Chapter 7: The Four Primary Ways to Grow Your Business
One of the most important things for any business owner, manager, entrepreneur or professional to realise, is that there are four principal ways to grow a business – any business. Of course, there are a myriad of ways you can grow your business. Other than some administrative functions however, some of which are not under your direct influence or control, nearly everything you do to build or grow your business can be classified under four distinct categories. If you learn to apply these simple concepts believe me, your competition won’t stand a chance. Why? Because your competitors not only don’t understand these concepts, most of them have never even heard of them.
1. Get More Customers
This first method of growing your business is obvious. Get more customers. That’s it. Build your customer base by converting more prospects into paying clients. When more people buy from you, you take in more gross dollars, and as a result (depending on your margins and overhead), you make more bottom line profits. As a spin-off benefit, the more people you add to your customer base the more people you have to mine for additional sales. In addition, you also have an increased opportunity for more referrals.
How Most Businesses Attract New Customers
Most business owners including your competition and probably you as well, spend most of their time, effort and money attracting new customers. If you’ve been in business for any length of time, you probably already know that getting new customers is not always the easiest, most efficient, or most profitable activity you can do.
Each business, industry, or profession has their own methods and timing to contact those who are most likely to be interested in their products and services. For example:
Telephone Soliciting – You probably have received your fair share of calls from these telemarketers. They tend to call at the most inconvenient times such as just when you are sitting down for dinner. This is a cold calling scheme made from a list. Companies can buy lists, or use their own customer list.
Television Advertising – Chiropractors, car dealers, truck driving schools, and lawyers often take a different approach. Many of them advertise heavily on television, especially during the afternoon hours to attract new customers. They’ve found that a large part of their intended audience… the people who are most inclined to use their services, watch television during those hours, and it’s a cost-effective way to reach them.
What works for some businesses, may or may not work for other businesses in the same or different industries or professions.
Doing What Everyone Else is Doing – Most likely, the method you use is the same method that nearly every other business uses. It’s called the, “That’s how things are done in our industry or profession,” method. Typically, when a person first chooses to go into business they look around and see what everyone else is doing. They imitate their competition in most every detail. They layout their office, shop or place of business just like every other similar type of business they’ve seen. They also look at what everyone else is doing to market or promote their businesses, products and services, and adopt those same marketing plans and methods as their own. This activity isn’t isolated to just a few businesses – nearly every business in most every industry or profession is guilty.
So, who set up that system in the first place? And who says it’s right, or that it’s the best system for you to use? The fact is that there are an unlimited number of methods of attracting new customers to your business, and your imagination is the only limiting factor.
Some of the best, most productive and cost-effective methods you can use, can be adapted from what others are doing in totally unrelated businesses. Now, this brings up a couple of questions.
First, how observant are you? What are others doing who are in the same business? How effective are they?
Next, look around at what other businesses… unrelated businesses in other fields, industries or professions are doing. How have they solved their problems? Have you seen what’s working for them? Are there any businesses that stand out, by doing something different or unusual? Does everyone utilize the same marketing methods?
Next question: How creative are you? Can you look at what some of the other businesses are doing, and adapt (with a few minor changes), their methods to your business? In other words, if you were brand new, just starting in business, and had no idea of what anyone before you had done to attract new customers, what would you do? How would you go about getting new customers? Would you use the same methods you use now, or would you do something completely different?
Let me give you an example of thinking outside the ordinary and drawing on your creativity to originate new marketing techniques.
A dentist I consult with specialises in working with children and their teeth. He loves children. He recognises that as they get older, they may need braces, they’ll probably get married, and have a spouse and children that will all need dental care. To appeal to his pint-sized clients, he set up his reception room with a special, “kid-height” counter. At the dentist’s office, the children are treated not as second-class citizens, but as equals. When the children arrive for their appointments, they can talk directly to the receptionist, transact business (with the parent’s help and supervision), and have a hand in scheduling their future appointments. This dentist even decorated his reception area with artwork and pictures contributed by some of his young patients. How do you think those young people feel? Well, you probably guessed it. They absolutely love it there. And they tell their friends about it, too.
As for their parents, they’re thrilled! Imagine, having your kids want to go to the dentist! And who do you think the parents use for their own dentist? That’s right, the same one their children use. A method this dentist uses to reach more clients is to expand his services to include the parents of his patients. By including adults in his practice, as the kids grow up and have families of their own he has a built-in market. Which dentist do you think they’ll use? Their childhood dentist with whom they feel comfortable. They’ll insist their spouse switches over, and they’ll bring their own children, too.
The relationship this dentist is building with those young people… of friendship, of trust and of caring, will provide him all the financial security he’ll ever need. He will be able to do whatever he wants, and go wherever he pleases for the rest of his life.
