to this…
- Increasing the Average Sales Value
- Increasing the Number of Purchases
- More Referrals from Customers
- Increasing Buying Lifetime
- Reducing Customer Losses
So, let’s talk about number one…
Increasing The Average Sales Value – Getting Your Customers To Make Larger Average Sales
What you’re looking at here is to get customers to spend more money when they buy something from you.
Now, this just happens to be the quickest and the easiest way there is, to increase your profits.
One of the things that continually amazes me, is the number of businesses that have extensive and expensive plans in place to acquire more customers. Yet, very few have paid much attention to this highly profitable and highly leverageable step of increasing the size of the order…getting more money from each of your customers every time they buy from you.
If you think about how easy this is and how profitable it can be, you’ll see why it’s such a powerful concept. You’ll also see why nearly every fast-food restaurant has embraced and mastered this principle.
Think back about your own experience. You drive through and place your order…a sandwich and a drink, and then what happens? A voice comes back over the speaker and asks if you’d like an apple pie, or fries with your order.
That’s an example of cross-selling. Selling an additional product in addition to, or beyond the initial purchase.
Or, they might suggest that you ‘super-size’ your order. That’s an example of an up-sell – increasing the size of the initial order.
In any case, if you take them up on their suggestion, what they’ve done is just increase their profits substantially, since they made an additional sale, but had no acquisition or marketing costs.
You see, they realize that a certain percentage of their customers will say “yes”. And the only reason they say “yes” is because a suggestion was made to them. So they play the numbers game.
The result? Well, by being aware of what their customers might want…but not ask for on their own…and then by asking questions or making suggestions, they bring in a substantial number of extra dollars and cents. Other than the actual cost of the product those dollars and cents are pure profit.
Make It More Compelling For Your Customers To Give You Their Money, Than Keep It For Themselves
Now here’s another technique fast-food outlets frequently use. It’s called ‘bundling’, or ‘packaging’ (the computer industry also has this nailed down well and truly!).
It’s where they combine a sandwich, a drink and fries, then throw in a couple of ‘bonus’ items, like maybe an ice cream and a toy. They put it all together in one package, and give it a name like ‘Happy Meal’ (if you’ve got children you’ll be very familiar with this term!).
They’ll charge you less for that package than what each of those items purchased separately would have cost, but the total amount you spend will be higher.
Since there were no marketing costs involved other than the cost of the items themselves…it’s pure profit and it goes straight to their bottom line.
Now, what does that have to do with you, and your business?
Well, you may not be in the fast-food business, but the principles can and should still apply.
Just ask yourself this question: “What additional products or services do you have that would be natural complements to what your customers initially buy from you?”
Can you maybe suggest that your customers upgrade to a better model, a larger quantity, maybe a more comprehensive or perhaps a more frequent application?
Can you find ways to bundle or package certain items that would give your customers more value, more use, more enjoyment and at the same time increase the sales value?
Do these things seem like common sense to you?
Well, they probably do. But as I mentioned before, it’s surprising how few businesses use these simple principles.
Out of all the strategies we use – the ‘up-sell’ and ‘cross-sell’ are the quickest and most profitable to apply.
It may surprise you to learn that there are different types of up-sell and cross-sell, depending on the business, but what doesn’t change is WHEN they’re used.
Both cross-sell and up-sell are ONLY used effectively at the ‘point of purchase’ – just at the time when the sale is made.
A good up-sell or cross-sell may only be one or two sentences in length (McDonald’s up-sell is just six words – “would you like to Super-Size?”), but we agonize over the structure of the up-sell or cross-sell before testing it on customers. We want to make sure we get it right…hit a home-run right out of the box!
Although this can be painstaking at times, it is more than worth it when 30-40% of customers take the up-sell or cross-sell. What effect would that have on your own profits?
Your Moral And Professional Obligation To Your Customers
Now think about it. In reality, you have an obligation to your customers, your clients, your patients, your policyholders…whatever you call those who do business with you …to make sure they get the very best value, the best use and the most enjoyment from their original purchase.
If you have additional items…either products or services…that can enhance their value, their use or their enjoyment, then your obligation is to do everything that’s reasonable and ethical to see that at least they have the option of taking advantage of those items.
Again, it’s playing the numbers game. Some will take advantage of your offer and some won’t. But at least you will have given them the opportunity. You will have fulfilled your obligation to them.
