Every business wants to get more customers. Customers are the lifeblood of every business. Without them, your business will fail. So how do you get more customers? We’ll break it down into these easy steps any business can take.
Have a Plan
Seems simple, but after almost two decades of working with small businesses, this is the number one thing most businesses are missing. Now we’re not talking about a business plan. We’re talking about an actionable plan that can be measured and improved upon. It can be as simple as you want. We think a low-tech method works best. Just a notebook dedicated to ideas and notes. We like this method because you can easily look back and review your plan and strategies.
Find the Root of the Problem
Once again, nothing earth shattering here but many times you just have to start with the basics. In today’s busy, fast moving world, it’s easy to get caught up with the latest trends. Social media, content marketing are all great ways to connect with your customers but is that really how your business will get more customers? The first thing you have to determine is if you already have enough customers. Wait, what? Yep, you may already have enough customers. You see more customers aren’t always the issue. Each customer has a cost associated with them. Are you actually profiting from each customer?
Determine What Matters
Spend any time with an MBA and you’ll here the terms like KPI (Key Performance Indicators) and ROI (Return On Investment) used countless times. If you own a physical store and it’s always empty, it’s easy to at least get an idea what the problem is. The same is true for your website. If no one is coming to your website, then you need to attract more visitors. On the other hand, if your store is full and your website is getting visitors than you have a profit or conversion problem. This is when these 3 letter acronyms become very important. First you have to determine how much each visitor is worth. This is fairly simple. You just need to divide income by shoppers/visitors. Next, we want to determine how many are browsing and how many are buying.
Conversion From Browser to Customer
Many businesses don’t understand that you really don’t have a customer until they actually purchase something. This is known as your conversion rate. It’s very easy to measure, but conversion rates vary wildly. Let’s compare two very different businesses. Now a restaurant will have a very high conversion rate. Why else would you go to a restaurant unless you were going to buy something to eat or at least drink something? Now let’s look at a car dealership. Maybe you’re just thinking about buying a car. You may not even know what brand or model you want. Most businesses are somewhere between these two extremes. The key here is to know what your actual conversion rate is. Until you know this, you won’t be able to measure any changes that are made.
How Much is a Customer Worth
Now that we know exactly what a customer is, we have to know what they are worth. This can be fairly difficult to determine. If possible you will actually want to know the lifetime value of a customer. First you need to know if you have repeat customers or new customers. This is known as your churn rate. The lower the churn rate the, the higher the lifetime value. Most POS (Point Of Sale) and customer reward programs have built in tracking systems. Online business usually use email addresses to track their return customers. There are still going to be some very profitable businesses with very low customer lifetime values. Think about a business that relies on seasonal or vacationing customers. These businesses can have extremely high churn rates. The key takeaway is that we need to know the value of a customer so that we can decide on how much we can spend to attract new ones.
Not all customers are created equal. Some may have a need for your product or service but aren’t able to afford them. This is commonly referred to as target marketing. You can spend a lot more on customer acquisition when you have a higher conversion rate. It’s not the business that spends the least on least on obtaining new customer that prosper. It’s the one that can spend the most. A business can spend a couple of hundred dollars on an add in a penny saver add. They will reach thousands of people, but few will have a need for what their business offers. Spend the same amount on a targeted mailer and your conversion rate will dramatically increase. Yes, you will reach fewer people but this will most likely reduce your cost to obtain these new customers.
In order for your business to be successful, you must have a plan. You must first decide if you need more customers or higher profits from your existing ones. Knowing the actual value of each customer is key to determining how much you can spend if you need to acquire new ones. Your marketing actions needs to be very specific. The spray and pray model just doesn’t work. Scale down your reach and focus on those who both need and can afford your product or service.