So, what about you and your business? What are you doing? Specifically, what marketing methods are you using right now to attract new customers and to build lasting relationships with them so they’ll do business with you for a lifetime? You also need to consider how many different marketing methods do you presently, and concurrently, have working for you? There’s a real danger in having just one or two main methods of attracting new customers.
For example, one of my consulting clients depended almost entirely on a telemarketing team to acquire leads for their salespeople to follow up. When a well-funded competitor opened for business not far away, they hired away nearly all that business’ telemarketing staff. and nearly shut the business down. This action nearly shut the business down. When they called me in as a consultant, I could see that we had to do something quickly, just to save the business. We got to work, hired and trained a whole new telemarketing crew, and got the business up and running again. But then we looked at other marketing options and put together an effective direct-mail program, started a proactive referral-generating system, and worked out some joint ventures and host-beneficiary relationships with other, complementary, but non-competing businesses. Now, if something happens to any one of their marketing methods, they have other strategies or other “pillars” in place that can keep the business from collapsing, and keep it running smoothly.
To be sure that you will not experience a similar disaster in your business, consider expanding your marketing methods. To evaluate how you can increase the number of ways you reach customers, start by going back and revisiting the questions I asked earlier. See if there are some areas where you can improve. Make sure you’re not dependent on only one or two main methods of attracting new customers.
Attracting new customers to your business is absolutely vital… not only to the growth of your business, but to its very survival. It’s critical that you have multiple systems in place so if anything unexpected happens, your business continues running, and growing, uninterrupted. Because of the limited amount of space in these pages, we can’t talk about all the methods of getting new customers, but in the training materials and workshops we conduct, we go into great detail on effective ways to attract prospects by the bushel, and convert them into loyal, long-term customers.
The importance of getting new customers cannot be discounted however, there are still three more methods you can use to grow your business. Each of these methods are more profitable, more effective, and give you greater potential for leverage than the first method.
2. Get Your Customers to Make Larger Average Purchases
One of the best ways to grow your business is to increase the amount of your average transaction. Get your customers to spend more money when they buy something from you. This just happens to be the quickest and easiest way to increase your profits. I am continually amazed at 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 leveragable step. Simply increase the size of the order, and get more money from each of your customers every time they buy from you.
Up-Selling and Cross-Selling
If you think for a minute about how easy this is and how profitable it can be, you’ll see why it’s such a powerful concept. One industry which has embraced and mastered this powerful technique is the fast food industry. Nearly every fast-food restaurant incorporates up-selling and “cross-selling” principles in their order system. Think about your own fast-food restaurant experience. You drive up to the speaker and place your order… a sandwich and a drink. Next, a voice comes back over the speaker and asks if you’d like an apple pie, or fries with your order.
That’s a classic example of cross-selling, or selling an additional product in addition to, or beyond the initial purchase. They might also suggest that you “super-size” or “giant-size” your order. This is 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. They made an additional sale, with no acquisition or marketing costs.
This industry realises 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. By being aware of what their customers might want, but may not ask for on their own, and then by asking questions or making suggestions, they bring in a substantial number of dollars. Other than the actual cost of the product, those dollars are pure profit.
Another technique fast food restaurants frequently use is called “bundling,” or “packaging.”
They combine a sandwich, a drink and fries, and throw in a couple of “bonus” items, like maybe a cookie and a toy. They put it all together in one package, and give it a name like “Happy Meal” in the case of McDonald’s. They’ll charge you less for that package than what each of those items purchased separately would have cost, but the total dollar amount you spend will be higher. Since there were no marketing costs involved, just product cost, it’s pure profit and goes straight to their bottom line.
Applying to your Business
Now, how can you apply this principle to your business? You may not be in the fast food business, but the same principles 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?” You probably already know possible answers to that question for your own business. For instance, if you have the type of business that offers more than one product to your customers you have a tremendous advantage to capitalise on the up-selling, cross-selling and bundling techniques. Some types of businesses, such as insurance companies that may offer only one type of product or service can also benefit from these strategies. They can package certain policies that cover multiple family members, add riders, or include other complementary services that go beyond the actual policies themselves. Once explained, these concepts seem obvious, but it’s surprising how few businesses make effective use these three simple techniques.
Developing Customer Loyalty
As a reputable business, you have an obligation to your customers. These people, who hand over their hard earned money to you, trust you to provide them good quality products and services. They rely on you to give them sound advice and make sure they get the very best value, use and enjoyment from their original purchase. If you have additional products or services that can enhance their purchase, then you should do everything reasonable and ethical to see that they at least have the option of taking advantage of those items. Again, it’s playing the numbers game. Only a percentage of your customers will take advantage of your offer. But at least you will have given them the opportunity, and you will have fulfilled your obligation to them.