You haven’t made the decision for them. You’ve given them a choice and you’ve let them decide. If you come across as honest, caring and sincere, they’ll not see you as being pushy, but they’ll realize that you are really trying to do them a favor…to help them get more value from their decision and their purchase and they’ll come back to do business with you again, and again…and they’ll refer others to you as well.
Up-selling, cross-selling and bundling…these are only three of more than a dozen immediate, profit-producing methods you can use to quickly and almost effortlessly add immediate profits to your bottom line.
If you do nothing more than find a way to incorporate these three techniques in your business (which you should be able to do within the next twenty-four hours), you’ll blast your profits completely through the roof.
Think about it…increasing your sales…increasing your profits…without increasing your expenses…it’s an exciting concept and it can add an immediate 20%, 30%, even 40% or more, in pure profits to your bottom line.
Increasing The Number Of Purchases – The One-Time Sale Should Only Be Considered When You’re Going Out Of Business Next Week!!
Now, let’s move on to the second Customer Maximization area…getting your customers to buy from you more often.
In other words, increase the frequency of their purchases. Get them to come back. Give them reasons to want to come back and to continue doing business with you.
You see, the longer your customers go between purchases from you, the more chance they have of buying from your competition.
It’s like ‘out of sight, out of mind’. You need to constantly stay in front of your customers with educational information, and notices of sales or special promotions. You need to tell them about new items, special incentives and other offers that might benefit them.
The idea is twofold…
- To ‘lock’ your customer in, so they can’t afford to do business with anyone else
- To make it so attractive to do business with you that they wouldn’t even consider going anywhere else
You see, what you really want to do is lead your customers to the inescapable and undeniable conclusion that they would have to be absolute fools to even consider doing business with anyone else but you, regardless of the selection you have, the prices you charge, your location, or the relationship they may have with their current supplier.
Did you know that tests show 69% of people stop being customers with a business through ‘indifference’? In other words they don’t feel like the business cares about them.
We all have a need to feel wanted and appreciated – that’s human nature. Somehow you have to build this into your business. When you do – your customers will do everything in their power to keep buying from you.
For example, my friend’s wife shops at the fashion store Karen Millen. She is on their ‘Preferred Customer’ list. Three times a year the store holds a ‘Preferred Customer Discount Evening’ where the best customers are invited to shop for three hours in privacy.
They only offer 15% discount, but let me tell you my friend’s wife moves heaven and earth to make sure she can attend!
That’s the power you can create when you make people feel special.
A jewelry store client of ours also has four or five ‘Special Customer Launch Evenings’ each year when they invite their best customers for an evening ‘event’ when new lines of jeweler are launched.
The store provides canapés and champagne through the evening and customers are asked to dress accordingly. Let me tell you these evenings generate tens of thousands of dollars for the store. That’s tens of thousands of dollars they wouldn’t get if they didn’t hold these events.
That’s just two examples of the incredible effect you can create when you make people feel special.
We have a ‘library’ of proven strategies you can use to increase the number of purchases made by your customers.
Like all these things, it’s knowing what to do and then how to do it. I agree, most of the stuff I’m talking about is common sense, but let me tell you, we’ve found when it comes to growing a business, common sense just isn’t that common.
Okay, I’m being a little harsh there, but knowing you should do these things, acting on them and then knowing how to do it, actually isn’t that easy, unless you’ve done it before. That’s the beauty of working with us. Our Specialists know this stuff inside out. They don’t have to ‘learn’ it. They don’t have to go through ‘trial and error’. They don’t have to go through pain to find the answers. They already have the answers, and they’re ready to use them for you and your business.
And that’s what we do so well. We know this stuff inside out. We don’t have to ‘learn’ it. We don’t have to go through ‘trial and error’. We don’t have to go through pain to find the answers.
We already have the answers, have applied these principles and strategies in other businesses, and we’re ready to use them for you and your business, too.
Make It Easy And Advantageous To Do Business With You, And Watch Your Profits Soar
Let me give you a real-life example of how this works…
One of the ‘Client Partners’ we consult with owns a restaurant and for his business customers who like to take their clients to lunch, he offers a certain number of lunches for a pre-paid, discounted price.
So what happens is he locks in his customer, gets his money upfront and makes it convenient for everyone.
