How to Make More Money in Your Business

How to make more money

Now more than ever I see more and more marketing time and expense spent on tweaking websites, developing landing pages, researching keywords, putting up anything on social media and giving fistfuls of cash to Google and Facebook for advertising.

Of course online marketing is crucial to our future viability.  There’s no doubt about that.

But it can become so all-consuming, that we can forget about the most important, fundamental thing we should be doing which will make us more money and be infinitely more satisfying than chasing new clients all the time.

What Is the Most Important Thing?

Looking after our existing customers.  That’s what.

And here’s three irrefutable and compelling reasons why we suggest you divert some of your effort into Retention Marketing.

Marketing to your customers – or retention marketing as it is known – involves keeping your existing customers engaged. Retention Marketing is achieved through loyalty programs, email campaigns, customer events and other activities.

Why Retention Marketing is Worth it

1. It’s far more profitable

Research produced by Harvard Business School states that increasing customer retention rates by just 5% increases a business’s profits by 25-95%

Harvard Study

Why?

Because it costs far less to market to your existing clients than it does to attract new ones, that’s why. The generally accepted rule of thumb is that it costs five times more to acquire a new customer than it does to generate repeat business from an existing one.

The cost per sale is lower because:

  • Communicating with them is cheaper. You have the choice of emails, newsletters, social media posts, social media customer groups, direct messaging and good old fashioned phone and mail.  This is far cheaper to do than Google Adwords, Facebook advertising, newspaper ads, letterbox drops and trade shows.
  • Response rate is higher. As they have already purchased from you and you have gained their trust, the cost per sale is much lower because the response rate is higher.  They are “warm”, not cold.  The probability of selling to an existing customer is 60-70% while the probability of selling to a new prospect is 5-20%.

2. Revenue is higher

It stands to reason that a customer who buys from you twice or more is going to be worth a lot more to you than someone who buys once.

As you can see from this excerpt from the  Invesp infographic, existing customers are 50% more likely to try new products and services and spend 31% more when compared to new customers.

Make more money

  • Part of the reason is customer satisfaction – they like you and are happy with you.
  • Part of the reason is the effort involved in finding an alternative supplier.

Every one of us can relate to this on a daily basis.  We have our favourite coffee shop, our favourite hairdresser and often a favourite camping ground or resort.  When we’re happy, we return and spend more.

The secret is to focus on the potential lifetime value of every new client, rather than the immediate sale value.  It’s a mindset shift, and if you can make that leap, you’ll find it will have a significant impact on your future revenue and profit.

For example, if someone books your handyman service to fix a broken toilet seat and it only generates $45 in revenue, don’t be annoyed.  Instead think of it as a “test” – they want to know if they can trust you to do the right thing by them. If they can, they’ll get you back for more work and refer you to their friends.  That one $40 could lead to a lot more work, in years to come.

This is a strategy we have employed with great success in hairdressing salons and with some tradies.

I just wish more tradies, retailers, restaurants, health providers and accountants would “get” this crucial concept.  What a difference it would make to what we think of them if we were treated well.

3. Customers recruit new business for you

Delighted customers will sing your praises to their friends, family and colleagues – in person and on social media and review sites.

It costs virtually nothing to generate a referral.  Just your effort to do a superb job and delight your customers to the point where they actively tell everyone.  And, if you implement an active referral program instead of “hope” strategy, the referrals will come in like clockwork.  One of our clients generates 70% of their business from referrals, week after week.  It used to be 30%.  This has allowed them to reduce their Google Adwords and print advertising costs by 50%.

The Danger of Not Implementing Retention Marketing

You may be thinking:  “if someone is already my customer, why should I spend extra time trying to keep them engaged — isn’t the fact that they’re a customer proof enough that I’ve done my job?

Good question – and one we often get.

The thing is, the fastest way to lose customers is to ignore them.  The “high” they experienced from having their problem solved by you or buying that fantastic product from you is short lived.  Once they have paid, it’s time to build your relationship with them, not end it.

Indifference is the biggest cause of churn.  If your customers don’t feel appreciated, they will soon take their future business elsewhere.

  • The first thing to consider is how you treated them and made them feel. This is even more important than doing a good job.
  • The second thing to consider is how you treat them after they’ve purchased. Ignore them at your peril.

Customer churnExcerpt from Invesp infographic

Your customers have more choice than ever before.  Finding an alternative to your business is easy. In fact they don’t need to go looking – they’ll see promotions from your competitors while searching online, on social media, on directories and in their letterbox.

I never cease to be astounded by the way companies ignore us once we’ve paid.

  • The tree Lopper who never contacts us – despite the fact that our trees still keep growing, and we’ve referred a lot of business their way
  • The pest controller who never contacted us again after we paid for the house to be treated – yet they know their treatment does not last a lifetime
  • My accountant who has rung me once in 10 years and sent one newsletter. He makes me chase him each year to get the tax done and never ever offers advice on how we could be doing things better in the business. (Needless to say after years of this treatment we have finally seen the light and moved to one who is helpful and proactive.)

Tips for Effective Retention Marketing

So how do you integrate retention marketing into your business?

The first thing to do is revamp the culture within your company.

How?

By changing the way that you and every member of your team thinks about your business.  This could involve shifting the emphasis away from closing more sales or finishing jobs faster or reducing costs; to making sure that everyone’s focus is on how you make people feel.  Seth Godin sums this up succinctly.

Seth Godin

Once you’ve moved customers from merely satisfied to absolutely delighted – you need to keep this going.

I know, some businesses types don’t have the opportunity for regular repeat business – like real estate, builders, concreters, wedding planners or mortgage brokers  – to name a few.

But every one of them has the opportunity to receive referrals.

The second thing to do is to implement retention marketing into your every day marketing system.

We’ve prepared a checklist of 34 things you can be doing right now to improve customer retention.


cta-retention-mktg-34

Download it now and see how you can increase repeat and referral business and reduce your overall marketing costs.  You will be kicking yourself for not doing this a long time ago.

Annette Welsford

Hi there. My passion is to inspire and help business owners to create the type of marketing and customer service that makes their business irresistible. I'm privileged to have a talented team at Commonsense Marketing who create and execute beautiful websites, engaging social media campaigns, and fantastic email campaigns that deliver results for our clients. And it's wonderful that many of them have said lots of nice things about the work we’ve done (see our case studies). We love to work with the owners and teams of small to medium sized business who are motivated to become the best in their niche and achieve more than they ever thought possible.

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