When applying this concept to your business, be sure you train your employees properly. You need to be sure you don’t make the decision for your customers. Give them a choice, and let them decide. If you come across as sincere, and not pushy, they’ll realise that you are really trying to do them a favour. They will see you as helping them get more value, more use, and more benefit from their decision and their purchase. With this no pressure sincere approach, your customers will come back to do business with you again, and again, and will refer others to you, as well.
Up-selling, cross-selling and bundling are only three of more than a dozen immediate, profit-producing methods you can use to skyrocket your business to the next level. 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 twenty, thirty, even forty percent or more, in pure profits to your bottom line!
3. Get 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. The longer your customers go between purchases from you, the more chance they have of buying from your competition.
The adage, “Out of sight, out of mind,” applies in this case. You need to keep your name constantly in front of your customers. Use educational information, notices of changes in the law, or updates regarding the products or services they’ve purchased from you that can affect them. Tell them about new products, new lines, special incentives and other offers that might benefit them.
This idea works two-fold.
It “locks” your customers in, so they can’t afford to do business with anyone else.
It makes it so attractive to do business with you, that they wouldn’t even consider going anywhere else.
What you really want to do, is lead your customers to the inescapable and undeniable conclusion, that they would have to be completely out of their minds to even consider doing business with anyone else but you. This transcends your selection of products or services, the prices you charge, your location, or any relationship they may have with another business.
Let me give you some real life examples of how this works: One of the clients I consult with owns a restaurant. 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. By doing this, he “locks in” his customer, gets his money up-front, and makes it convenient for everyone. The customer simply signs the check, which includes the tip. No money changes hands during or after the lunch, and new customers are constantly being introduced to his restaurant. As a result, many of those new customers take advantage of the same arrangement for their clients.
Here’s another example. The car wash where I take my cars offers a special pre-paid, discounted card, that’s good for a certain number of car washes. It’s a great deal for me. I save money and I can take my car to be washed when it’s convenient, even if my teenagers have gotten into my wallet and taken my last couple of dollars. When my card is filled, I’ve got a free wax job coming. It’s a good deal for the car wash company as well. They’ve gotten their money up front and have locked me in as a loyal customer and away from the competition.
Here’s one more. The store where my wife buys shoes offers a “points” program. Every so often, she receives a notice in the mail informing her of how many points she’s accumulated. Even if she has not been to that store for quite a while, when she gets the notice and sees the credit she has coming, she nearly always makes it back to that store within a couple of days. In addition, she hardly ever leaves empty handed.
Airlines offer upgrades and mileage bonuses for those who fly with them on a regular basis. Countless other businesses offer similar programs as well. So how do you apply this concept to your business? Think about what would:
Endear your customers to you
Lock them in
Get them coming back more often
Do you have an educational newsletter or special informative reports that you periodically send that keeps your customers updated on the latest news in your industry?
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?
Do you have a frequent buyer club for your more loyal customers?
Do you offer a Referral Reward system that recognises or compensates your customers for referring their friends?
All these features let your customers know that you value and appreciate them and that you want them to come back. Make doing business with you fun, risk-free, rewarding, and easy!
By these suggestions, I’m sure you can see that the ideas are unlimited. While the restaurant, car wash and shoe store examples may not apply directly to your business, they should spark some ideas. You know your business and market better than anyone. Use these examples to generate your own program to develop trust and loyalty from your customers.
In our coaching programs we go into great detail, and discuss more than two-dozen very specific strategies that create an almost magnetic effect, that keeps your customers returning time and time again. We lead you by the hand and help you develop personalised and effective strategies that keep them saying, “I’ll be back”… strategies that keep them “insulated” from, and locked out of your competition.
4. Extend Your Customers’ “Average Buying Lifetime”
This concept, known as “Customer Retention” refers to a measure of the average amount of time you keep a customer? 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 even stopped to figure this out? This is an important step, and one that we’ll be discussing in more detail in later pages.
Next, 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 doubt about it. Your competition… right now… right this very minute, is making plans and taking steps to take your customers away from you. The question you need to ask yourself is not, “What are you going to do about it?” The real questions are:
“What are you currently doing about it?”
“What are you doing about it right now?”
Essentially, what plans… 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? If you answer “yes” to that question, my next questions would be:
“Are you sure?”
“How do you know?”
“Where did you get your information?”
“How reliable is it?”
“Can you explain in detail, the system you have in place for finding out?”
Notice that I said, “Are they thrilled enough?” Not “are they satisfied enough?” There’s a big difference between being thrilled and being satisfied in your customers and it affects you right on the bottom line. Last year, more than 200 million Americans stopped doing business with companies with whom they were “satisfied.” Sixty percent of so-called “satisfied” customers switch companies or brands on a regular basis.
As a business owner, you can’t afford not to thrill your customers and to build their trust in you and your business while you’re at it. The cost is too high, and unfortunately, most business owners simply don’t understand this point. 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 you make $200 in sales per year from your average customer. Let’s also assume 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, have a relative in the business, or possibly have a bad experience with someone in your company.