The customer simply signs the receipt, which includes the tip…and new customers are constantly being introduced to his restaurant and many of those new customers take advantage of the same arrangement for their clients.
Here’s another example. The car wash company we use offers a special pre-paid, discounted card that’s good for a certain number of car washes.
It’s a great deal for us because we save money, and when our card is filled, we know we’re going to get a free car wash.
It’s a good deal for the car wash too, because they’ve received their money upfront and have locked us out of the competition.
Here’s one more…The store my wife buys shoes from offers a ‘points’ program. Every so often, she receives a notice in the mail informing her of how many points she’s accumulated.
She may not have been to that store for quite a while, but when she gets that notice and sees the credit she has coming she nearly always makes it back to that store within just a couple of days! And believe me she hardly ever leaves empty-handed.
Airlines offer upgrades and mileage bonuses for those who fly with them on a regular basis and countless other businesses offer similar programs.
The UK based supermarket giant, Tesco’s, will even send discount vouchers for your most regular purchased items, if you haven’t been in their store for a couple of weeks or so!
Now, let’s apply this concept to you and your business. Here are several questions you need to ask yourself…
- What can you do that will endear your customers to you?
- What can you do to lock customers in and get them coming back more often?
- Do you have an educational newsletter?
- Do you send postcards, or do you have a website that keeps them informed of new items and promotions?
- Do you hold special ‘Customer Appreciation Sales’ or events?
- How about a ‘Frequent Buyer Club’ for your more loyal customers?
You see, you have to let your customers know that you value them…that you want them to come back…and you want to make doing business with you fun, risk-free and easy.
Well, I’m sure you can see the ideas are unlimited and I’m sure you can probably think of a number of things you can apply in your business right now, which will help you develop trust and loyalty with your customers.
There are dozens of different strategies you can use to create an almost magnetic effect, which keeps your customers returning time and time again and keeps them saying, “I’ll be back.” That keeps them ‘insulated’ from and locked out of your competition.
More Referrals From Customers – Recommendations From Customers Are Easy To Convert
This third area of Customer Maximization happens regularly to good businesses without any effort on their part. In other words, because of the experience your customers have with you, they will often recommend their friends or colleagues to your business, without any intervention from you.
That’s good news. But what if I told you, that by putting in a ‘Referral System’ you can increase your number of referrals by 200%, 300%, 400% or more? Just by ‘nudging’ your customers you can get so much more out of them. How can that be, I hear you ask?
Well it’s quite simple really. People are silently begging to be led. If you ask them to do something they are more inclined to do it. So by asking them to recommend their friends or colleagues to you, they’ll be more inclined to do it – even those that wouldn’t normally have thought to do it.
Then as long as you thank them for sending you a referral – they’ll keep doing it!
So what can you do? What system can you put in place for your business? Well let me give you a few simple examples from ‘Client Partners’ of ours…
- A carpet cleaning company that supplies each customer with a ‘Carpet Cleaning Kit’ when they recommend someone new to them.
- A portrait photographer who supplies a free print when their customer recommends two or more friends to them.
- An accountant who provides a ‘Business Development Meeting’ free of charge when clients recommend others to them.
- A restaurant which offers a free bottle of wine up to the value of $15 to customers who recommend their friends to them.
- A florist who gives their customers a $10 high-end retailer gift-card when they recommend their friends to them.
- And so on.
Does that give you any ideas? The key is to create the system and then automate it. Believe me, when you do this you’ll be staggered at the results!
What may surprise you is we have tons of different types of referral systems ready to unleash on any business.
Here are just a few of them…
- The Bring A Friend(s) Referral
- The Free Offer Referral
- The Quality Time Referral
- The Lower Price Referral
- The Cross Promotion Referral
- The Longstanding Customer Referral
- The “Price/Fee Objection” Referral
And that’s just a few of what we have in our “stable” of proven referral systems.
Clearly which type(s) of referral we use depends on your business and the types of customers you have. Then it’s simply a matter of testing what determines the best referral types to implement.
It really is that simple. Within no time you’ll have a powerful referral system in place churning out recommendations from your customers. The question is – can you handle the increase in sales?
Increasing Buying Lifetime And Reducing Customer Losses – How To ‘Insulate’ Your Customers From Your Competition
Now let’s talk about the last two areas of Customer Maximization you can use to grow a business…your business…in fact, any business. That is, to extend your customer’s ‘buying lifetime’. Hand in hand it’s ‘reducing customer losses’. As a whole we call this ‘Customer Retention’.