They may just simply disagree with some policy or procedure you might have. It could be a falling out with a staff member or employee, a personality conflict, a miscommunication, a problem they had with one of your products, or perhaps a feeling of neglect from you or someone in your business. It really doesn’t matter what the reason, they just stop doing business with you. This means those 100 customers are no longer paying you $200 this year which just cost you $20,000.
Now let’s factor in word of mouth referral. What if those 100 customers tell 5 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 again, for that matter). What if each of them had been spending an average of $200 per year with your company? That’s $100,000 you won’t be receiving from them, PLUS the $20,000 you lost on your existing customers who left. That brings the total in lost income to $120,000 in just one year!
It’s not unusual for some businesses to bring in a hundred (or more) new customers each month. That’s twelve hundred-plus new customers a year. Out of the new customers they attracted to their business, they may only see a total increase in their customer base of 150 or 200 at year-end (sometimes not even that).
What happened to the other 1,000 plus customers? Where did they go? Surely, they all didn’t die, or move away. Interestingly, most business owners don’t concern themselves with what, or whom they’ve lost. They just focus on their net gain. They figure that if they finish the year with more customers or more sales than they started with, they’re ahead.
Now, let’s return to the original 100 lost customers. Suppose you give them reasons… good, compelling, life or business enhancing reasons, to continue doing business with you this year. Let’s also suppose that each of them told those same five people about their now-positive experience with you. You now have the $20,000 you would have lost in the first place, and another $100,000 you may possibly pick up from their referrals or by word of mouth testimonials. For most businesses, this extra income could be put to good use.
The point is, customers are important – all customers. In fact, they’re critical. A business couldn’t remain in business unless it has someone to buy its products and services. Those “someone’s” are real people like you and me. If you sell your products to the business community, remember, businesses don’t buy from businesses. People in business buy from other people in business. Your market is always people, not businesses.
In summary, we’ve covered a lot of ground and a lot of ideas. So, let’s pause for a minute, and recap what we’ve discussed up to this point. There are four primary ways to grow a business.
First, get more customers. And as I mentioned, this is a vital step. But it’s also the most difficult and the most costly.
Second, get your customers to spend more money with you… increase 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.
Third, get your customers coming back to buy from you more often.
Fourth, extend your customers’ buying lifetime. 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. Nearly everything you do to build and grow your business can be slotted under one of these four categories. As I mentioned earlier, there are more than two-dozen ways to apply these concepts and build your business, but for now, if you’ll work on these four primary methods, you’ll absolutely run circles around your competitors.
As you take a good, close-up look at these four areas, you’ll see that what it really boils down to is effectively marketing your business to your customers and potential customers.
In the end, the success of your business enterprise depends, largely, on how effectively you market your business.
If you want your business to excel…
If you want to virtually eliminate your competition…
If you want to become the dominating force in your marketplace…
Then you’ve got to begin thinking of yourself as being in the marketing business, not in the product or service selling business.
As I’ve advised you before, you need to consider yourself as the head of a marketing organisation that sells the products and services that your business offers. Once you begin operating effectively at that point, you’ll find that your job becomes much easier and much more enjoyable. Your prospects and customers will begin seeking you out and referring others to you, rather than you chasing after them. The net result will be that your marketing costs will plummet, and your profits will skyrocket!
Take Action Exercises
Most business owners know exactly how much they have invested in furniture, fixtures and equipment. They can tell you, nearly to the penny, how much each item costs, how old it is, how much it has depreciated and its remaining life expectancy. That’s important information for any business to have. What’s amazing is that very few business owners know the value of their most important asset… their customers. Think about how this whole concept relates to your business. How can you specifically extend your customer’s buying lifetime with you?
Take a few minutes and answer these questions?
First of all, who are your customers … those who are buying from you now?
Who are their family members?
Do you know the names and ages of their spouse or children?
Do you know where they work?
Do you know where their spouse works?
Do you know where their children attend school?
What are their hobbies or interests?
Do you know why they purchased a certain type of product or service?
Do you know who their friends, neighbors or relatives are?
On the service end of your business, do you know how your employees 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?
How do you treat those customers?
Do you treat them any differently than the others?
Do you have regular staff meetings and talk about how to think like a customer?
What you would want if you were a prospect considering doing business with you for the first time?
Do existing customers consider giving repeat business to your establishment or organization?
Would they consider 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? (I.e. short-tempered customers or 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, finally converting them into Raving Fans?
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, 5 ½ years, instead of just 5 years?
Take a few minutes and go through these questions and formulate answers for them. Incorporate that information into your business practices. You can work wonders towards extending the buying lifetime of your customers. And as a result, you’ll add significant profits to your bottom line.