Here’s what I mean. How long, on average, do the people who buy from you…your customers…remain your customers?
In other words, how long do they continue doing business with you before they move on? Are they one-time buyers? Do they stay with you for a year? Five years, or ten years? Have you ever stopped to figure it out?
Then, what are you doing in your business right now to make sure your customers continue doing business with you?
If you don’t have a strategic plan…a working system in place, you are going to lose a certain percent of your current customers to the competition. There’s no question about it. Your competition…right now…right this very minute, is making plans and taking steps to take your customers away from you.
Now, the question is not, “What are you going to do about it?”
The real question is, “What are you currently doing about it?” What are you doing about it right now? What systems do you have in place to keep your customers from defecting to the competition?
Let’s talk about your customers for a minute. Are they thrilled enough with the products you offer and the services they receive from you to continue doing business with you year after year?
What if you answered “yes” to that question? Well, my next questions would be, “Are you sure? How do you know? Have you asked them? Do you have a system in place for finding out?”
Notice that I said, “Are they thrilled enough?” Not “Are they satisfied enough?” You see, there’s a big difference between being thrilled and being satisfied.
You can’t afford not to thrill your customers, nor to build trust in you and your business. The cost is too high, and unfortunately, most business owners simply don’t understand it.
Failing To Provide Exceptional Value Can Cost You BIG Time
Let’s take a look at what the potential cost could be to you if you fail to do these things:
Let’s say that your average customer spends $250 per year with you.
And let’s say that for any number of reasons, 100 customers stop doing business with you each year. They may die or move away. They may no longer have need for your products or services…they may switch companies because they’ve had a bad experience with someone in your organization, or have a relative in a competing business.
Or they may just simply disagree with some policy you might have. It could be a falling out with an employee, a personality conflict, miscommunication, a product they wanted that wasn’t in stock, or perhaps a feeling of neglect from you or someone in your company. It really doesn’t matter what the reason is, they just stop doing business with you.
Well, those 100 customers no longer spending $250 with you this year, just cost you $25,000.
But that’s not all…
What if each of those 100 customers tell five others about their experience with you? That’s an additional 500 potential customers who won’t be doing business with you this year (or maybe ever, for that matter).
If each of them spent an average of $250, that’s $125,000 you won’t be receiving from them…PLUS the $25,000 you lost on your existing customers who left.
That brings the total in lost revenues to $150,000 in just one year!
Here’s a summary…
The Cost of Losing a Customer
|The unhappy “lost” customers.||
|Tells 5 other friends, colleagues through bad word of mouth.||
|Total “lost” customers||
|Annual customer purchases||
|Total lost revenue||
Now, let’s suppose that you gave those 100 lost customers good, compelling, life or business enhancing reasons to continue doing business with you this year.
And let’s suppose each of them told those same 5 people about their now positive experience with you.
Well, there’s $25,000 you wouldn’t have lost in the first place, and another $125,000 you may possibly pick up from their referrals or by their word of mouth.
One of the things we focus very hard on is each interaction you have with your customers.
We call this ‘Moments Of Truth’. In summary what we do is make sure every single interaction with your customers is planned to perfection to ensure they have a ‘wow experience’ with you.
Is this something you’ve done in your business already? I’d be surprised if you had. Very few businesses have even looked at this, but let me tell you, using ‘Moments Of Truth’ in your business will without question reduce your customer losses, increase the buying lifetime, and very welcome by-products are a big spike in sales and an avalanche of referrals.
One of the most valuable services we provide our clients is a ‘Moments Of Truth Workshop’ where we identify the interactions you have with customers and then create the perfect result. I guarantee you’ll find this fascinating, extremely enjoyable and very productive.
Your Customers…The Most Valuable Business Asset You Have
The point is, customers are important. In fact, they’re critical. There’s no question about it. You and I both know that.
A business can’t remain in business unless it has someone to buy its products and services and those ‘someone’s are people. Real people. People like you; people like me.
Businesses don’t buy from businesses. People in business buy from other people in business. It’s people that you market to. Not businesses.
Some businesses or professions refer to the people who trade with them as customers, clients or guests. Others call them patients, passengers or patrons. Insurance companies use the term ‘policyholders’.
It really doesn’t matter what name we give them, what’s important is that without people who are willing to trade their money for the products and/or services that you have to offer, you won’t be in business very long.
Now, here’s an interesting point. Most business owners know exactly how much they have tied up in furniture, fixtures, equipment and inventory.
They can tell you nearly to the penny how much each item costs, how old it is, how much it’s depreciated and what the remaining life expectancy is.
That’s important information for any business to have; there’s no question about it. But what’s amazing is that very few business owners have any idea of what the value of their most important asset is…their customers.
Now, think about how this whole concept relates to your business for a minute. What is it that you can do…specifically, to extend your customer’s buying lifetime with you? Why not take a few minutes and answer these questions?
First of all, who are your customers…those who are buying from you now? Do you have a method of capturing their name, address and phone number? Do you have a way of determining how often they purchase from you? What are their favorite colors, sizes or styles?
What about your staff or employees? Do you know how they treat or feel about your customers? Do they, or do you for that matter, have favorite customers? What makes them a ‘favorite’? Is it how much they spend? How often they come in or buy from you? Is it their personality? How do you treat those customers? Any differently than the others?
Do you have regular employee meetings and talk about how to think like a customer? What would you want if you were a prospect considering doing business with you for the first time? Or, maybe an existing customer considering giving repeat business to your business? Or maybe considering referring a friend, a family member or an acquaintance?
Do you have a training system in place to teach your staff how to handle or deal with difficult customers? Short-tempered customers? Analytical customers?
Do you have a plan for moving people up the ‘Loyalty Ladder’? From ‘suspect’, to ‘prospect’, to ‘shopper’. Then on to ‘customer’, ‘client’, and ‘advocate’. And finally to convert them into ‘raving fans’?
What procedures do you have in place to identify each customer interaction and turn that interaction into a ‘wow experience’ for the customer?
When a customer stops doing business with you, do you know why? Do you have a system in place to find out? What would you have to do differently to get your customers to buy from you for…say, five and a half years, instead of just five years?
Believe me, if you will actually take the time to go through these questions and formulate answers to them…and then incorporate that information into your business practices, you can work wonders towards extending the buying lifetime of your customers and reduce customer losses at the same time. As a result, you’ll add significant profits to your bottom line.
The Real Key To Business Success Is Having An Effective Marketing System
We’ve covered a lot of ground and a lot of ideas, so far. So, let’s pause for a minute, and recap what we’ve discussed up to this point. There are just three ways to grow a business – three Business Multipliers.
First, you can get more inquiries. As I mentioned, this is a vital step. But it’s also the most difficult and the most costly.
Second, you can then convert more of those inquiries into customers. This won’t cost you a single penny more, and the effects are instant!
Third, is to get your customers to spend more money with you…
By increasing the average transactional value of each sale, and remember, that this is the fastest and the easiest way to add immediate profits to your bottom line.
By increasing the number of purchases. Get your customers coming back to buy from you more often.
By getting more referrals from customers – put a ‘referral system’ in place that will motivate your customers to refer others to you.
Increasing buying lifetime and reducing customer losses. Find ways to retain them, keep them as customers, and keep them coming back as long as you possibly can.
It’s really pretty simple if you know what you’re doing. Everything you do to build and grow your business can be slotted under one of these three Business Multipliers.
Just knowing and applying these three principal ways to build your business, makes your job a whole lot less daunting and much easier.
Now, when you take a good close-up look at these three Business Multipliers, you’ll see that what it really boils down to is effectively marketing your business to your customers and potential customers. In other words, the success of your business enterprise depends largely on how effective your marketing system is.
That means if you want your business to excel…to really excel…if you want to virtually eliminate your competition and become the dominating force in your marketplace, then you’ve got to begin thinking of yourself as being in the marketing business and not in the financial services business, the widget business, or ‘the products or services that your company sells’ business.
In effect, you need to consider yourself as the head of a marketing organization whose biggest (and possibly only) client is the company that sells the products and services which that company, organization or enterprise offers…your OWN company!
When you begin operating effectively at that point you’ll find your job becomes easier, much more enjoyable and your prospects and customers will begin seeking you out and referring others to you, rather than you chasing after them.
The net result is your marketing costs will plummet and your profits will skyrocket! Not bad, eh?